12.20.05

If you liked Crossing the Chasm….

Posted in business at 12:05 am by Francisco

If you liked the book Crossing the Chasm by Geoffrey Moore, I have great news! Geoffrey Moore has a blog, and he has a new book coming up, Dealing with Darwin.

I have been a big fan of Geoffrey Moore throughout my career in the software industry. During my undergraduate at Caltech several entrepreneurs I met told me that if I wanted to start a company I had to learn about marketing, and if I wanted to learn about marketing, I had to read Crossing the Chasm. I took their advice, and I became an instant fan. I went on to read Inside the Tornado, and The Gorilla Game.

Crossing the Chasm is all about what to do when you have a great technology and you want to build a company out of it. In a nutshell, products follow an s-curve in their adoption cycle, and the people who adopt them can be grouped into the following categories: Technology enthusiasts, visionaries, early adopters, late adopters, and laggards. Each of these groups has its own set of values, and each of them must be approached very differently from a marketing perspective. These groups tend to distrust each other, and members of one groups don’t make great references for the next group. The problem, which Moore calls the chasm, comes when you need to go from the visionaries to the early adopters. The early adopters and the late adopters will give you all your money, but in order to get to the early adopters you need to jump from the visionaries to the early adopters, and that is where Geoffrey Moore sees the chasm. Visionaries don’t need much references because they want to be the first doing something, and late adopters have the large early adopter market as a reference, so jumping from technology enthusiasts to visionaries and from early adopters to late adopters is not that difficult. In stark contrast, early adopters deeply mistrust visionaries, and they require referenceable accounts in order to buy, but a visionary account is not referenceable for them. What to do? Read Crossing the Chasm to find out!

Inside the Tornado is about what to do once you have crossed the chasm and you are in what Geoffrey Moore calls “the tornado”. Your company has gone through “the bowling alley” when it used the revenues, credibility, and experience it gained in conquering the early adopters of one niche to attack and conquer other niches, taking them down as pins. At a certain point, your portfolio of niches unifies into a platform, you have proven you can dominate that market, and everybody wants yor products. This is when you go into a hypergrowth phase, your company enters a “tornado” where your demand is much larger than your production capability. Inside the Tornado shows you how to compete and win in this situation. You can become the 800 pound gorilla in your industry, and Geoffrey Moore shows you how. If you didn’t get to be a gorilla during a tornado, Moore also talks about competitive strategies for companies holding the second and third places, as well as the rest of the followers. Moore calls these other companies the chimps and the monkeys.

The Gorilla Game looks at companies from the point of view of an investor. If there are principles that you can use toward creating a successful company in the technology marketspace, then there are principles that you can use identifying these companies. How do you identify an industry that is ready for a tornado? How should you place your bets to ensure that you make money in a tornado market? The Gorilla Game tells you all that.

Now Geoffrey Moore seems to be focusing on what to do after you are a gorilla, how to use innovation for competitive advantage. This is what I think Dealing With Darwin will be about. In his blog he talks about his new model for innovation, which has four main directions in which you should focus depending the age of your company and your industry: Product leadership, marketing leadership, mature market leadership, and renewal innovation. Under each of these directions there are several types of innovation that you could try to target: Disruptive innovation, as well as application, product, and platform innovations all fall under product leadership. This type of innovation is what Crossing the Chasm was all about. Line extension, enhancement, marketing, and experiential innovation all fall under marketing leadership. He dealt with this extensively in Inside the Tornado. Value engineering, process, integration, and business model innovation fall under mature market leadership. I think this will be part of Dealing With Darwin. Renewal innovation includes organic renewal, structural renewal, and harvest and exit. This should also be part of Dealing With Darwin.