How to Identify High Growth Innovations Using the Lens of Consumer Techno-Readiness

What service technologies are best poised for future growth? (Hint: if you read ahead, one of them is online C2C commerce). While it is impossible to truly predict the future, planners can gain insight by focusing a lens on the most “techno-ready” consumers. Using Rockbridge’s TechQual Index™, a survey metric based on a series of proven attributes, we are able to profile consumers (or corporate decision-makers) based on their “techno-readiness”, defined as their propensity to adopt cutting edge products and services. A decade of research has shown that the most techno-ready consumers are more optimistic, innovative, comfortable and secure when it comes to technology, and tend to be early adopters who are farsighted in their views. By studying the behaviors of this group, we can identify those innovative products and services that are likely to expand to the broader market in the future.

The tool for identifying innovations with future growth potential is the Divergence Index, which is calculated as the ratio of technology usage among consumers with high techno-readiness (per TechQual™) to the usage among those with low techno-readiness (example: 60% among high/30% among low = 2.0). The table below shows rankings among 31 online services by the index values. To complete the picture, the table also reports the penetration rate among the upper third most techno-ready consumers.1  When considering emerging technologies, decision makers can make safer bets by investing time and resources in high growth potential products and services with strong penetration among the most techno-ready segment.

High Growth Online InnovationsSo what does this analysis tell us about the future? Services with low divergence scores, such as online banking and news websites, are so widely used by all consumers regardless of techno-readiness that the services can hardly be called “cutting edge” anymore. Because these services are mature, there is not much of an untapped market remaining. If we focus on services with high divergence scores, we can immediately identify certain categories with room to grow, with online Consumer-to-Consumer (C2C) commerce topping the list. Half of highly techno-ready consumers have purchased items from other consumers online through auction sites or online ads, and nearly a third sold items online through C2C services. The ultimate test of confidence in a virtual service is a willingness to do business with a perfect stranger unaffiliated with a business or website.

It is also worth paying attention to downloading movies and songs, streaming music, and online services by membership organizations. We know from research in the non-profit area that associations are facing challenges with a shift away from local chapters and physical meetings, and towards national communities of interest that are bound through an online presence. The results here suggest that this shift is a long-term trend that has not reached its full market potential.

Introducing any innovative product or service requires a unique approach that takes into account varying levels of techno-readiness (that is, marketing a smartphone is different from a soft drink). Leading edge consumers can be expected to adopt valuable innovations early, but for the rest of the market,Product Innovation Blurb it is important to prove the product or service benefits to consumers who are skeptical, ensure ease of use and solid support for those with low comfort levels, and reassure consumers who are distrustful. If marketers can bridge the gap between the tech-savvy and the tech-skeptical or tech-challenged, they can transform emerging innovations into mainstream brands.

1 Source: 2012 National Technology Readiness Survey, sponsored by Rockbridge Associates, Inc. and the Robert H. Smith School of Business.

Written by: Charles Colby, Chief Methodologist