When Crossing the Chasm by Silicon Valley consultant Geoffrey A. Moore was first published in 1991, it quickly became the marketing bible for high-tech.
It was a perfect fit, especially for the type of business model that dominated the startup scene in the 90ies: complex IT products – hardware, software, or mix of both – that required quite expensive R&D and typically were sold B2B through a enterprise sales force.
One key insight presented by Moore was this: innovative technology solutions often require their users to change habits or processes.
And since individuals and organizations are typically resistant to change, a startup trying to sell such a solution was initially fighting an uphill battle with the majority of its potential customers.
Only a small subset of the potential customers would be open to buy and implement the startup’s offerings. So, after an initial phase of very promising growth, a startup would often face a completely unexpected drop in sales: having exhausted the segment of open-minded customers, but still unable to sell its solution to the more conservative majority of customers, the startup would fall into the chasm between those two customer segments and fail.
Crossing this chasm is so tricky because in order to sell to the more mainstream customers, a startup needs to completely reconfigure itself – the very tactics, processes, and company values that ensured success with the earlier customers are actually counterproductive in winning over the more mainstream customers.
The book then describes how to employ a very focused niche strategy to cross the chasm and build a broader user base.
When I came across this book in the mid 90ies, I was at HP, working on a brand-new software product for operations management that was a big hit with some of HP’s biggest enterprise customers – mostly financial services institutions.
The book was a revelation to me, as it helped me make sense of what was going on around me: for “my” product, things unfolded pretty much the way Moore had described. For example, it turned out that these financial services institutions wanted to manage servers all around the world from a few central locations. This was a use case that hadn’t been front and center in the minds of the product’s inventors – and it required a lot of R&D spending to get the product to fully support this use case.
This is a situation that according to Moore is quite typcial: customers often employ a product in ways not envisioned by the vendors – and success depends on the ability of the startup to understand and embrace this.
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