Any new technology offers competitive differentiation that is inversely proportional to its adoption in the market. The newer the idea (and the fewer people using it), the greater the return. The more widespread the approach, the lower the return. In other words, when an idea is a real winner, the first people to use it receive extraordinary benefit.
The problem, of course, is that the high payoff is accompanied by higher risk. Many seemingly powerful innovations fall flat leaving their investors and early customers in the lurch.
New technologies, by definition, begin their lives as untested hypotheses. The ideas make logical sense, but have not been tested in any way. With social media, the rush to deploy has included a number of idealistic ventures that did not work out.
A technology’s effectiveness changes as it moves through the marketplace. If a new technology will have a lasting impact, the first several years of its life always deliver the maximum return for adopters.
Technology moves through the HR Market in phases. As the process matures, both the risk and the reward for adopting the new approach decrease. People who adopt a new approach very early can get enormous benefit. They can also look pretty silly.
Here are the phases through which new ideas pass as they move from novelty to broad acceptance.
- Discovery As the story of those early successes move through the market (via trade shows, publications, blogs and professional associations), the addressable market grows dramatically. The first people to buy into the new idea look silly to their more conventional brethren. If the idea gains real attraction, they look like geniuses. If it fsails, they look like spoiled rich kids.
- Popularization As more companies adopt the technology and the users talking about it increase, enthusiasm and excitement accelerates, which leads to even more users. After the early adopters bear the risk, there is still a tremendous store of competitive advantage to be had. The optimal time for an organization to start using a new technology is here.
- Best Practice As the market begins to embrace the tool, it becomes a so-called Best Practice. By this time, much of the competitive advantage has already been delivered. Even so, the mantle of ‘best practice’ further accelerates both adoption and the decline in effectiveness. Once new tools have been used long enough for there to be ROI calculations, industry analysts start referring to them as ‘best practices’. Best practices are not innovations. Rather, they are ideas that will provide a modest return and carry a modest risk.
- Standard Practice By the time a new idea has become Standard Practice, prices are falling and the new idea is simply a part of the cost of doing business. Organizations rely on standard practices to meet the minimum requirements of operating in their markets. Vey little competitive advantage is gained by this point in the evolution of an idea.