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CROSSING THE CHASM AGAIN!
Paul WiefelsManaging Director & Co-Founder
The Chasm Group, LLC
Fundamentals of Market Development
Crossing the Chasm Again
THE IMPACT OF DISRUPTIVE INNOVATION
REMAINS POWERFUL AND PERSISTENT
Internet of Things
Deploying software applications globally
Connecting 1-to-1 with anyone anywhere
Adding a resource in a sharing economy
Making a transactional decision in real time
Optimizing real-world systems in real time
Massive leverage comes from catching these waves
Scarce & expensive now becomesubiquitous & cheap
TECH LEADERS WHO MISSED THEIR NEXT WAVE
Burroughs Sperry Control Data Unisys
MSA McCormick & Dodge Cullinet Cincom ADR
DEC Data General Wang Prime Tandem
Daisy Calma Valid Apollo Silicon Graphics Sun
Atari Osborne Commodore Casio Palm Sega
WordPerfect Lotus Ashton Tate Borland
Informix Ingres Sybase BEA Siebel Systems PeopleSoft
Nortel Lucent 3Com Banyan Novell
Netscape MySpace Inktomi Ask Jeeves Yahoo!
Blackberry Motorola Nokia Sony
All of these companies thought they were doing the right thing.
MARKET FOCUSED STRATEGY IS 3-DIMENSIONAL
Where should we compete?
How should we compete?
How will we win?
Analysis of existing & emerging markets, profit streams, competitive intensity, etc. leading to choice of where and where not and why
What to offer?How to offer?How to differentiate?Source of competitive advantage?Source of innovation?
Business model?Market model?Revenue model?Resources to compete?Criteria for success?
UNDERSTAND YOUR FUNDAMENTAL SOURCE OF
Absence of 4th value discipline revealed by
Clayton Christensens The Innovators Dilemma
Treacy & WiersmaThe Discipline of Market Leaders
Optimize R&D to gain
Optimize production and delivery systems to gain a cost advantage
Use disruptive technology
to create first mover advantage
Create differentiated customer experience
to gain customer loyalty advantage
KEY SUCCESS FACTORS FOR CUSTOMER-
Identify target markets based on customer definitions
Compelling reason to buy - Understanding met and unmet needs
How does your value-add fit in?
What is your current market development orientation? What are your strengths? Relevance? Why should someone walk?
What is the magic link between you and your prospects?
What is your elevator pitch? How do you differentiate in a meaningful way?
What is the support?
How do you demonstrate the support?
What is your validation process?
THE DIFFUSION OF INNOVATION
The Technology Adoption Life Cycle
THE EVOLUTION OF DISCONTINUOUS
Gasoline Powered Car
DVD Players and DVRs
Content on Demand
Video Conference e.g.Skype
Discontinuous innovations require an infrastructure to prosper and proliferate.
ORCHESTRATING THE SOLUTION:
BUILDING THE VALUE CHAIN
All these linkages are requiredfor a new technology wave to succeed.
Sales & Support
Product Providers Service Providers Customers
THE DYNAMICS OF DISCONTINUOUS INNOVATION
PragmatistsStick with the Herd!
VisionariesMove Ahead of the Herd!
TECHNOLOGY ADOPTION LIFE CYCLE
Pragmatists create the dynamics of high-tech market
They cast the deciding vote!
DISCOVERING THE CHASM Visionary market saturates; or visionaries abandon category
All visionaries have bought Too easy for fast-followers to catch up
Pragmatists see no reason to start yet Too early for anything to be in production No related birds of a feather reference groups have yet formed (beyond those of visionaries)
MODEL BREAKS DOWN AT KEY TRANSITION
Visionaries vs. Pragmatists
Early buy-in attitude
Independent of the herd
Think Pragmatists are pedestrian
Part of the herd
Think Visionaries are reckless
Pragmatists don't trust visionaries as references.
CROSSING THE CHASM
The Problem 80% of many solutions100% of none
Pragmatists won't buy 80% solutions
Conventional solution (leading to failure) Committing to the most common
Never finishing any one customer's (customer segment) wish-list
The Correct solution (leading to success) Focus on a single customer segment and
build whole product for that segment
Use experience and product to move to similar segments
The Beachhead segment
Buyer behavior creates market dynamics
Disruptive innovations typically launch in the Early Market
Continuous innovations often launch on Main Street
Markets are not homogenous. Winning strategies will change from inflection point to inflection point. Typically, the previous strategy will need to be significantly modified
both in concept and execution if it is to be useful for the next phase.
THE GUIDEPOSTS: MARKET DEVELOPMENT
BEYOND THE CHASM: THE CATEGORY MATURITY
Technology AdoptionLife Cycle
End of Life
Indefinitely elastic middle
The A-B-C-Ds Of Portfolio Management
CROSSING THE CHASM 2.0
Complex Systems model
Disruptive business models
B2C or B2B2C focus
Volume Operations model
DISRUPTIVE BUSINESS MODELS 2.0 businesses extend 1.0 technology adoption
The Internet is ubiquitous, low-cost, and consumer friendly
There is no technology chasm to cross
2.0 businesses disrupt legacy business models Service subscription displaces product license
Advertising displaces subscription
Self-service displaces intermediaries
Two chasms to crossat different times! Cross a popularity chasm to create sustainable community
Cross a monetization chasm to create investor returns
Do so in that sequence
TWO CHASMS TO CROSS
The Popularity Chasm Must achieve exponential critical massand fast!
Cant spend a lot of money to do so
This is an impossible business problem to solve
Thus, ask kids to solve it.
The Monetization Chasm Must translate social energy into economic returns
Must not alienate community in so doing
This is a difficult business problem to solve
Adults can be helpful here
There are still chasms Like most reality shows, most entrants dont make it to the Finish line
Crossing has become much more complex Three-dimensional intersections
Looking both ways no longer good enough
Focus is still the scarce resource Must reduce number of variables
Must get the investment sequence right
Its about making the right decisions. And about making the right bets.
Q & A