This book sat on my bookshelf for five years before I finally read it. I should have read it sooner! It brilliantly explains the difficulties faced when you want to make the leap from early adoption of your product/service into a mainstream market.
What follows is a brief summary of its content. As always, these notes barely touch on the content of the book and are no substitute for going and reading the book itself.
Book note
In 1943, Bryce Ryan and Neil C. Cross from Iowa State College plotted farmers adoption of a new hybrid corn seed. The bell curve they observed has since become known as the classic adoption curve for new products and services. It identifies 5 distinct groups of adopters:
- Innovators are the first to try a new idea
- If a product gets the seal of approval from innovators, early adopters will pick it up.
- They are followed by the early majority, until half the market is taken.
- Then the number of new adopters begins to decrease, as the late majority are convinced to join in.
- The curve ends with the laggards, who join only when they are in a clear minority.
Geoffrey Moore applies this adoption curve to the high-tech market and takes it a stage further, identifying that the transition across each phase of adoption is not as smooth as the curve suggests because there are key differences between each group. He identifies three cracks:
- The transition from innovators to early adopters will only happen if the idea/technology can be translated into some form of strategic/competitive advantage
- The transition from early to late majority can get stuck if too much effort is required to use the product/service (early majority will put in effort to learn, late majority expect it to just work)
- Ignoring feedback from laggards (as often happens) can lead to missed opportunities for future growth (there’s a big blue ocean out there somewhere…)
But the big issue is the chasm between early adopters and the early majority. It is the transition from the early market to mainstream market, where the basis for sale fundamentally changes.
The first challenge with the chasm is that the customer list for early adopters and early majority will look similar, but their reasons for purchase are radically different. Early adopters are visionaries looking for competitive advantage – willing to take risks and be the first to try out new ideas. The early majority are pragmatists, looking for productivity improvement with minimal disruption and limited risk – case studies, support and alternatives are an essential part of the purchasing decision. Early adopters are useless as references for pragmatists, and pragmatists won’t buy without references. Hence the chasm.
The second challenge is that the jump from early adopters to early majority also represents a market shift – from the early market into a mainstream market. Entering a mainstream market means invading someone’s territory, eating up the budget for their product/services – it is an act of aggression and won’t be welcome. Success rarely comes without a fight.
Given these two challenges, Moore outlines his recommended approach, comparing it to the D-Day invasion during World War II. (Well, if you’re going to pick a fight to compare with…)
- Secure a beachhead – target a very specific niche within the market that you can dominate from the outset
- Concentrate an over-abundance of support to force/keep competitors out of that niche
- Use success in the niche as a reference point to establish a broader base
To move from an early market into the mainstream requires you to view your product very differently. Visionaries will often prefer to deal with the generic product, building their own unique system around it to maximise the benefits it can provide. Pragmatic customers expect the product to come with a complete support system around it, they don’t want to build from the ground up. You will need to fill the gaps with partners and allies.
But the most interesting observation that Moore provides is about competition. To move into a mainstream market requires competition. At first, this sounds all wrong – surely success is more likely when there is no competition? It’s back to understanding the market dynamics – for pragmatists, competition is a fundamental condition to purchase. They will wait until there are alternatives to choose from. It helps keep costs under control and increases the likelihood of better support for the product/services, particularly if you buy from the market leader. (This doesn’t change the fact that most companies aim to eventually dominate the market by eliminating the competition – monopolies still rule on that front – but you need competition to get started.) Choosing your target competitor can be challenging – you don’t want to alert them to your niche, or the invasion will be over before it has begun. But try claiming there is no competition, and you are unlikely to win over the pragmatists – prepare your parachute because you are heading into the chasm.
This can make pragmatists sound like a bit of a pain in the butt, surely life is more fun when working with the visionaries? Well not always – visionaries have challenging traits too. They will want to control how your product/service develops, to maximise their potential gains. But more importantly, they will only be in it for the short term. If the project succeeds, promotion will often follow (and you aren’t guaranteed a ride on their coat tails). If it looks remotely like failing, the project will be dropped in favour of the next big idea. Pragmatists are in it for the long haul – they stick around and have to live with the results. That’s why they will be more prudent about what exactly they are purchasing and why. But, if you prove your worth, they will likely be loyal and help you move into the late majority market. If making money is your priority, the pragmatists hold the most valuable market currency. If proving there is demand for your idea is what rocks your boat, you’ll do well with visionaries but don’t expect to get rich from being right.
References
- ‘Crossing the Chasm’ – book review on Amazon
- ‘Blue Ocean Strategy‘ – book review on Amazon
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