Understanding the diffusion of innovations

To approach the green building market, it is useful to think of it in terms of technological innovation. In classical marketing theory, people have found that innovations take time to get into the marketplace. Typically, the time for more than 90 percent of the market to adopt an innovation is 15-25 years (i.e., a generation). In order to be adopted, an innovation typically has to have a major cost or business advantage over existing methods. In my experience, this advantage has to be greater than 25 percent, if cost alone is the criterion. This "cost-effectiveness barrier" exists because of the costs of learning new methods, the economic risk of investing capital in new things and the business risk inherently involved with trying something new. In the building industry, there has been historic resistance to discontinuous innovation, so that in many ways, buildings are built much the same as 20 years ago, relying on incremental innovations to improve performance.

Figure 9.1 illustrates how innovation enters the marketplace. Initially, a group of innovators with strong technical expertise and a tolerance for risk tries

► 9.1a Diffusion of innovation showing progressive stages of adoption over time.

► 9.1a Diffusion of innovation showing progressive stages of adoption over time.

something new. When the size of this group reaches about 2.5 percent of the total potential market, then a group of early adopters begins to find out about what the innovators are doing, observes successful field trials and then begins to incorporate the innovation into their own work. This group of early adopters has less tolerance for risk, but is attracted to the benefits of the innovation. When the size of the group adopting the innovation reaches about 16 percent of the potential market, then a new group, the early majority, begins to use the innovation and begins the process of "mainstreaming" it. Finally, at about half the potential market size, a group of late adopters signs on, not wanting to be left out forever. Near the end of the adoption process, a large group of laggards reluctantly adopts the innovation, and some people, of course, never adopt. (Think of the Amish in Pennsylvania, still driving a horse and buggy 100 years after the automobile was introduced.)

Of course, many technical and technological innovations never achieve mainstream status, owing often to cost or complexity. The process of mainstreaming is never smooth, and according to author Geoffrey Moore, it can be compared to "crossing a chasm." Many technological innovations never have appealed to more than the early majority, either because something better comes along, or because they have high switching costs, offer few comparative economic benefits or are just too complex for the average user. One can think for example,

Cumulative Adoption by Phsychographic Type

► 9.1b Diffusion of innovation showing total adoption rates by psychographic type.

e n novato b 5 early early late laggards adopters majobitv majobity e n novato b 5 early early late laggards adopters majobitv majobity

% op Total Cumulateve

Table 9.l Categories of responses to new technological innovations

Name of Category

Percentage of Total





Early adopters



Early majority



Late majority



Laggards (or "nevers") 16.0 Traditional

Laggards (or "nevers") 16.0 Traditional of all the PDA products developed in the 1990s before the Palm Pilot finally came along and captured the imagination of the mainstream business market.

Classical diffusion theory, now more than 50 years old, was popularized by Everett Rogers1 and is widely known among marketers of new technologies. Basically, it posits a group of five distinct personality types who adopt innovations in different ways and at different times. Table 9.1 shows these distinctions. This theory also posits a normal distribution of innovation adoption, with an average time to reach 50 percent of the potentially available market of typically 10 years or more.

As may be expected, the major issues in determining the rate of adoption of innovation include:

• Relative economic or social advantage (still being debated for green buildings, but generally considered a positive factor).

• Compatibility with existing methods (generally this is the case for sustainable design).

• Ease of trial at relatively low cost (not the case for new building technologies).

• Observability by those who would try it (this is definitely the case for green buildings).

• Simplicity of use (which LEED and sustainable design are not, at this time).

Of these five factors, relative economic advantage is the major driver of response to innovation. According to Rogers, there are four overall key factors in determining the rate at which an innovation will spread from the relatively small innovator segment that welcomes new things, to broader segments that are far more risk averse and intolerant of ambiguity.

• The nature of the innovation itself, including its relative advantages.

• Communications channels used by subsequent market segments.

• Time required for the decision to innovate, the process of adoption to occur and additional adopters to learn about it (the time dimension for completing new buildings, typically 2-3 years, is short-circuited by the sharing of information from multiple similar projects, in this case).

• Social system in which the innovation is imbedded, particularly the barriers to innovation.

At this time, LEED has gained perhaps 10 percent of the institutional market for new buildings but scarcely 3 to 5 percent of the corporate market. (See the discussion in the earlier chapters about the state of market adoption of LEED in 2007.) So, for the private-sector market, the client base can be described as more likely to be innovators and, for the public buildings market, the client base is more likely of the early adopter mind-set. Even in the public buildings client base, many project managers who supervise large projects could properly be characterized as late adopters, and will need strong mandates from upper management to pursue sustainable design projects.

The relative economic advantage of green buildings and LEED has yet to be shown in either of these markets, given the demonstrably higher capital costs and certainly higher certification costs, compared with conventional practice. (See discussion of costs of green buildings in Chapter 4.) Certain benefits, such as energy savings, are already a standard part of conventional project payback analysis and are often a positive factor in promoting green buildings. Benefits appear greater for long-term owner occupants of buildings, but many of the reported and putative benefits are harder-to-measure "soft costs" such as employee productivity, improved morale, reduced absenteeism and illness. From our experience, these benefits have relatively little acceptance at this time among building owners and project financiers.

Anecdotal evidence of the business-case benefits (see Chapter 3) is strongly in favor of green buildings, but it has not filtered yet into the general marketplace enough to overcome perceived cost hurdles. Since the green building market is project based, it may take sometime for perceived benefits to find appropriate projects, for a fuller implementation. Oftentimes, adoption of innovation is incomplete, for example, when a technology is acquired (in the way of desired outcomes such as LEED certification) but not deployed into general use; this phenomenon has been called the "acquisition gap" and has been found in a number of technology diffusion studies, which observe that "knowledge barriers impede deployment."2 This is happening with LEED: 45,000 people have taken the LEED training course, more than 35,000 have passed the LEED AP examination, yet relatively few are actively pursuing LEED registration for their design projects, primarily because of their own limited knowledge and fear of client rejection.

In the light of the current state of the market, building owners' and developers' requirements for more independent cost and performance evaluations of green buildings are critical for building credibility and overcoming perceived barriers. According to "Yudelson's Law," (cited in Chapter 8) the expectation of real benefits has to exceed the likelihood of increased costs by 25 percent or more to change most decisions in favor of new technologies or methods.

Was this article helpful?

0 0

Post a comment