The Chasm That Technology Startups Fail to Cross
In a previous post I described the popular technology adoption life cycle in its original form. I say original because Geoffrey A. Moore, in his book Inside the Tornado, argues that the model is flawed in that it fails to describe a particular phase that he dubs the chasm.
The problem with the model is that it fails to explain the real-world problems that companies encounter in getting their product to move from the early adopters (visionaries) to the early majority (pragmatists). This transition being important because it is the early majority that brings in the millions and billions of dollars that put companies on the map. The problem stems from visionaries being poorly regarded by pragmatists and thus failing to serve as a valued endorsement for an emerging product or service. This difference in ideology ends up causing companies to fall in to a chasm where they run the risk of going out of business.
Geoffrey suggests that the idea of the chasm is a simple one. He writes:
"It says that whenever truly innovative high-tech products are first brought to market, they will enjoy a warm welcome in an early market made up of technology enthusiasts and visionaries but then will fall into a chasm, during which sales will falter and often plummet. If the products can successfully cross this chasm, they will gain acceptance within a mainstream market dominated by pragmatists and conservatives. Since for product-oriented enterprises virtually all high-tech wealth comes from this third phase of market development, crossing the chasm becomes an organizational imperative."
The secret to crossing the chasm is understanding one key difference between the two markets on either side of it. On the one side is a group that is willing to accept a solution that is 80% complete because of the potential it promises. On the other side is a group that wants a solution that is 100% complete. Of course, a 100% complete product that serves all market segments is an impossible to achieve goal for a company at this stage in its development. Thus, the strategy is to build a complete product but only for a particular market segment. When enough individual segments have been brought on board each with their respective whole product, the company will then be in a position to step out of the chasm and have at the ready a product ready for the mainstream.
There's no question that on paper this approach seems simple. Of course, it glosses over the execution problems that are inevitable. Still, it seems that Geoffrey has certainly come up with an important piece of the puzzle in moving from an unknown startup to a well-established enterprise.