Unpacking the 5 Core Attributes of Innovation Diffusion Theory: Complexity

In this series, we have explored Everett Rogers’ theories about the diffusion of innovation as it relates to the adoption of new technologies in today’s financial services (“FS”) landscape, which includes banking, insurance, investment, and capital markets. In previous articles, we have looked at Embedded Finance, Identity Proofing, and the Metaverse - using only two of Everett’s five core attributes that impact adoption of any new technology innovation - Relative Advantage and Compatibility. In this article, we explore the third attribute: Complexity.

When considering how easily a new technology/ idea will be adopted, it’s essential to ask: 

“Is this new idea/ technology perceived as easy or difficult to understand - and use?”

This is the core notion of the concept of Complexity as it relates to Everett’s work. It infers that innovations or ideas which are highly complex and challenging to use take longer to adopt in any given environment - and that when an idea is easy to use/ understand, it is adopted faster. 

The rule underpins the modern notion of “frictionless user experience,” which is key in creating user journeys that have a higher probability of a user reaching the intended end goal. Amazon’s “1 Click Checkout” embodied this concept and gave the technology giant an incredible advantage in an increasingly competitive e-commerce landscape.

As we can see, the word “perceived” again plays an important role - and overlaps with the behavioral characteristics of the previous two concepts in this article series. For an innovation to be “perceived” as easy to use and understand would be vastly swayed by how its uses are communicated (as covered in the article on Relative Advantage) and what has come before (as covered in the article on Compatibility).

Taking a more recent digital product example from the e-commerce domain (and the Ulysses Partners spotlighted trend Embedded Finance),  “Buy Now, Pay Later” or BNPL is an interesting application of this attribute in action. Consumers can easily finance a purchase at the point of sale ( or sometimes before) with little to no interest in a matter of a few clicks. With very low “perceived complexity,” BNPL has had an increasingly high uptake. The offering has been maturing in complex ways, making the reality of credit implications complicated for the end consumer - however, as it remains easy to understand (and use), this feature’s rate of adoption remains rigorous.

As we’ve been progressing in this series, it’s becoming clearer that teasing out the exact source of adoption for any technology or idea is not trackable to a single factor but perhaps a reasonable combination of them all. Perceived complexity, for instance, can be aided by the benefits being communicated in an easy-to-understand way (Relative Advantage) or by how easy the technology is to understand when compared to other available options (Compatibility).

In the penultimate article of this series, we explore the concept of “trialability” - a concept most “freemium” business models thrive on. Follow Ulysses Partners on LinkedIn for the announcement of the next release.