Diffusion of innovation used to be a slow phenomenon on the positive side (seen from the organization's point of view- hey the market and product awareness is growing) till you had the Internet and social media. On the flip side of diffusion of innovation is the phenomena of diffusion of discontent which probably explains why investors lost such a lot of confidence on the Netflix stock. About 20% share value loss on Thursday vs. only 4 % customer loss due to price protests.
Diffusion of discontent has become pretty disproportionate today. One unhappy customer reports a bad dinner at a restaurant on Yelp and suddenly some more people who were peeved with your restaurant service wake up and start "contributing" their horror stories. If you are the restaurant owner you find yourself suddenly facing desolate tables. Same thing with product recalls, and price protests as in the case of an otherwise great brand Netflix ( see an earlier Netflix post here).
So what does an organization do to deal with diffusion of discontent?
- Treat customer discontent very very seriously. Because it can spread real fast to investors and the general public who may or may not be your customers.
- Apologise to customers fast and fix what you need to fix. How fast is fast? In the age of social media it's probably within hours or at least before the stock exchange opens. Service recovery must be super fast.
Now Netflix has apologized and is talking about splitting the digital distribution and DVD business distribution. The overall damage to the Netflix brand and stock may take a while to fix – so powerful is this diffusion of discontent.