Crossing the Chasm: why bad products can be hits and good ones miss

Anyone who has been around the IT business for more than a couple of years can probably name half-a-dozen potentially great products and technologies that didn’t make it in the marketplace. My favourite is the chording keyboard, when I first saw one (in the early 1980s) I was convinced it would make an impact.

On the other hand there are plenty of lacklustre products that have taken off. Some started life as ugly ducklings, but with patience and TLC grew into swans.

In some cases we’ve learnt to love dodgy technologies despite their awfulness: SMS text messaging might be essential but the user interface is a nightmare. Other bits of high tech naffware still haunt us years after they should have been put out of their misery.

Clearly, being able to spot winners and losers early is a useful. However, it isn’t easy or straightforward. In this context better doesn’t necessarily mean more successful.

Some believe technically-poor winners beat technically-better losers simply because of clever marketing. There’s a grain of truth in this, but the reality is more complex.

In the early 1990s, US writer Geoffrey Moore found that all business technology products have an adoption life cycle. At the sharp end of the cycle are the early investors. These are companies that must have the latest technology, either for prestige or perceived competitive advantage. They’ll willingly pay a relatively high price which in some cases will fund further development or marketing.

Next are visionary customers who need a product to gain a real competitive advantage or control costs. Often they are prepared to accept immature support, absorbing technology risk. They’ll pay a premium allowing the maker to develop the marketing channels and support infrastructures required in the next phase.

The third phase is the bulk of the market. Moore calls the people in this group early majority or pragmatic customers. They look for clear pay-offs from a technology investment. This group delivers the profits and locks a technology into the mainstream.

The fourth group are reluctant adopters. If a sensible case can be made, they’ll buy mature, proven technologies incorporated into commodity products. The final group are those who may never adopt a technology, for example companies that still don’t use email, mobile phones or computerised book-keeping.

Moore says that for any technology to succeed it must cross the chasm from the first two phases and enter the third. It’s an Evil Knievel-style leap, many technologies simply can’t make it.

The bridge across the chasm might be technical, it might be channel organisation, support infrastructure, political matters such as establishing a standard or it might just come down to old fashioned marketing.

If you want to improve your winner picking skills, put everything else in the background and simply focus on the product, service or technology’s ability to cross the chasm between visionary and pragmatic customers.

In addition to Moore’s chasm, consider common sense concepts of price and utility. Any product which meets certain key standards can sell; but the number sold depends on price and function. A lower price or more functionality means higher sales. If the first two phases of the adoption life cycle enable a maker to build in enough functionality or make price reductions through economies of scale then it’s going to be easier to bridge the chasm.

Standards are a further good indicator of likely success. However you need to read the signs correctly. A lot of so called standards are anything but open. And widely-accepted standards aren’t always the ones which prevail, especially in the face of market dominating companies like Intel or Microsoft. Sometimes the standards used in a particular product or technology are not fixed. For example, a non-standard communications protocol can often be changed with a software upgrade.

Although Moore’s focus was originally on business technology, the principles also apply to consumer products such as DVD burners or Apple’s iPod. The rules don’t change much between the suits and the open-neck shirts but their interpretation does. Building up a head of steam to cross the chasm can be harder for makers of consumer hardware. Consumers rarely look for a return on their investment in the conventional business sense and they are often less willing to pay top dollar for new products.

Complicating matters further is the way many products now straddle both markets. In some areas the consumer market influences business purchasing strategies. For example, the first customers to adopt the iPhone were consumers. Business users are still behind on the adoption curve.