Sunday, January 14, 2007

BOOK REVIEW: Crossing the chasm

Author: Geoffrey A Moore

Price: 17.95 USD

ISBN: 0-06-051712-3

This book is one of the all time classics in the high tech product marketing and Innovation. Its been in my 'reading list' for years together and one of my colleagues literally forced me to read this book in order to have interesting 'coffee-table' discussions. As a matter of fact we had multiple discussions and I got ample amount of insights into technology product marketing. This book provides a basic frame-work, where any technology and its growth can be fitted in.

To start with, what does it take to build great technology product and how to measure the success of any technology? The author introduces two key terms 'fad' and 'trend' to understand the consumer behavior, which is very key in innovating and marketing any technology product. The former (fad) is seen only among the small segment of people who are technology enthusiasts or special interest groups. These are the people who hook themselves to the latest gadget and start admiring its technology. They try out all the features and options given in the product. The later(trend) is when any particular product or technology is widely accepted by large pool of customers and it creates sustainable business around it. The success of any high tech product venture depends on how quickly and successfully it is able to change the 'fad' to a 'trend' and sustain it. In order to achieve this transformation, one should understand how the new technology is adopted by the customers. In order to do that, the author introduces the terminology 'Technology adaptation life cycle'. This is all about understanding how the technology would be adapted by various types of customers. This categorization is based on the psychological nature of various customers.

Before getting into the categorization, the author classifies the high tech innovation into continuous and discontinuous innovation. The continuous are the ones which bring incremental changes to the existing product or service. Whereas the discontinuous innovations brings in big leap changes, which totally change the way we do things. For example the Google's gmail is a continuous innovation, which brought excellent new features like unlimited storage, excellent user interface, labeling the email etc. Whereas hotmail is a discontinuous innovation, by bringing in mail access to via the Internet. The challenge in high tech marketing brings in huge amount as marketing these discontinuous innovations require change in the customer behavior. So the main objective of the marketing is to bring in a 'compelling reason' to buy the product. In order to bring in that compelling reason it is important to understand the various customers.

To start with, the 'technology enthusiasts' are the first set of folks who deal with any new technology or product who create the 'fad'. As I said in the beginning of this blog, these people are 'geeks' who always shop for the latest equipment or software and try it out. They build the product with the technical expertise and the are only interested in 'how' the new technology works. But these enthusiasts contribute only to very thin portion of the total customer base. Followed by them are the 'visionaries' who foresee the the advantage of the product by bringing in huge order of improvement. They are good at the 'productizing' a technology idea by intuitively predicting the future. For any entrepreneurial venture these two are generally achieved pretty easily as they have got visibility up to this point. But the real challenge is to move to the next phase by selling the product to 'pragmatists' who belong to the major portion of the customer base. They are also called as 'early majorities' and they are pretty skeptical in adapting to the new product as they are low-risk takers. Majority of the technology firms fail in this phase because they fail to convince the pragmatists. When the organization in transitioning between the visionaries and pragmatists it is in the 'chasm' phase. Crossing the chasm successfully determine the success of the organization and the focus of this book. Followed by the pragmatists are 'late majority' conservatives who are the volume players. They enter in when the market is matured but take advantage of their existing vast customer base. Followed by them are the 'laggards' who are very conservatives. All these types are shown in the diagram below.

Now let us come to crossing the chasm. How can the firm convince the 'pragmatists' and make them adapt to the new product? This is similar to capturing a new land with the help of the army. In order to do that the niche market (or the beachhead) needs to be captured. This starts with addressing the pain points of the niche market customers. Creating a competition and showing a value proposition is the key for making the pragmatists to buy. This gives them the signal that the product is matured. Now what about winning the competition? This is where the positioning of the product comes into picture. The positioning needs to be done depending on what phase of the technology adaptation cycle the product is in and the author suggests the following approach:

  1. Technology-enthusiasts: Name-it-frame-it
  2. Visionaries: Who-for-what-for
  3. Pragmatists: Competition and differentiation
  4. Conservatives: Brand and trust

After the positioning the product properly, distribution and pricing comes into picture. In this phase we can say the product has successfully crossed the chasm. After that the organization moves into altogether a different phase. In this time the financial and people aspects needs are totally different and the author gives some more details in these areas. In the end the author describes about product management and product marketing management roles which emerges after crossing the chasm. The author has given multiple examples while explaining the concept. Unfortunately these examples belong to the 1990s time-frame and I found pretty hard to co-relate with today's world.

More than anything, this book has given a 'structured framework' for individuals to think about high-tech innovation and product marketing. Working in the 'engineering' world we tend to believe coding and bug fixing are the only part of the product. In reality they are just the tip of the iceberg and there is much more things happen after the engineering releases the product. As a matter of fact no organization fails because of its technical competence as most of them become victims of the 'chasm' as they fail to market to product by showing a 'compelling' reason to buy.

Overall this book is one of the all time classics, which is a must read for technology professionals. After reading this book I am able to think why my previous organization (a technology startup) failed. I will write a separate blog about my 'chasm' experiences.

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