August 13th, 2020
Category Selling Solar
Having reviewed the barriers to diffusion, the next challenge is to look more closely at how they are overcome. This brings us to the role of the entrepreneur. As we saw in the case of solar, to explain the acceleration of diffusion without reference to the pioneering entrepreneurs would have been meaningless. Similarly, entrepreneurs today are toiling throughout the renewable energy and energy-efficiency sectors to bring new innovations to market. In order to explain innovation diffusion, the analyst needs to be able to account for what empowers these agents to make their impact on diffusion.
Entrepreneurs often play a central role in bringing an innovation to market and trying to make it attractive, competitive, affordable and available enough that thousands if not millions of custom...Read More
Finally, if an innovation is attractive, competitive and affordable but not easily available, then diffusion will suffer. Here it is important to assess the extent to which an innovation is infrastructure-constrained, meaning the extent to which it relies on a supporting infrastructure for its diffusion. If an innovation can use a pre-existing infrastructure, then it may be able to diffuse more rapidly. But if an innovation needs a new infrastructure, then its diffusion will be tied to how quickly this can be built. For instance, in the case of solar, diffusion was initially limited by the absence of sales points, locally available inventory, salespeople, and technicians who could provide both installation and after-sales services...Read More
As we saw in the case of solar, even if an innovation is competitive, it will not rapidly diffuse if it is not affordable. Here, rather than consider the innovation in an objective economic sense, the analyst needs to relate the price of an innovation to the very specific disposable income of the target customers, and consider whether they have the purchasing power to afford it. For example, although green revolution agricultural technology was competitive in terms of enhanced profitability per acre, it was not initially affordable to most farmers in emerging markets. Renewable energy innovations like solar will also tend to fall into this category...Read More
By contrast, the question of whether an innovation is competitive or not is intended to be totally objective (devoid of customer perception). First, identify the alternatives to the innovation that customers presently use, and compare the competitiveness of the innovation in terms of both economic gain and functionality. In the case of renewable energy and energy-efficient technology, it will be essential to look at the life-cycle costs of the technology, and not just the up-front costs. A cost/benefit analysis of the innovation compared to different substitutes over 5, 10 and 20 years will be a particularly useful tool. If the innovation is competitive on a life-cycle basis, then there is a solid basis for its diffusion, all else being equal...Read More
When we ask if an innovation is attractive, it is a simplified way of asking how customers perceive the innovation. Therefore the analyst’s first objective is to get inside the mind of the customer to understand their initial reactions to the innovation and their satisfaction after purchase. This will help to establish the relative attractiveness of the product. If it is not attractive, then the innovation may not yet be ready for market. But if it is attractive, the key is to understand how the early customers first heard about the innovation, and what helped them overcome their uncertainties and decide to buy it. Analysts should particularly look out for the role of referencing (word of mouth), opinion leaders, change agents and social norms...Read More
Solar is but one of the renewable energy technologies that emerging markets can choose from to lessen and eventually eliminate their dependence on fossil fuels. Others include, for example, wind turbines, hydro installations, biomass power units, solar thermal concentrators and geothermal units. In addition, energy-efficient and other clean-energy innovations are a natural complement to renewable energy, either because they reduce the amount of energy needed in the first place or they help put renewable energy to use in a meaningful way for customers...Read More
Solar in the emerging markets started as a twinkle in the eye of its early propagators – a vision of solar on the rooftops of millions of homes, providing essential light, displacing fossil fuels, and establishing a new technology in a new setting as a beacon of hope and a guard against future growth in emissions. It was terribly compelling. But as with many innovations, the hopes and aspirations initially outran the reality.
A review of theories on innovation diffusion showed that solar technology was by no means alone. The history of technology diffusion is filled with cases of slower than expected diffusion. From these theories we distilled four essential barriers, and put them forward as questions that might help explain solar’s slower than expected progress:
1 Is it attractiv...Read More
At the outset we asked two essential questions about solar. First, why was a technology with such enormous potential so slow to diffuse in emerging markets throughout the 1980s and 1990s? And second, why at just the point when many were starting to give up on solar, did diffusion pick up in some emerging markets so quickly at the turn of the new century? We asked these questions not just because they were relevant to solar, but because through answering them, we could shine a light on the much bigger picture of renewable energy diffusion.
We now return to these questions, and summarize our solar findings in the first part of this concluding chapter. The second part then returns to diffusion research and the analytical framework developed in Chapter 2...Read More