Throughout my career, I’ve noticed an unwritten law that seems to govern how new solutions or technologies are adopted by customers. Usually, it happens in two stages, and seems to be governed by inertia. In other words, the business world is full of pragmatists — risk-averse managers – who will use the same tools, techniques and strategies unfailingly, year after year, until they are forced to change, either by a business crisis or by competitive pressures.
The first phase of the adoption cycle is driven by early adopters — those wild-eyed, forward-thinking customers who love to be the first to try out new products and prototypes. They love to be on the “bleeding edge” of technology. In fact, the motto of the early adopter appears to be, “If you’re not bleeding, the technology is too mature!”
As these early adopters play around with this new product or technology, inevitably they figure out how to use it to create a significant competitive advantage — often an order of magnitude more efficient than the existing method used to traditionally do that type of work.
The early adopter then takes what he has learned and uses this advantage to win more new business — often at the expense of their local competitors. Blindsided by this innovative upstart and his unexpectedly efficient alternative, competitors suddenly find themselves asking, “How’d he do that??” It reminds me of a Far Side cartoon by Gary Larson, which shows two cowboys crouched down behind a covered wagon. An arrow shot by an Indian has just landed in the canopy of the wagon, and is starting to burn a hole in the fabric. The one cowboy asks the other one, with an incredulous look on his face, “They can’t do that, can they?”
That leads us to phase two of the adoption cycle, which is where the competitors of the early adopter figure out what he did to create such a dramatic advantage and they, too, employ the early adopter’s idea. But this me-too, reactive thinking only allows the pragmatic competitor to belatedly play catch-up, while the early adopter is already looking at additional ideas, tools and technologies to further revolutionize his or her business.
Clearly, the early adopter always learns something in this experimentation process, and has the opportunity to use this strategy to extend its competitive advantage over time. Being the lead user can lead to greater profits, but only as long as you stay focused on the time- or cost-saving benefits each tool can potentially provide to your business. If no benefits emerge, cut your losses and move on to the next potential tool or technology. Remember: Too much unfocused experimentation and can divert attention from critical operating aspects of your business, so be sure not to be moderately pragmatic and very open-minded at the same time.
I saw this two-stage technology adoption scenario in action a number of years ago in Cleveland. A large local construction contractor was losing business, due to a prolonged recession in the construction market. The company’s leaders realized that they would need to broaden the types of projects they worked on in order to survive.
While road construction work was being delayed until economic conditions improved, one local sector was still going strong: bridge reconstruction and repair. After all, when a major highway bridge was declared unsafe by the State DOT, you couldn’t wait a year or two to fix it — you needed to fix it now or close it down.
The traditional technique for removing bridge decks is to cut the concrete and steel deck into large section using water-cooled, diamond-tipped concrete saws, and then remove these large pieces with cranes. The work was slow, and could be somewhat dangerous in the winter months; the water used to cool the concrete saws tended to pool and freeze, making the work area slippery for construction workers. In addition, local landfills no longer wanted large chunks of concrete and steel debris.
The contractor’s solution to this dilemma was quite innovative. The company’s executives learned of several manufacturers in northern Ohio that were starting to market powerful hydraulic demolition tools, designed to speed building demolition. Attached to hydraulic excavators, powerful shears could be used to cut steel I-beams into smaller pieces, while pulverizer attachments could be used to crush concrete and brick pieces into smaller aggregate. However, due to the depressed economy, these innovative new demolition tools weren’t selling very well.
So this enterprising contractor decided to experiment with using these hydraulic demolition attachments to remove bridge decks. It worked like a charm. I visited one viaduct in Cleveland that had been scheduled for a two-week removal process, using the traditional saw and crane method. Instead, this contractor was able to remove the entire deck using two excavators and shears in three days! What’s more, the contractor used these tools to cut the steel into shorter lengths, so they would fit into a dumpster. The steel was sold for scrap to a local smelting company, a new source of modest revenue for the contractor that never existed before. Pulverizers were used to crush the concrete left over from the demolition process, which was used to build haul roads for the new bridge deck construction, or used on other highway jobs. No debris was left over to take to a landfill. And, of course, this highly efficient new demolition method required much less equipment, labor and time — which meant a bigger profit margin between what the firm bid for the project, and what it actually took to get the work done. All of these savings went right to the contractor’s bottom line.
As a result, this Cleveland contractor outbid his local competitors on the next several major bridge deck demolition jobs, kept its workers employed and brought in a significant amount of additional revenue and profit.
While this is a rather long story, it serves to illustrate the point well: Would you rather be the lead user, who succeeds in leveraging a significant competitive advantage from a new tool, technique or technology? Or would you rather be on the losing end, trying to play catch up with your much more nimble, innovative competitor?