Today, technology plays a massive part in our daily lives. It is linked to almost every field of work, and all industries follow it to measure the development of new technologies. So, it is crucial to evaluate technology through the technology readiness level and technology adoption curve before starting your startup or building your innovative product.

Company’s Readiness and Market Readiness for New Technology

No job today can be done better with the help of technology. Today, our cell phones are phones and radio, TV, writing tools, productivity tools, etc. Today, smartwatches are more than a watch that will tell us what time it is. We use watches for many other things.

So, let’s look at two concepts of evaluation:

Company’s Readiness for New Technology

Developing and bringing innovative products on the market requires understanding and leveraging technology capabilities to produce an innovative product that will work without problems in the real operational environment. The innovative product itself is also new technology for the market. So, we have an organization that innovates at the beginning of the process. This organization, which in many cases is a startup, will need to use different technologies and processes inside its innovation process to make the innovative product possible from one side.

Market Readiness for New Technology

Then, we will have the market on the other side to evaluate our innovation as new technology through acceptance and adoption. Startup companies, when talking with potential customers about their products, learn that they need to change something in the design or anything else. This is a requirement from the market. After implementing changes, they will lose something in their features.

For example, they can lose efficiency in power production if we talk about the gadgets needed to produce power.

What You Need to Evaluate?

So, when it comes to technology, we need to pass two crucial basic principles:

1. Our company’s readiness for technology includes expertise, knowledge, skills, technical equipment, and so on.
2. Market readiness, or how much is the market ready to use specific new innovative technology.

The main question is how technology can be evaluated before it is ready for development or commercialization. The answer is with the technology readiness level for the company’s readiness and the technology adoption curve for the market readiness.

What are the Technology Readiness Levels (TRL)?

NASA first developed the Technology Readiness Levels for space exploration and related technologies.

You can use this process for technology evaluation on a scale from the idea of a technology’s invention through tests in an operational environment to its commercialization and extensive application. In simple words, Technology Readiness Levels (TRL) is a tool for measuring the development of something, from an idea and basic research to the shipment of a product for commercial use or market readiness. This includes integrating basic technological components to establish their functionality and compatibility, particularly in a laboratory and a simulated operational environment, not the actual operational environment, at Technology Readiness Levels 4 and 5.

A simulated environment allows testing and optimizing the new technology without risking damage to equipment or potential harm to people. This stage is also where potential issues and failures can be identified and addressed before moving on to an actual operational environment.

Moving up the TRL scale, at levels 6-7, the actual system prototype is tested in a relevant environment or operational where customers will use the product.

Using this approach, we assign a technology readiness grade during technology development. We can evaluate technology using the rating system to determine whether it is near or far from deployment to the market. The rating system can be from one to nine, where TRL9 is the highest level, and TRL1 is the lowest level of technology readiness.

Different industries can use different timeframes in TRL. For example, software development may take just several months to progress from an idea. Conversely, medication development in the pharmaceutical industry may take over ten years to progress from TRL level 1 to TRL level 9 because of the high level of required testing. A technology readiness assessment is crucial in evaluating the technical maturity of a technology during its acquisition phase.

One of the biggest problems with TRL is uniformity because the scale was developed with the space industry in mind. Although the nine technology readiness levels can be implemented in different industries, it is much better to customize the scale per your requirements instead of following the standard model.

If we look at technology readiness levels differently, we will see that the first three are related to knowledge creation. In large part, universities are the ones that can contribute to starting the development of innovative technology. From the fourth to the sixth level is the development of technology, and here, cooperation with other stakeholders using the principles of open innovation is essential. Finally, there is business development, where everything should already be functional and ready for an operational environment. The technology readiness assessment often examines program concepts, technology requirements, and the demonstrated technology capabilities of a particular technology.

Let’s look at a case in which CloudWatch redesigned this tool to make it more usable for startups. Here, we start from 0, where we have only an idea for a product or service and an idea that has not been tested and proven, and we end with nine, which is the complete commercial application of the product or service for the market.

If we put this inside our workflow related to product validation, you can quickly develop ideas on using this vital tool inside your processes.

What is the Technology Adoption Curve (TAC)?

Let’s look at the other side of technology evaluation: the technology adoption lifecycle, or curve, which we can use for technology evaluation but from the market side.

The development of new technology depends not only on innovative organizations but also on the market and the extent to which potential customers will accept the new technology.

The most important question is when the customer will buy one specific new technology, product, or service. The answer is the model called Technology Adoption Curve or Technology Adoption Life Cycle. The model describes the market penetration of any new technology product in terms of a progression in the types of customers it attracts throughout its useful life. So, simply, TAC is a model for understanding the acceptance or adoption of new products. This helpful tool can help you understand technology adoption in the market. However, the tool can help organizations develop new products to boost their customers’ growth.

The model breaks the market for new technology into five segments based on how quickly the market will adopt the new technology.

Innovators.

We can see that the first customers for a new technological product in the early market are innovators. They are enthusiasts, people with an understanding of technology. They love new things, want to experiment with new technologies, own them, use them, and are happy because they have access to such a product. Also, they are aggressive in searching for new technology even before developers start with marketing activities because, in their life, technology has a central place regardless of the function of that technology. They are buying new technology for the pleasure of exploring, testing, and experimenting.

These innovators are not many on the market, but finding and using them can significantly help startups pass to the following TAC stage – finding and increasing the second group of customers, early adopters. Once innovators experiment, test, and use new technology, they are the biggest spreaders of the message that something new is working, paving the way for another group of customers and a second stage of the cycle. As shown here, when innovators are the only customers of a new product, the sales volume is still very low.

Early adopters.

Like innovators, early adopters buy a product quite early in the life cycle, but they are not people of technology like innovators. This group of customers quickly succeeds in understanding and appreciating the benefits they receive with the new product. Whenever they have a substantially new technology overlap with some of their needs, they decide to buy it.

Although this group of customers is still small for the product’s success on the market, and the sales volume is still low, these customers are the ones who will further push the product to go to the following TAC stage. So, early adopters are the key to opening up any high-tech market segment.

If someone is a person who wants to have the first electric car in his street or city or the latest cell phone, then this person is probably in the group of innovators or early adopters.

Early majority.

Early majority customers also like new technology but are driven by a new product’s or service’s practicability. Because they know that most innovations end up like failures, they will wait to see how other people that already bought the product use it and do the work with them. They will buy new technology only if they are convinced of the practicability and usefulness of the products.

So before making a purchase decision, they want to look for evidence. On the other hand, the product’s success in convincing these customers of its quality and benefits will bring high success for the company. This segment of customers simply represents almost one-third of all customers on the technology adoption life cycle and provides a large sales volume, growth, and profitability.

If someone answers that he is waiting to see how electric cars are driven without any problems and there are enough services, he is probably part of this segment of customers.

Late majority.

This segment has almost all the characteristics of early majority customers. The only difference is that this group of customers are not so much comfortable with the new technology. Therefore, these customers are waiting for new technology to become the standard in use. They want exceptional support and a high reputation and credibility of the companies they will buy from.

Like the early majority, the late majority covers almost a third of all customers on TAC. They ensure the company’s high profitability, although as the product ages, the profit margin decreases.

If someone says that he will not buy an electric car until most people buy and use it and driving a gasoline car is becoming too costly, he probably belongs to this customer group.

Laggards.

At the end of the TAC are “laggards,” or people who simply do not want to have anything with new technology, whether for personal or economic reasons. They are the last ones who will decide to buy or not. We can see that the sales have already dropped drastically, and the number of customers in this segment is much smaller.

If someone says that he will not buy an electric car, whatever happens, he is probably in this group of customers.

Crossing the Chasm

You need to take into consideration one important thing. It is the gap between early adopters and the mainstream market. Geoffrey Moore, in his book when talks about this gap, illustrates why so many companies fail. The answer is that they fall into the large gap between the tech-savvy early adopters and more unadventurous, mainstream customers. Many startup companies are simply unable to cross this gap.

In the past two decades, we have seen many startups grow quickly, becoming market leaders in industries that have never existed. The timeframe for new product development is shorter because of the shortened product life cycle. Many promising high-tech products and services, even the whole market, can disappear overnight. That means customer acquisition strategies for the early market must be adopted based on industry-specific approaches.

Clayton Christensen, the author of many books on disrupting innovations, recognizes sustaining and disruptive technologies. The first type of technology improves the performance of established products along the performance dimensions that mainstream customers in the market have valued before. On the other hand, disruptive innovation underperforms established products in the mainstream market but has some features for new customers from other markets.

Big-Bang Disrupters

The availability of many disruptive technologies that are cheaper to manufacture and install gives innovators and startup entrepreneurs opportunities to explore new applications at small risk to investors, abandoning prototypes that do not quickly demonstrate success. For example, today, developing and publishing applications for cell phones can quickly succeed in application markets like the Android Play Store and Apple’s app store.

These disrupters are called “big-bang disrupters” that change the product life cycle and technology adoption cycle we know by proving the actual system under mission conditions, leading to successful mission operations.

So, these five segments we discuss will become two segments in “big-bang disruption” – trial users, who participate in product development, and everyone else. In such a situation, the adoption curve has become closer to a straight line that heads up and falls rapidly when saturation is reached, or a new disruption appears.

With this change, we cannot use Moore’s approach to make the giant leap from targeting early adopters to marketing to the early majority. However, big-bang disruptions can be marketed to every segment concurrently, directly from the beginning of the product life cycle.

4 Stages of Technology

We have witnessed so many technological innovations in the past. More and more new technologies become available to all of us. But, what is important to you is what you need to think about technology and how to time an innovation in your business. This is a perfect TED talk in which Chris Anderson talks about the four stages technology needs to go through to become viable, starting with scientific research that translates basic principles into applied R&D. It’s worth your time. You will learn many useful tips.