[Read the entire chapter by chapter review of Crossing the Chasm.]
Pages 75 – 104; Amazon Locations 1078 – 1468.
Moore’s first chapter laid out his Technology Adoption Life Cycle and the second chapter showed its explanatory power. In Chapter 3, he shows how to win using the model. The D-Day invasion is Moore’s metaphor for successful marketing – here he is building off of Sun Tzu’s more ancient counsel from his chapter on Tactical Dispositions, “13… Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated.” Don’t let the skeptic block the sale, be prepared. Moore is helping the reader launch a product that can survive the first three waves of buyer – from the early adopters to the pragmatist, and in so doing, cross the chasm. In Ries’s Lean Startup, we see how this can be done as effectively and with the lowest amount of risk.
“The consequences of being sales-driven during the chasm period are, to put it simply, fatal.” Chapter 3, Location 1160
Your goal in the chasm is to get through the chasm. If you aren’t sufficiently prepared and funded, then the need for sales will distract you from creating a reference-able customer base to get to the other side.
“The key to moving beyond one’s initial target niche is to select strategic target market segments to begin with. That is, target a segment that, by virtue of its other connections, creates an entry point into a larger segment. “ Chapter 3, Location 1237
The value here is in the strategic preparation and commitment. If you’ve framed the market correctly, then focusing on the segment will lead you across the chasm and onto other segments. Market sequence is the big decision in chasm strategy. Focus on the core market, then by virtue of having made good decisions, you can survive.
“Make a total commitment to the niche, and then do your best to meet everyone else’s needs with whatever resources you have left over.” Chapter 3, Location 1290
Focus on the early buyers – do whatever it takes to get them through their adoption risks. If those first accounts don’t purchase and succeed, then they can never become references and success stories for the rest of the market. To survive the chasm you must produce reference-able customers for the rest of the adoption cycle.
“It is not about the money you make from the first niche: It is the sum of that money plus the gains from all subsequent niches.” Chapter 3, Location 1347
Too often companies can become ROI focused and lose focus as they launch new products. ROI can be appropriate – but the “R” (Return!) must include all the future markets that can only be one if this first bowling pin falls.
“Chasm-crossing theory says, “Act locally, then globally.”” Chapter 3, Location 1427
Win the first accounts at all costs. Do not, do not, do not fail.
“The critical attitude to maintain in all four of these challenges is that chasm-crossing represents a unique time in your enterprise’s history.” Chapter 3, Location 1463
If we’re asking our team to Cross the Chasm – the team deserves special rules so they can behave in different ways than the rest of our organization. Moore hits on these needs in his 2015 book Zone to Win (video summary).
Page by Page
“Their efforts conspire to tax the reserves of the fledgling enterprise seeking to pass through to the mainstream. We need to look briefly at these challenges so we can be alert in our defenses against them.”
The Perils of the Chasm
- early market customers are saturated
- Mainstream pragmatists not yet comfortable
- Cash flow
- Customer diversity
- Investor expectations
1092 – 1468
“Under the best-case scenario, you are asking them to rein back their expectations just when it seems most natural to let them fly. There is an underlying feeling that somehow, somewhere, someone has failed.”
“You must get into a mainstream market segment soon, establishing long-term relationships with pragmatist buyers, for only through these can you control your own destiny.”
Fighting Your Way into the Mainstream
“To enter the mainstream market is an act of aggression.”
“18. In war, then, let your great object be victory, not lengthy campaigns.” Loc 142
“No one wants your presence. You are an invader.”
“Cross the chasm by targeting a very specific niche market where you can dominate from the outset, force your competitors out of that market niche, and then use it as a base for broader operations. Concentrate an overwhelmingly superior force on a highly focused target.”
Moore’s military metaphors make reference again to Sun Tzu’s wisdom – focus your resources to create an advantage.
“The more tightly bound it is, the easier it is to create and introduce messages into it, and the faster these messages travel by word of mouth.”
Focus on a market. Focus on a market. Focus, focus, focus.
“Most companies fail to cross the chasm because, confronted with the immensity of opportunity represented by a mainstream market, they lose their focus, chasing every opportunity that presents itself, but finding themselves unable to deliver a salable proposition to any true pragmatist buyer.”
How to Start a Fire – Trying to Start a Fire
“Trying to cross the chasm without taking a niche market approach is like trying to light a fire without kindling.”
“We do not have, nor are we willing to adopt, any discipline that would ever require us to stop pursuing any sale at any time for any reason.”
“We are, in other words, not a market-driven company; we are a sales-driven company.”
“The consequences of being sales-driven during the chasm period are, to put it simply, fatal.”
“The sole goal of the company during this stage of market development must be to secure a beachhead in a mainstream market—that is, to create a pragmatist customer base that is referenceable, people who can, in turn, provide us access to other mainstream prospects.”
“Therefore, whole product commitments must be made not only sparingly but strategically—that is, made with a view toward leveraging them over multiple sales. This can only happen if the sales effort is focused on one or two niche markets. More than that, and you burn out your key resources, falter on the quality of your whole product commitment, and prolong your stay in the chasm. To be truly sales-driven is to invite a permanent stay.”
“Winning over one or two customers in each of 5 or 10 different segments—the consequence of taking a sales-driven approach—will create no word-of-mouth effect.”
“This lack of word of mouth, in turn, makes selling the product that much harder, thereby adding to the cost and the unpredictability of sales.”
Moore covers several examples – tax software, gaming, desktop os- pragmatists want to buy from mkt leaders. Anything other than a market leader is not a reference they will trust.
“So, if we want market leadership early on—and we do, since we know pragmatists tend to buy from market leaders, and our number one marketing goal is to achieve a pragmatist installed base that can be referenced—the only right strategy is to take a “big fish, small pond” approach.”
Segment. Segment. Segment.
“leadership—it is critical that, when crossing the chasm, you focus exclusively on achieving a dominant position in one or two narrowly bounded market segments. If you do not commit fully to this goal, the odds are overwhelmingly against your ever arriving in the mainstream market.”
What about Microsoft?
Evil Kneivel approach
Microsoft – os as a moat.
“The key to moving beyond one’s initial target niche is to select strategic target market segments to begin with. That is, target a segment that, by virtue of its other connections, creates an entry point into a larger segment. “
Macintosh – graphic arts in the Fortune 500.
“All used the Macintosh to exchange a variety of graphic materials, and the result was a complete ecosystem standardized on the “non-standard” platform.”
Clarify, Documentum, Palm Pilot, NEON
“So, because of the dynamics of technology adoption, and not because of any niche properties in the product itself, platforms must take a vertical market approach to crossing the chasm even though it seems unnatural.”
“It was—and indeed still is—a great idea, but it required not only new software and significant systems reengineering but also new workflows and new job descriptions, and pragmatists were leery of jumping on board.”
“The market was exploding, and lack of customer support threatened to become a bottleneck to growth.”
“The segment has specific needs that weren’t prioritized, and these priorities at minimum compete with, and sometimes even directly conflict with, the desires of customers in other markets. What is a company to do in this case?”
“Make a total commitment to the niche, and then do your best to meet everyone else’s needs with whatever resources you have left over.”
“The customer problems here were not quite as complex, but the call volumes were in many cases much higher.”
“In the year after Jeff came on board, it went to $ 8 million, then to $ 25 million, then $ 45 million (and an IPO), and then $ 75 million.”
“Pharmaceutical companies were taking up to one year to get their first application filed—not a year to get it approved, a year to get it submitted!”
“It is normally the departmental function who leads (they have the problem), the executive function who prioritizes (the problem is causing enterprise-wide grief), and the technical function that follows (they have to make the new stuff work while still maintaining all the old stuff).”
“There are two keys to this entire sequence. The first is knocking over the head pin, taking the beachhead, crossing the chasm. The size of the first pin is not the issue, but the economic value of the problem it fixes is.”
“It is not about the money you make from the first niche: It is the sum of that money plus the gains from all subsequent niches.”
“If the executive council cannot see the extended market, if they only see the first niche, they won’t fund. Conversely, if you go the other way, and show them only an aggregated mass market, the end result of the market going horizontal and into hypergrowth, they will fund, but then they will fire you as you fail to generate these spectacular numbers quickly.”
3com palm pilot – stand alone platform crosses the Chasm
Others had failed – sharp wizard, Casio boss. Consumer focused firms. Why did PP win? Psion, Poquet – tiny PCs then HP LZ and Apple Newton.
“Success through subtraction is the key lesson here.”
“It’s a huge challenge to manage.”
“And that—achieving density or critical mass—is the key to crossing the adoption chasm with any platform.”
“This ensures high saturation rapidly, thereby justifying the economics of the new infrastructure.”
“Chasm-crossing theory says, “Act locally, then globally.””
Applications vs Platforms
“Applications are what an end user sees. They can readily gauge the benefits of them.”
“To accelerate the adoption of platforms, then, vendors must clothe them in applications clothing.”
“That is, they must tie them directly to an application in order to gain the end-user sponsorship necessary to secure a beachhead.”
“And since real estate people do not talk to newspaper people, and neither of them cares much to talk to lawyers, you cannot develop word-of-mouth support across them. You must pick one, saturate it, and then move on to the next.”
Pivot between archipelago and platform- examples of failure:
Lotus Notes, McIntosh, silicon graphics (Sgi)
“These are the huge wins in high tech. Just understand, they are also the hardest types of technology to get across the chasm.”
“The critical attitude to maintain in all four of these challenges is that chasm-crossing represents a unique time in your enterprise’s history.”
“Between these two stages is a singular moment of transition, the penetration of the mainstream market, an act of burglary, of breaking and entering, that requires special techniques used at no other time in the Technology Adoption Life Cycle.”
Persuasion language – burglary, D-Day, etc.