Innovation Is 90% Psychology and 10% Technology
When people think about innovation, the default assumption is that it’s all about technology, AI, blockchain, robotics, or the latest gadget. But here’s the twist: technology accounts for only about 10% of innovation. The other 90% comes down to psychology.
Innovation isn’t just about inventing something new. It’s about how people perceive, adopt, and create meaning around what already exists. The biggest breakthroughs don’t just happen in labs, they happen in our minds.
Why Psychology Beats Technology in Innovation
Technology is incremental: Every new piece of tech builds on what already exists, bound by the laws of science, physics, and code. It’s plug-and-play, and while useful, it has natural limits.
Psychology is infinite: Human imagination knows no boundaries. When we tap into emotions, perceptions, and behaviors, we unlock possibilities far beyond the raw capabilities of technology.
This is why true innovation comes from reframing experiences and creating value through psychology, not just building new tools.
Subscription Models: Innovation in Commitment
Peloton is the perfect example of how innovation isn’t always about the product, it’s about the business model. Exercise bikes have been around forever, but Peloton reframed them into a subscription experience.
Instead of just selling hardware, they tapped into psychology:
Habit formation - daily classes keep users engaged and coming back.
Social proof - leaderboards and community create accountability.
Perceived value - customers feel they’re investing in their health, not just equipment.
This shift turned a one-time purchase into a recurring revenue stream. The lesson? Innovation doesn’t always come from reinventing the product, but from rethinking how services are marketed, monetized, and experienced.
Pricing Is Psychological, Not Just Economic
Take Starbucks. Coffee is cheap to produce, yet people pay a premium every single day. Why? Because of branding, atmosphere, and social signaling. The value isn’t in the beans, it’s in the story and the experience wrapped around the cup.
Digital Value Is Psychological
NFTs prove that value can be built entirely on collective belief and social consensus. With no physical utility, their worth comes from psychology, showing how innovation today is often shaped by perception and culture.
Technology Adoption Depends on Psychology
Webcams were built into laptops for decades, but hardly anyone used them. Then came the pandemic, and suddenly, they became essential. The technology was always there, but a global psychological shift unlocked its true value.
Final Thoughts
If you want to innovate, don’t just ask: What can this technology do? Instead, ask:
How can I shift perceptions?
How can I influence behavior?
How can I tell a new story around an existing product?
Because the real frontier of innovation isn’t in silicon chips or lines of code, it’s in the human mind.
Innovation is 90% psychology and 10% technology. Master psychology, and you’ll master innovation.
Frequently Asked Questions
1 - Why is psychology important in innovation?
Psychology helps us understand people, their needs, habits, and motivations. Since innovation succeeds only when people adopt it, understanding human behavior is key to making new ideas stick.
2 - How is innovation different from invention?
Invention is about creating something new, like a product or device. Innovation is broader, it’s about applying ideas in a way that changes how people live, work, or think, often by improving or reimagining existing things.
3 - Why do some innovations fail?
Innovations often fail when people aren’t ready to accept them. Lack of trust, high cost, or no clear benefit can stop adoption. Success comes when technology matches human needs and psychology.
4 - How does culture affect innovation?
Culture shapes how people view new ideas. What works in one country may fail in another. Social norms, traditions, and beliefs play a big role in how fast innovations are accepted.
5 - What is the future of innovation?
The future of innovation lies in blending technology with psychology. Tools like AI will grow, but success will depend on how well they fit human needs, create meaning, and build emotional connections.
About the Author:
Shawn Kanungo is a globally recognized disruption strategist and keynote speaker who helps organizations adapt to change and leverage disruptive thinking. Named one of the "Best New Speakers" by the National Speakers Bureau, Shawn has spoken at some of the world's most innovative organizations, including IBM, Walmart, and 3M. His expertise in digital disruption strategies helps leaders navigate transformation and build resilience in an increasingly uncertain business environment.