geoff moore -crossing the chasm for productx.org
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Crossing the Chasm
What’s New? What’s Not?
Israeli Product Excellence Association
Podcast, May 12, 2014
Time
Reven
ue G
row
th
Growth
Market
Mature
Market
Declining
Market
Indefinitely elastic
middle
End of
Life
Fault
Line!
E
D C B A
Technology Adoption
Life Cycle
2
Prolog: Category Maturity Life Cycle Putting Technology Adoption in Perspective
Emerging
Market
(pre-Tornado)
Growth
Market
Mature
Market
Declining
Market
D C B
3
Prolog: Category Maturity Life Cycle The Economics of Category Life Cycles
Indefinitely elastic
middle
Growth
Market
Mature
Market
Declining
Market
D C B
4
Prolog: Category Maturity Life Cycle The Economics of Category Life Cycles
Secular
Growth
Capture Market
Share
Indefinitely elastic
middle
Growth
Market
Mature
Market
Declining
Market
D C B
5
Prolog: Category Maturity Life Cycle The Economics of Category Life Cycles
Secular
Growth
Capture Market
Share
Cyclical
Growth
Make
Money
Indefinitely elastic
middle
Growth
Market
Mature
Market
Declining
Market
D C B
6
Prolog: Category Maturity Life Cycle The Economics of Category Life Cycles
Secular
Growth
Capture Market
Share
Cyclical
Growth
Make
Money
Secular
Decline
Find an
Exit
Indefinitely elastic
middle
Technology-Enabled Business Models Sources of Disruption for this Decade
• Eating other people’s lunch
• Software eats hardware
• Op ex eats cap ex
• Services eat products
7
Technology-Enabled Business Models Sources of Disruption for this Decade
• Eating other people’s lunch
• Software eats hardware
• Op ex eats cap ex
• Services eat products
• Leveraging next-generation technology
• Social
• Mobile
• Analytics
• Cloud
8
Marketing Disruptive Innovation What Makes High-Tech Marketing Different?
• High Risk
• Unproven products and promises
• Incompatible and incomplete infrastructure
• Social resistance to change
9
Marketing Disruptive Innovation What Makes High-Tech Marketing Different?
• High Risk
• Unproven products and promises
• Incompatible and incomplete infrastructure
• Social resistance to change
• Low Data
• No product history
• No company track record
• No best practices
10
The Technology Adoption Life Cycle The Challenge Facing Every Disruptive Innovation
11
The Technology Adoption Life Cycle The Challenge Facing Every Disruptive Innovation
12
The Technology Adoption Life Cycle The Challenge Facing Every Disruptive Innovation
13
The Technology Adoption Life Cycle The Challenge Facing Every Disruptive Innovation
14
The Technology Adoption Life Cycle The Challenge Facing Every Disruptive Innovation
15
The Technology Adoption Life Cycle The Challenge Facing Every Disruptive Innovation
16
Innovators - Technology Enthusiasts
17
Innovators - Technology Enthusiasts
• Primary Motivation:
• Learn about new technologies for their own sake
• Key Characteristics:
• Strong aptitude for technical information
• Like to alpha test new products
• Can ignore the missing elements
• Do whatever they can to help
• Challenges:
• Want unrestricted access to top technical people
• Want no-profit pricing (preferably free)
Early Adopters - The Visionaries
19
Early Adopters - The Visionaries
• Primary Motivation:
• Gain dramatic competitive advantage via revolutionary breakthrough
• Key Characteristics:
• Great imaginations for strategic applications
• Attracted by high-risk, high-reward propositions
• Will commit to supply the missing elements
• Perceive order-of-magnitude gains — so not price-sensitive
• Challenges:
• Want rapid time-to-market
• Demand high degree of customization and support
Early Majority - Pragmatists
21
Early Majority - Pragmatists
• Primary Motivation:
• Gain productivity improvements via evolutionary change
• Key Characteristics:
• Astute managers of mission-critical applications
• Understand real-world issues and tradeoffs
• Focus on proven applications
• Like to go with the market leader
• Challenges:
• Insist on good references from trusted colleagues
• Want to see the solution in production at the reference site
Late Majority - Conservatives
23
Late Majority - Conservatives
• Primary Motivation:
• Just stay even with the competition.
• Key Characteristics:
• Better with people than technology
• Risk averse
• Price-sensitive
• Highly reliant on a single, trusted advisor
• Challenges:
• Need completely pre-assembled solutions
• Would benefit from value-added services but do not want to pay for them
Laggards - Skeptics
25
Laggards - Skeptics
• Primary Motivation:
• Maintain status quo.
• Key Characteristics:
• Good at debunking marketing hype
• Disbelieve productivity-improvement arguments
• Believe in the law of unintended consequences
• Seek to block purchases of new technology
• Challenges:
• Not a customer
• Can be formidable opposition to early adoption
How High-Tech Markets Develop The Technology Adoption Life Cycle
27
How High-Tech Markets Develop The Technology Adoption Life Cycle
28
How High-Tech Markets Develop The Technology Adoption Life Cycle
29
EARLY
MARKET
How High-Tech Markets Develop The Technology Adoption Life Cycle
30
EARLY
MARKET
CHASM
How High-Tech Markets Develop The Technology Adoption Life Cycle
31
CHASM
EARLY
MARKET
BOWLING
ALLEY
How High-Tech Markets Develop The Technology Adoption Life Cycle
32
CHASM
EARLY
MARKET
BOWLING
ALLEY
TORNADO
How High-Tech Markets Develop The Technology Adoption Life Cycle
33
CHASM
EARLY
MARKET
BOWLING
ALLEY
TORNADO
MAIN
STREET
The Early Market
Tesla
Google glasses
3-D Printers
Self-Driving Cars
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Project focus
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Project focus
Consultants (picked by customer)
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Project focus
Consultants (picked by customer)
Direct sales, opportunistic
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Project focus
Consultants (picked by customer)
Direct sales, opportunistic
Value-based, measured by gain
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Project focus
Consultants (picked by customer)
Direct sales, opportunistic
Value-based, measured by gain
Other categories
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Project focus
Consultants (picked by customer)
Direct sales, opportunistic
Value-based, measured by gain
Other categories
Break-through technology
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Project focus
Consultants (picked by customer)
Direct sales, opportunistic
Value-based, measured by gain
Other categories
Break-through technology
Another visionary in a different industry
Market Dynamics The Early Market
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Visionary business executive
Dramatic competitive advantage
Project focus
Consultants (picked by customer)
Direct sales, opportunistic
Value-based, measured by gain
Other categories
Break-through technology
Another visionary in a different industry
Target market is not under pressure to change
The Bowling Alley
Retail Analytics Advanced Threat Detection
Health Care Diagnostics Digital Media Buying
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Solution focus
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Solution focus
Solution completers (picked by vendor)
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Solution focus
Solution completers (picked by vendor)
Direct sales, focused on niche market
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Solution focus
Solution completers (picked by vendor)
Direct sales, focused on niche market
Value-based, calibrated by pain
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Solution focus
Solution completers (picked by vendor)
Direct sales, focused on niche market
Value-based, calibrated by pain
Traditional approaches to problem
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Solution focus
Solution completers (picked by vendor)
Direct sales, focused on niche market
Value-based, calibrated by pain
Traditional approaches to problem
Niche market leader
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Solution focus
Solution completers (picked by vendor)
Direct sales, focused on niche market
Value-based, calibrated by pain
Traditional approaches to problem
Niche market leader
Adjacent niche market
Market Dynamics The Bowling Alley
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist business manager
Fix a broken business process
Solution focus
Solution completers (picked by vendor)
Direct sales, focused on niche market
Value-based, calibrated by pain
Traditional approaches to problem
Niche market leader
Adjacent niche market
Target market is under pressure to change
The Tornado
Smart Phones Cloud Computing
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Product focus
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Product focus
Compatible products & services
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Product focus
Compatible products & services
Direct & indirect, sales coverage focus
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Product focus
Compatible products & services
Direct & indirect, sales coverage focus
Set by market leader
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Product focus
Compatible products & services
Direct & indirect, sales coverage focus
Set by market leader
Directly comparable products/services
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Product focus
Compatible products & services
Direct & indirect, sales coverage focus
Set by market leader
Directly comparable products/services
Market status: Gorilla, Chimp, Monkey
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Product focus
Compatible products & services
Direct & indirect, sales coverage focus
Set by market leader
Directly comparable products/services
Market status: Gorilla, Chimp, Monkey
Adjacent mass market (geographic)
Market Dynamics The Tornado
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Pragmatist IT manager
Keep up with market norms
Product focus
Compatible products & services
Direct & indirect, sales coverage focus
Set by market leader
Directly comparable products/services
Market status: Gorilla, Chimp, Monkey
Adjacent mass market (geographic)
Target market is under pressure to change
Main Street
Laptops
Wireless Networks
Flat Panel TVs
Projectors
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Systems focus
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Systems focus
Outsourcers (picked by customer)
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Systems focus
Outsourcers (picked by customer)
Indirect sales, maintenance focus
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Systems focus
Outsourcers (picked by customer)
Indirect sales, maintenance focus
Set by lowest cost vendor
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Systems focus
Outsourcers (picked by customer)
Indirect sales, maintenance focus
Set by lowest cost vendor
Commodity suppliers
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Systems focus
Outsourcers (picked by customer)
Indirect sales, maintenance focus
Set by lowest cost vendor
Commodity suppliers
Established customer relationships
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Systems focus
Outsourcers (picked by customer)
Indirect sales, maintenance focus
Set by lowest cost vendor
Commodity suppliers
Established customer relationships
Other members of your installed base
Market Dynamics Main Street
Target Customer
Compelling Reason to Buy
Whole Product
Partners and Allies
Distribution Channel
Pricing Strategy
Competition
Positioning
Next Target Customer
Conservative IT manager
Lower costs, better value
Systems focus
Outsourcers (picked by customer)
Indirect sales, maintenance focus
Set by lowest cost vendor
Commodity suppliers
Established customer relationships
Other members of your installed base
Target market is not under pressure to change
Key Takeaways
• Each stage is distinctly different
• What causes success in one causes failure in the next
• Different playbooks required at different times
• Often need to change roles to get the right leader in place
• Multiple products at multiple stages
• Enterprises must segregate their efforts by life cycle stage
• End-to-end alignment is key to success
• Must get all players rowing in the same direction
82
Q & A
• How do you deal with the chasm on a limited budget?
• How do you recruit an ecosystem to a niche market?
• How do social networks affect crossing the chasm?
• How do you use this model to do root cause analysis on slow sales?
• Other questions?
83
gmoore@geoffreyamoore.com
twitter.com/geoffreyamoore
http://linkd.in/YnBwig
84
Thank You
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