(notes on) Crossing The Chasm by Geoffrey Moore
NB. These notes contribute towards my diyMBA, my attempt to learn lots without a formal MBA programme. Check out my full reading list, and why I’m doing it DIY.
In summary, this is a classic that despite being 30 years old remains a foundational framework that underpins more recent frameworks. An easy read without too much padding. But the outdated war metaphors — “invasions” and “beachheads” — so loved by (male) authors for so long quickly get tired.
Potential users of a new product can be grouped according to similar characteristics and needs. Tech products often begin by appealing to an early market, with companies assuming the same growth strategies will then enable them to reach the mainstream market.
But its not that easy. There is a chasm between two specific groups — Early Adopters and Early Majority — down which many companies fall and fail. Why? Because the needs and beliefs of the Early Adopters are radically different to the Early Majority.
To successfully cross the chasm, companies must identify a niche within the mainstream and build a complete solution for that niche, with bespoke positioning, distributer incentives, and strong marketing message.
To begin, what is a market? It’s a set of actual or potential customers, for a given set of products or services, who have a common need and provide a reference for each other when making a buying decision.
Tech products typically travel through markets from left to right in the below chart. Approval from one group will help you reach the next, but they won’t adopt the product if it is presented in exactly the same way previously. They’re different customers with different needs and desires.
Let’s look at each in more detail…
Innovators, the Tech Enthusiasts: love tech for its own sake, pursue new technology products aggressively and actively search for new features. They’re like kindling — they start the fire — so win them early by letting them in on a secret and marketing hard.
Early adopters, the Visionaries: want a breakthrough, not incremental improvement. They buy into new product concepts very early in the life cycle but unlike innovators, they are not technologists. Instead, they match new tech with strategic opportunities and have the temperament and charisma to spread to larger groups. They’re easy to sell to, but hard to please.
Early majority, the Pragmatists: 1/3 of whole market. Are driven by a sense of practicality. Risk is negative, its just a chance to waste time and money. They believe many new products pass as fads, so they wait and see what others do before they jump in. They spend time communicating narrowly within only their industry, so it can be difficult to reach them. They want a whole product, eg Microsoft not Google+Slack+Zoom+AWS. They’re hard to win over, but very loyal once won.
Late majority, the Conservatives: 1/3 of whole market. Prefer tradition, and are not comfortable buying the new thing. They wait for something that has become an established standard before trialling. Ultimately, they have a desire to stay relevant to the rest of the world so do eventually adopt. When they do, they expect pre-assembled packages at low discounts.
Laggards, the Skeptics, are not interested in new technology. Don’t waste time trying to sell to them, but do market to them to limit their negative influence on other groups.
Cracks in the Curve
It may look like a linear curve, but there are gaps between each psychographic group.
The largest and most dangerous gap — aarrrgghhh the chasm! — is between Early Adopters and Early Majority.
The early adopter is buying a change event, to be the first to implement change. The early majority wants to improve incrementally; an evolution, not revolution.
Generally, a positive reference from a prior group helps build trust in the next group. But the early majority do not want to disrupt their organisations like the early adopters do, so the only suitable reference is another member of the early majority.
Crossing The Chasm
Once you’ve conquered the early adopter, its time to cross the chasm…
Step 1: Define you niche
- Begin by choosing your niche within the Early Majority
- Small enough to win, large enough to matter
- Follow intuition and data, not just data. You may not have full data.
- Do not split your attention, instead offer great value to one specific Early Majority group.
- There must be competition within this niche (else it isn’t a true market).
Step 2: Win your niche
- Concentrate overwhelming force on one niche market
- Choosing the wrong niche isn’t a problem, but you must win the one you choose.
- Position yourself as the stable, correct choice in an understood category, alongside a market alternative and a product alternative.
eg “For film editors who are unhappy with traditional editing (market alternative), our workstation is a digital editor which enables you to modify images any way you choose. Unlike workstations from SUN (product alternative), we provide all the tools for film-editing.”
- Price in line with the market leader. Give a significant reward margin to the best distribution channel (someone pragmatists trust) to incentivise them to sell.
- Leverage the point of disruption. Identify a problem that gives your target market a truly compelling reason to buy.
- Surround your disruptive core product with a whole product that solves the customer’s problem from end to end. Partnerships will help you address needs that fall outside your core competencies.
Step 3: Define neighbouring niche, and repeat.
- Once you have a credible, strong position in one niche, expand to a neighbouring niche.
- Broaden your sales channels with more distribution and bundles.
- Change messaging and positioning as appropriate.
On The Other Side…
You crossed the chasm, great! Time to chill right? No.
Your company is now optimised for a very specific set of challenges. Your goals, people, culture, and operations are no longer appropriate. The first set of challenges have been overcome, so the company must now evolve to thrive as an established mainstream proposition.
Focus on profitability. Remove distributer incentives you’ve previously offered, and quickly broaden sales channels to make up for any associated loss in reach.
Change personnel. Leaders focussed on early market growth will often not be interested in “business as usual”. Now you need “Settlers”, people who diffuse authority and build standardised procedures.
NOW it’s time to chill, right? Definitely. Hang on, who’s that plucky upstart loved by our Early Adopters?