Moore’s Crossing the Chasm Ch 08: “Getting Beyond the Chasm”

Pages  213 – 242; Amazon Kindle Locations 2939 – 3300

Life guidance and business books can use many structures for their final chapter:

  • Repetition of the book structure, with a grand lesson.
  • Re-commitment of the principals of the book, with a charge to do more.
  • Taking the lessons of the book one step further – almost an abstraction of the concepts and anticipation of their impact.

Moore uses the third option to the fullest – he takes each concept a little bit farther, while also doubling pack to reiterate the importance of each concept.  His persuasive concept is simpler than what Goldratt brought us with The Goal, which in some ways makes it a more complex topic to cover in a book.  If it was simpler, he could use the chapter-lesson-repeat format that we find with Sun Tzu and Carnegie.

Best Quote(s)

“All organizations are market-driven, whether they acknowledge it or not.” Chapter 8, Location 2932

Every business has a market associated with their revenue stream.

“That is, they promise a level of performance or reward that, if delivered, would simply destroy the enterprise.” Chapter 8, Location 2953

Before crossing the chasm, when dealing with early adopter customers, it can feel easy to create obligations that are later too costly to support.  The obligations live on in the minds of the pioneer account managers that made them, even if the liabilities they create will bankrupt the business.

“The purpose of the post chasm enterprise is to make money.” Chapter 8, Location 2978

Financial returns drive the business.  Avoid vanity metrics.  Avoid unstated goals that don’t lead to money.

“Hockey stick curves are created by spreadsheets, a software tool that many have argued has driven some of the worst of the investment decisions of the past two decades.” Chapter 8, Location 3004

Industrial products grow with discrete buyers – and each qualification with a new buyer is a stair step that creates the option for incremental growth.  ‘Hockey Sticks’ are possible with high transmission rates and huge pools of buyers.

“How long will it take before I can achieve a reasonably predictable ROI from an acceptably large mainstream market?” Chapter 8, Location 3029

Leaders have to plan for how much runway they will have to launch their products.

“Until profitability is achieved, nothing is secure, and your destiny is not under your own control. This argues for early adoption.”  Chapter 8, Location 3055

As was said in the earlier chapter – it is crucial to control your fate as a new organization.  Profitability is the only guarantee.

“The key to leaving the chasm behind, however, is to stop custom developments and institutionalize the whole product, to build to a set of standards that the marketplace as a whole can support.”  Chapter 8, Location 3117

Unchecked growth metastasizes like cancer – there is no organization, there is no clear goal, and the product never ships.  It must be checked – this is one of Ries’s major points.

“And so it is that a pioneer salesperson left unchecked can be highly disruptive and demoralizing to a sales organization looking to leave the chasm behind.” Chapter 8, Location 3117

The pioneer will struggle to see their commitments dropped.  Routinized sales, driven by process and methods are a foreign concept to the types of account managers that deliver early adopters and help them make the crucial first purchase.  The goal is for the organization to cross the chasm – not necessarily every member of the original team.

Leadership’s obligations are to the future team members and to ensuring there is a future team.

“Like authors, they are compelled to conduct their craft regardless of whether anyone will pay for it. As such, their negotiating position is fundamentally weak, and their normal compensation reflects it.” Chapter 8, Location 3238

This is a great aside on the siren song lure of writing and product innovation.

“Whole product R&D is driven not by the laboratory but by the marketplace.” Chapter 8, Location 3253

Innovating is as much about the Whole Product as it is about fundamental performance.  Deliver on time.  Improve the service-scape.  Only when those conditions are met can a vendor earn the trust to put really disruptive innovation in to a customers’ hands.

“It prefers to assemble its creations from existing technologies and products rather than to invent new ones from scratch.” Chapter 8, Location 3253

Innovate from components – not from science projects.  If you can’t identify all the predecessor innovations that lead to your ‘new’ concept, then the cost of coordination could be too high and the effort will fail.

“We began by isolating a fundamental flaw in the prevailing high-tech marketing model—the notion that rapid mainstream market growth could follow continuously on the heels of early market success.” Chapter 8, Location 3285\

Great closing.

Page by Page

2939

“All organizations are market-driven, whether they acknowledge it or not.” Chapter 8, Location 2932

2948

“The fundamental lesson of this chapter is a simple one: The postchasm enterprise is bound by the commitments made by the prechasm enterprise. These prechasm commitments, made in haste during the flurry of just trying to get a foothold in an early market, are all too frequently simply unmaintainable in the new situation.”

2953

“That is, they promise a level of performance or reward that, if delivered, would simply destroy the enterprise.” Chapter 8, Location 2953

Nasty…

“The first and best solution to this class of problems is to avoid them altogether—that is, to avoid making the wrong kind of commitments during the prechasm period.”

2958

“I loathed that advice.”

2968

“It is not a time to cease innovation or to sacrifice creativity. But there is a call to redirect that energy toward the concerns of a pragmatist’s value system instead of a visionary’s.”

2978

Financial Decisions: Breaking the Hockey Stick

“The purpose of the postchasm enterprise is to make money.” Chapter 8, Location 2978

2998

“And so entrepreneurs raise capital using “hockey stick” graphs of revenue attainment.”

3004

“Hockey stick curves are created by spreadsheets, a software tool that many have argued has driven some of the worst of the investment decisions of the past two decades.” Chapter 8, Location 3004

3008

“Once that sum is identified, then market analyst reports are scoured for some appropriate citations, and any other source of evidence or credibility is enlisted, to justify what is a fundamentally arbitrary and unjustifiable projection of revenue growth.”

“But in fact, the revenue development that actually occurs looks more like a staircase than a hockey stick.”

3019

“And when the hockey stick scenario does not come true, and the mortgage comes due, the founder’s equity gets radically diluted, things fall apart, and the company dies in the chasm.”

3029

The Role of the Venture Financing Community

“How long will it take before I can achieve a reasonably predictable ROI from an acceptably large mainstream market?” Chapter 8, Location 3029

3040

“Supposing this plan has some credibility, a raft of other questions immediately follow. How big will this market be?”

“Market boundaries occur, in other words, at the point of failure of either the value proposition or the whole product.”

3050

“Demand to see not only broad, long-term market characterizations but also specific target customers for the D-Day attack.”

3055

The Role of the Venture Financing Community

“Until profitability is achieved, nothing is secure, and your destiny is not under your own control. This argues for early adoption.”  Chapter 8, Location 3055

3060

“The great benefit of adopting the discipline of profitability at the outset is that you do not have to learn it later on.”

3071

Why ever raise money?

“First, the price of entry is too great to fund with sweat equity or consulting contracts.”

3076

“The other reason to forego initial profitability is when the market is expected to develop so rapidly that you cannot afford to mark time as a bit player.”

3081

Reason 3…

“It is typically more capital intensive to cross the chasm than it is to build the early market.”

3086

“All this is premature until you have established some early market credibility on your own.”

3096

Organizational Decisions: From Pioneers to Settlers

“Their brilliance fuels the early market, and without them, there would be no such thing as high tech. Nonetheless, once you have crossed the chasm, these people can become a potential liability.”

3117

“The key to leaving the chasm behind, however, is to stop custom developments and institutionalize the whole product, to build to a set of standards that the marketplace as a whole can support.”  Chapter 8, Location 3117

 

“And so it is that a pioneer salesperson left unchecked can be highly disruptive and demoralizing to a sales organization looking to leave the chasm behind.” Chapter 8, Location 3117

3127

“Pioneers do not want to settle down.”

3137

Two New Job Descriptions

“The first of these might be called the target market segment manager, and the second, the whole product manager.”

3143

“The target market segment manager has one goal in his or her short job life—to transform a visionary customer relationship into a potential beachhead for entry into the mainstream vertical market that particular customer participates in.”

  • Expedite adoption by the first buyer.
  • Establish a successor act manager
  • Leverage the relationship to roll out other products that meet broader industry needs

3167

The Whole Product Manager

3177

“Now, the whole product manager is a product-marketing-manager-to-be. The reason she is not one today is that the job itself is premature.”

“What is there today, on the other hand, is a list of bug reports and product-enhancement requests that is growing with disconcerting speed. If this list is not managed properly, it will bring the entire development organization to its knees.”

A great corollary to this rule: If there is no growing list – then there is no crossing of the chasm.

3198

Coping with Compensation

3208

“The key is to discriminate between account penetration and account development.”

3218

“Compensation for the pioneer salesperson should have the opposite characteristics. It should provide the bulk of its rewards immediately, in recognition of a single key achievement—winning the account.”

3228

Compensating Developers

“These divide into two camps—true company founders and very early employees.”

3233

Equity as compensation, “This is a compromise, to say the least, as equity should be reserved for people who cross the chasm and stay—not the pioneer’s ideal role.”

3238

“Like authors, they are compelled to conduct their craft regardless of whether anyone will pay for it. As such, their negotiating position is fundamentally weak, and their normal compensation reflects it.” Chapter 8, Location 3238

3243

R&D decisions: From Products to Whole Products

3248

“And once this scenario begins, R& D doesn’t get to focus on the generic product anymore. It must become whole product R& D.”

3253

“Whole product R&D is driven not by the laboratory but by the marketplace.” Chapter 8, Location 3253

“It prefers to assemble its creations from existing technologies and products rather than to invent new ones from scratch.” Chapter 8, Location 3253

3259

“Instead, the top guns rush out to create more discontinuous innovations, flooding the market with far more technology than it can possibly absorb, and complaining all the while about how product life cycles are becoming shorter and shorter. They play the game, in other words, almost entirely to the left of the chasm,..”

3264

“Product life cycles truly are getting shorter—but whole product life cycles are as long as they ever were.”

An Emerging Discipline

  • Focus groups
  • Packaging studies

3285

Leaving this Book Behind

“We began by isolating a fundamental flaw in the prevailing high-tech marketing model—the notion that rapid mainstream market growth could follow continuously on the heels of early market success.” Chapter 8, Location 3285

3290

“The tactics for implementing that invasion were then set out in four clusters.”

3296

“Finally, it should come as no surprise that there are no warranties, expressed or implied, on any of the methods described in this book.”

3300

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