If you are not already familiar with Everett M. Rogers or his 1962 book Diffusion of Innovations, we highly recommend you become acquainted with his work. With his book, Rogers introduced and popularized the concept of the technology adoption curve and the five types of product adopters that follow along with it. In this article, we will focus specifically on two of those types of adopters: early adopters and innovation investors. We will also discuss in more detail the concept of the technology adoption curve and adopters themselves.
How Innovation Investors Find Their Niche: The Technology Adoption Curve
Let’s start at the beginning with Rogers’ technology adoption curve. Its name is actually fairly self-explanatory. The technology adoption curve demonstrates the process by which a new product or technology is introduced to the marketplace. It breaks down the population into five categories of technology adopters, each of which adopts the technology or product at a different time.
Rogers’ book also explains the differences and unique characteristics of each group of adopters:
- their distinct social status
- tolerance for risk
- wealth level, etc
These characteristics, of course, influence when they adopt new technologies. And this in turn influences when the other groups will adopt those same technologies.
The concept of the technology adoption curve has had profound impacts on two parties. It impacts both companies trying to disseminate and market their new products and adopters looking to adopt new products and technologies.
Thus, by paying attention to the technology adoption curve and the different adopters, marketers can predict many things. They can learn how much of a new product to make available at a certain time, who to pitch it to, how to better market it, and much more.
And as for adopters – depending on the group – it can be extremely valuable to know these stages of the adoption curve as well. Knowing what stage of the curve a given product is in at certain time helps them predict the best time to invest in the product.
So what are these five categories of adopters?
- Early adopters
- The early majority
- The late majority
- and The laggards
In this post, we will discuss the first two groups that adopt new products: innovators and early adopters.
Early Adopters Influence Innovation Investors
Let’s start with the early adopters, as they are exactly what they sound like. They are early customers, or adopters, of a certain product, technology, or even company. Although they are not the very first consumers to adopt a new product (those would be innovators) early adopters are usually considered the most influential people within their market space.
After the initial innovators have invested in a given product, companies target the early adopter group. This is because early adopters provide critical feedback, endorsements, and marketing for the product.
- are typically fairly young
- almost always have a fair amount of financial resources
- are well connected to the community
They also often tend to lean progressive and have a high degree of education. As such, early adopters are respected community members: others value their thoughts and opinions. One could say they are the “influencers” of the investing world.
Accordingly, if an early adopter tries out a new product or technology that they love, they could broadcast that to their social networks. As a result, this can give that product or technology a significant marketing bump.
For these reasons, companies will typically target early adopters to try out their product in its early stages. This all begs the question – what do early adopters have to gain from their role in the technology adoption curve?
How do early adopters benefit?
There are several answers.
1. Exclusive access
For one, they get exclusive access to new products and technologies. Not only can these products serve trial purposes, but they also can be advantageous.
New technologies are being produced every day. Many of them have the potential to have huge impacts on everything from the way we work to the amount of money that investors can make off of them. Having early access to potentially influential and groundbreaking technologies certainly has its benefits.
2. VIP treatment
Secondly, early adopters are treated to a high degree of customer support. Customer service and sales representatives will be at the beck and call of early adopters. They are thus ready to assist them in any way that they can to make their experience with the product or technology more fruitful and enjoyable.
On a similar note, the marketing teams of the companies behind the product are readily available to early adopters. They are there to provide tips, insights, and even to help them construct social media posts for informing the public know about the product.
If all goes well with this relationship, early adopters have both benefited from the product or technology and have been able to offer feedback on the product. This feedback has improved the product development and assisted the product’s innovators. They have then informed their networks and community about the product; this is often called “thought leadership.”
Thought leadership refers to a degree of opinion leadership that certain groups, such as early adopters, have amongst their peers and communities. Community members are much more likely to listen to and follow those who have a thought leadership status.
Earning the approval of early adopters is a huge win – and in many cases an essential win – to companies seeking to market and distribute new products. Their approval is oftentimes the linchpin in determining whether or not the other stages of adopters will accept and purchase the product.
Understanding how early adopters fit into the technology adoption curve is very important because it enables companies to selectively market products and technologies. As a result, this can greatly impact innovative goods’ or services’ chances at success.
So What Are Innovation Investors?
And now we will shift our discussion to another very interested group of adopters: innovation investors. As mentioned above, innovators are the first group to adopt a given product or technology.
They are – almost without exception – risk-takers, and also by nature are enthusiastic about new products and technologies. Like early adopters, innovation investors enjoy an elevated social status. They are typically even younger on average than early adopters, and even wealthier. And they are also highly educated and respected, with many connections in the community.
Another key characteristic of innovation investors is that they are frequently well-versed in some sort of scientific or technological discipline of the new product or technology. This makes them pre-disposed to giving an informed and accurate opinion on the product.
Innovation investors must have substantial capital and high risk tolerance
These are all necessary qualities for innovators to have, given their role in the technology adoption curve. Investing in these new products and technologies is not cheap, and so innovators have to enjoy a certain degree of wealth to be able to be the first to adopt a product at all.
They are also making an inherently risky investment: these products are not at all guaranteed to succeed. In fact, seeing as innovation investors are the first to try out the product, it can be hard to predict how high a chance of success the product has until after the innovator adoption phase. But if you are an innovation investor, this is an exciting time for you. They are extremely risk-tolerant and go into the process fully aware that some products will not succeed as well as they had hoped.
Innovation investors play a critical role in the technology adoption curve. Without their heightened technical knowledge, wealth, and risk tolerance, many products would never get that important first chance that is necessary for them to ultimately succeed.
If a product is not able to successfully pass through the innovator adoption phase it will never reach the early adopter phase, meaning it will never reach the early majority phase, and so on. Innovators only make up about 2.5% of consumers, but their impact is much larger.
Thinking like Innovation Investors
Many high net worth individuals take pride in playing the role of an innovator or early adopter in the technology adoption curve. Being a part of a product’s development so early on is beneficial to you as a consumer, the company that you are supporting, and the economy as a whole. These adopter categories are essential to a product or technology being able to gain momentum and ultimately reach the entire population.
Guidance on Investing and Your Wealth Management
Understanding the role the technology adoption curve plays in the economy and how you can get involved is important. However, it isn’t simple. Fortunately, there are financial experts with years of experience whose profession it is to help investors navigate the marketplace.
However you choose to protect your wealth, remember that professional guidance will provide you with the best options available to you. The right wealth management partner will make these options clear and easy to understand. This way, you can choose the investments that will serve you best.
Finding a financial advisor who takes the time to get to know you and treats your financial decisions with respect is the wisest move you can make. Schedule a meeting with us here to learn more. We look forward to discussing your goals with you.