Why is it that some ideas, trends or innovations take hold, while others start up but fade from existence? In other words, for every iPod and Facebook, why is there always a Zune or a Bebo?
Sociologist coined a theory to try and explain this called “diffusion” (or the theory of Diffusion of Innovations). Put simply, diffusion is the process where innovation is communicated through certain channels over time among members of a social system.
It is worth noting that this is very much different from adoption, which is very much an individual process detailing the series of stages one undergoes from first hearing about a product and finally taking it on. The diffusion process instead encompasses the adoption process within larger social groups.
The real challenge to ensuring an innovation takes hold is crossing ‘the chasm’. If the early adopters succeed in bridging this critical juncture to the more sceptical masses, we reach a tipping point, allowing the curve to rise as the masses accept the innovation, and sink again when only the stragglers remain.
The most interesting end note to this cycle is that while the masses are starting to take on the technology, the innovators or early adopters are often turning away as they search for the next big thing.
Let’s suppose you just created a product that is wildly new, useful and disruptive. Or you’ve created a new technology that represents a leap forward in usability, performance and customer value. Your product is amazing and now all you need to do is sell it to the masses. Which is great because you have a bullet-proof plan of how you’re going to do that. Right? You’ve already figured out how to price it, position it against competitors and identified the optimal distribution channel partners to make it sail off the assembly line and into your customer’s hands. Right?
In 1991, Geoffrey Moore wrote his first book “Crossing the Chasm” which explained that the problem many startups face in getting their product to the masses could be explained from the perspective of the classic product lifecycle.
Product Life Cycle
The product life cycle is familiar to most marketers – when you introduce a new product that product goes through stages of adoption. At first, the product sells slowly to a few very geeky people who love technology for technology’s sake – called the innovators. Then it progresses to a larger portion of the population, a group that sees potential in the product and is willing to deal with bugs and incomplete feature sets because they are visionaries and sees massive opportunities down the road. These are the early adopters.
The next group of people is vastly different than the first two groups. The early majority are far more pragmatic and want solutions to their existing problems and only buy products that are fully baked (read: not beta). The late majority are made up of conservative late-comers whose primary objective is to avoid risk and “don’t screw anything up.”
This product life cycle concept is nothing new but the way Moore applies it to marketing new products is insightful. The first thing Moore explained was the existence of a wide and deep chasm between early adopters and the early majority.
The chasm exists because after a certain point of selling your product too early adopters you reach a sales plateau where your next stage of growth is to take the product to the masses. In the book, Moore argues that the fundamental issue entrepreneurs and product managers face when trying to cross the chasm is the fact that while early adopters are okay with incomplete features and early-stage technologies in general, the early majority is pragmatic and will only accept the product once it solves a current problem they face. To them, the product misrepresent a practical improvement to what they do – not merely promises of future ROI potential.
Crossing the Chasm
In his first book, Moore argues that in order to successfully cross the chasm you must do the following:
Create the “whole product” – don’t try to cross the chasm without a complete feature set and all major bugs eliminated
Position the product appropriately for skeptical pragmatists who make up the early majority
Price the product relative to competitive comparisons rather than using value-based pricing
Distribute the product through the right channels
The Whole Product
One of the major challenges startups face is the need to round out their product feature set and ship a “whole product.” The lean startup methodology encourages the creation of a “minimum viable product” which is analogous to the core product in Moore’s framework.
Positioning the Product
To position the product successfully to pragmatists, Moore argues it’s important to focus on the economic buyer and emphasize ROI as the compelling reason to buy.
Showcase things such as:
Third party support
Vertical press coverage
Industry analyst endorsements
Distribute the Product Through The Right Channels
One of the biggest insights from Moore’s framework is the critical role of various distribution channels. In his book, he argues that most distribution channels can fall into two general categories: demand creators and demand fulfillers.
For example, the direct sales channel is a channel that is optimized for demand creation. This is usually the most effective channel for new technologies because unless the product category is well defined and well established in the market, you will need to have a direct sales force out in the market to explain the benefits of the product.
Conversely, retail sales channels are optimized for demand fulfillment. Once a product category is well understood in a market and there is existing demand for the product, retail can be the most effective means to fulfilling that existing demand.