Crossing the Chasm. What s New? What s Not? Lean Start-Up February 24, 2015
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1 Crossing the Chasm What s New? What s Not? Lean Start-Up February 24, 2015
2 Disruptive Innovation Sources of Wealth Creation in the Current Decade Everyone is eating someone else s lunch Software eats hardware Op ex eats cap ex Services eat products Leveraging next-generation technology Social Mobile Analytics Cloud Internet of Things 2
3 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 How customers cope with high-risk, low-data buying decisions is modeled by the Technology Adoption Life Cycle 3
4 4 The Technology Adoption Life Cycle The Initial Dynamics of Disruptive Innovation
5 5 Innovators - Technology Enthusiasts
6 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 Like to demonstrate their own expertise Challenges: Want unrestricted access to top technical people Want no-profit pricing (preferably free)
7 7 Early Adopters - The Visionaries
8 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
9 9 Early Majority - Pragmatists
10 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
11 11 Late Majority - Conservatives
12 Late Majority - Conservatives Primary Motivation: Avoid falling too far behind market norms Key Characteristics: Better with people than technology Risk averse Price-sensitive Highly reliant on a single, trusted advisor Challenges: Need completely pre-assembled solutions Need value-added services but do not want to pay for them
13 13 Laggards - Skeptics
14 Laggards - Skeptics Primary Motivation: Maintain the 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
15 The Technology Adoption Life Cycle How Disruptive Innovations Get to Market TORNADO MAIN STREET EARLY MARKET CHASM BOWLING ALLEY 15
16 Disruption Can Be Played in Different Ways Four Adoption Strategies Go ahead of the herd for competitive advantage Bespoke projects from the experts Go ahead of the herd to address a painful problem Proven applications from segment-focused vendors Stick with the herd as it transitions to new infrastructure Next-generation infrastructure from market leaders Go after the herd for less disruption and a lower price Evolutionary extensions from established vendors Key zones for start-ups 16
17 Selling in the Early Market The Initial Sales Dialog Opening YOU: Breakthrough technology is changing the rules CUST: Can it help me do this <amazing thing>? Middle YOU: Tell me more about what you have in mind CUST: Here is my vision YOU: I think we can help here, but it would take a special project CUST: I can get the funding Close YOU: I can pull together a team to scope this thing more fully CUST: Great, let s get on this right away
18 Selling in the Bowling Alley The Initial Sales Dialog Opening YOU: We ve been working with customers on <problem>. Is this something you are struggling with? CUST: Are you kidding? Everybody is struggling with it. Middle YOU: Here are some of the symptoms we re seeing CUST: Yes, that s us, and that s not the half of it YOU: Really? Tell me more CUST: Well first of all... and then... and furthermore... Close YOU: Yes, that s pretty much what we are seeing too CUST: So what are you doing about it?
19 Crossing the Chasm: B2B Markets Two Key Principles Target a beachhead segment Highly focused approach to rekindling the flame Niche market with an intractable problem, not solvable by conventional means Process owner is under pressure to find a solution Pragmatists are willing to consider disruptive approach Commit to provide the whole product Bring all the ingredients with you Complete solution to the intractable problem Typically involves products and services from partners and allies Lead vendor takes responsibility for ensuring customer success 19
20 Crossing the Chasm: B2C Markets What s New? There is No Chasm!!! Digital Services Light to deploy, focus on user experience The Lean Start-Up Minimum viable product, rapid agile learning In consumer use cases, leap to the tornado Critical Success Factors: The Four Gears Acquire Engage Monetize Enlist Digital B2C consists of low-risk, high data decisions Just the opposite of the chasm! 20
21 The Four Gears Technology Adoption in B2C Markets Referrals Contributions Sharing ENLISTMENT ACQUISITION Traffic Eyeballs Hits Starter Motor Advertising Retail Subscription Bus. Model MONETIZATION ENGAGEMENT Time on Site Interactions Liking 21
22 Deconstructing The Dynamics The Performance Gears The Good Performance drives revenue & growth The Bad Performance makes demands on brand s good will ACQUISITION Performance Gear How many? How fast? Performance Gear How much? How profitable? MONETIZATION The Ugly Performance-only focus liquidates brand s good will 22
23 Deconstructing The Dynamics The Power Gears Power Gear How often? How wide? ENLISTMENT The Bad Investment in power requires deferring performance The Good Enlistment creates good will to drive acquisition The Good Engagement creates good will to drive monetization ENGAGEMENT Power Gear How often? How deep? 23
24 The Four Gears Classic Approach to Building Momentum Begin with Engage Confirm you have something people want and like Then Move to Acquire Find the levers that have the most leverage Then Enlist Get your most engaged customers to evangelize your offer Then Monetize Gently ease in don t pop the clutch and stall the car!~ 24
25 Slowest Gear Theory Prioritizing and Focusing Thesis Prior to the tornado At any given point in time One of the four gears is slowing the other three down Examples Bing Acquisition LinkedIn Engagement Whatsapp Monetization Groupon Enlistment 25
26 Slowest Gear Theory Actions Required Identify the slowest gear Focus everyone on speeding it up Maintain attention on the other three gears You really do have to be a circus performer! Repeat every quarter until You reach a tipping point or You run out of gas 26
27 Thank You twitter.com/geoffreyamoore 27
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