Chasm 01: High-Tech Marketing Illusion – 293 – 543
Moore makes his points about marketing technology product over hundreds of pages organized across just 8 chapters. The chapters are long.
Carnegie’s points were simple, but made with repetitive poetic effect. Goldratt uses fiction and applies the same toolset countless times to demonstrate the effectiveness of his creation – the theory of constraints. Moore’s chapter structure and writing style are very different. Moore has a clear, new concept to show the world – the technology adoption life cycle. This model is the most important part of the first chapter. He walks the reader through it in detail, using logic and examples to show how it predicts the fate of new product introductions.
Moore combines the life cycle model (his own invention), with the whole product concept (introduced in Chapter 2, but a focus of Chapter __, and which he credits to others), and then uses Sun Tzu’s prescriptive style to describe how this battle must be fought, and how it fits into a broader war. The prescriptive urgency and focus of Sun Tzu serves as Moore’s template.
“… the High-Tech Marketing Model. That model says that the way to develop a high-tech market is to work the curve left to right, focusing first on the innovators, growing that market, then moving on to the early adopters, growing that market, and so on, to the early majority, late majority, and even to the laggards.”
Page by Page, Screen by Screen, Swipe by Swipe
“As the revised edition of this book is being written, it is 1998, and for this time we have seen a commercial release of the electric car. General Motors makes one, and Ford and Chrysler are sure to follow.”
“Now the question is: When are you going to buy one?”
The Technology Adoption Life Cycle
“Your answer to the preceding question will tell a lot about how you relate to the Technology Adoption Life Cycle, a model for understanding the acceptance of new products.”
Moore isn’t talking about revenge or tech – he’s talking about individual consumer behavior. It is aggregation of that behavior that creates markets.
“It turns out our attitude toward technology adoption becomes significant—at least in a marketing sense—any time we are introduced to products that require us to change our current mode of behavior or to modify other products and services we rely on. In academic terms, such change-sensitive products are called discontinuous innovations. The contrasting term, continuous innovations, refers to the normal upgrading of products that does not require us to change behavior.”
Continuous vs discontinuous innovation
“Between continuous and discontinuous lies a spectrum of demands for change.”
“Whereas other industries introduce discontinuous innovations only occasionally and with much trepidation, high-tech enterprises do so routinely and as confidently as a born-again Christian holding four aces. From their inception, therefore, high-tech industries needed a marketing model that coped effectively with this type of product introduction. Thus the Technology Adoption Life Cycle became central to the entire sector’s approach to marketing.”
“The model describes the market penetration of any new technology product in terms of a progression in the types of consumers it attracts throughout its useful life:”
Bell curve of adoption.
“They know that many of these newfangled inventions end up as passing fads, so they are content to wait and see how other people are making out before they buy in themselves.”
“Whereas people in the early majority are comfortable with their ability to handle a technology product, should they finally decide to purchase it, members of the late majority are not.”
“To recap the logic of the Technology Adoption Life Cycle, its underlying thesis is that technology is absorbed into any given community in stages corresponding to the psychological and social profiles of various segments within that community. This process can be thought of as a continuum with definable stages, each associated with a definable group, and each group making up a predictable portion of the whole.”
“…very foundation of the High-Tech Marketing Model. That model says that the way to develop a high-tech market is to work the curve left to right, focusing first on the innovators, growing that market, then moving on to the early adopters, growing that market, and so on, to the early majority, late majority, and even to the laggards.”
“It is important to maintain momentum in order to create a bandwagon effect that makes it natural for the next group to want to buy in.”
“If momentum is lost, then we can be overtaken by a competitor, thereby losing the advantages exclusive to a technology leadership position—specifically, the profit-margin advantage during the middle to late stages, which is the primary source from which high-tech fortunes are made.”
“This, in essence, is the High-Tech Marketing Model—a vision of a smooth unfolding through all the stages of the Technology Adoption Life Cycle.”
Testimonials – 380
“It should come as no surprise that the history of these flagship products conforms to the High-Tech Marketing Model.”
Illusion and Disillusion: Cracks in the Bell Curve
“Each of these gaps represents an opportunity for marketing to lose momentum, to miss the transition to the next segment, thereby never to gain the promised land of profit-margin leadership in the middle of the bell curve.”
“At present, neural networking software falls into this category.”
“As we shall see in the next chapter, the key to winning over this segment is to show that the new technology enables some strategic leap forward, something never before possible, which has an intrinsic value and appeal to the nontechnologist.”
“Simply put, the early majority is willing and able to become technologically competent, where necessary; the late majority, much less so.”
“What the early adopter is buying, as we shall see in greater detail in Chapter 2, is some kind of change agent. By being the first to implement this change in their industry, the early adopters expect to get a jump on the competition, whether from lower product costs, faster time to market, more complete customer service, or some other comparable business advantage.”
“By contrast, the early majority want to buy a productivity improvement for existing operations. They are looking to minimize the discontinuity with the old ways. They want evolution, not revolution. They want technology to enhance, not overthrow, the established ways of doing business. And above all, they do not want to debug somebody else’s product. By the time they adopt it, they want it to work properly and to integrate appropriately with their existing technology base.”
“Because of these incompatibilities, early adopters do not make good references for the early majority.”
“So what we have here is a catch-22. The only suitable reference for an early majority customer, it turns out, is another member of the early majority, but no upstanding member of the early majority will buy without first having consulted with several suitable references.”
“In sum, when promoters of high-tech products try to make the transition from a market base made up of visionary early adopters to penetrate the next adoption segment, the pragmatist early majority, they are effectively operating without a reference base and without a support base within a market that is highly reference oriented and highly support oriented.”
A High-Tech Parable
“….It’s time to bring in “real management.””
“Real management doesn’t do any better.”
This parable is a highlight of the book for anyone who has worked in tech.
“Thus, at a time of greatest peril, when the company was just entering the chasm, its leaders held high expectations rather than modest ones, and spent heavily in expansion projects rather than husbanding resources.”