High-Tech Life Cycle
Let me share with you what we are teaching at graduate school these days…… from the 1980s until recently, we talked about being in the Consumer Era. That is, don’t make anything until you ask the consumer what they want and then make it. That way you take all the pressure off sales and inventory control isn’t about selling off obsolete stock. Then Steve Jobs came along with his disruptive innovation vision. “In the high tech business, you can ask the consumer all day long what they want, and they just do not know.” He asserts that we are now in the Innovation Era. The consumer has no idea what is possible, what they want, what to even ask. Successful high-tech companies now must do the following:
1. Innovate like crazy – discontinuous innovation. Create an environment within your company to think exponentially and develop the most innovate product commercially feasible
2. Post purchase evaluation – then ask the Innovators and Early Adopters what they liked about the product, what they didn’t like, what they would like to see added, etc. etc. etc.
3. Innovate some more – continuous innovation. This will get you to the Early and Late Majorities that are absolutely necessary for success…

Now we are talking about the Technology Adoption Life Cycle. As the chart indicates, approximately 15% percent of the market will try anything that even suggests high-tech. Those are the Techies and Visionaries……those are the ones that sleep overnight on the street in Times Square to get the new iPhone. They pursue new high technology products aggressively. They love anything new, anything high-tech, anything that allows them to be first with the newest. Today, 15% of the market is big, full of enthusiasm and vision, and they are the most knowledgeable. They do know what they want and what they like. So ask them. Winning them over is essential if you want to reach the 68% of the market. Be guided accordingly. They are key to opening up any high-tech market segment.

I’m reading a book entitled “Crossing the Chasm” by Geoffrey A. Moore (marketing and selling disruptive products to mainstream customers). His premise is that there is a CHASM between the 15% early market and the mainstream 68% majority markets. A CHASM between being first with the greatest to the majorities that are more practical and want assurances that the product becomes an established standard and is supported effectively. Each group represents a unique psychographic profile.

So what does all of this have to do with lighting, you ask. In my debate with Chris Brown, I contend that we are in a transition. A possible CHASM between the traditional / legendary lighting business and the developing intelligent SSL lighting business. I am now of the opinion that we have crossed the CHASM. In the high-tech innovation era, the process is to move smoothly through the Technology Adoption Life Cycle, maintaining the momentum to make it natural for the next group to want to buy in, even the laggards. In the lighting industry, we are moving through the TALC faster than at any time in our history.

Let me conclude this blog by addressing how this will affect distribution……hold on to your ass Chris. When the practical Early Majority and Late Majority participate in greater numbers in the Smart Lighting Industry and they most certainly will, then lighting distribution will play an important role. Manufacturers will continue to innovate on the high-tech product side allowing the majority markets to get more and more comfortable with the impact it will have in their lives. But what about the service side. Who will satisfy the enormous growing need for the service demand that is always present when it comes to electronics? I assert that it will be the channels of distribution. Those established channels of distribution that adapt to the changing environment and revise their business model to SERVICE the new needs of the Smart Lighting customer. From the book: “The final pieces of the strategy come into play……across the chasm: distribution and pricing. Distribution is the vehicle that will carry us on our mission, and pricing is its fuel. These two issues are the only two points where marketing decisions come into direct contact with the new mainstream customer. The number-one corporate objective, when crossing the chasm, is to secure a channel into the mainstream market with which the pragmatist customer will be comfortable.” That my friends is the new electrical / lighting distributor…

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  1. Dave Pfund says:

    Bill…Since lighting distributors typically sell through electrical contractors, how will the lighting distributor sell service to an end user? Will service be bundled in the price of goods or as a separate service contract? And, will the service also be delivered through third party contractors/service organizations? Seems that in the building technology and IT markets, the distributor/installer/service provider is one in the same. Does this suggest that it is the independent EC whose future value proposition is in jeopardy? In the consumer electronics market, consumers really don’t know if they are going to need service until they need it. Some might purchase a short term extended service contract at the time of purchase, but I believe many opt out and reach out for service later, if and when they need it. If the future lighting distributor is to be involved in post-installation service, it will need a consumer face to market and secure the business. Correct? Perhaps I should read “Crossing the Chasm.” 🙂

  2. BillAttardi says:

    Very good comments and questions. Wish I had all the answers but it’s clear to me distribution needs to change it’s business model to compete in the Smart Lighting industry. I think your reference: “technology and IT markets, the distributor/installer/service provider is one in the same.” Isn’t it all about control. We can learn from them. Maybe distributors don’t sell the product but lease or finance it with a monthly charge they pay forever as the service side offers the customer any new high-tech development that will certainly happen. Dave, you know this is very complicated and will evolve as we go forward. Lots of creative unique strategic directions will emerge……..my humble opinion. Needs more discussion. How about writing a blog with your thoughts, Send to me and I will post… thanks for your comments.

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