Dream End State - Crossing the chasm: the adoption of new tech

Crossing the chasm: the adoption of new tech

This model illustrates what’s required to take new, disruptive technology into the mainstream.

Geoffrey Moore built on Everett Rogers’ diffusion of innovations theory to set out the marketing challenge a company faces when attempting to launch a new high tech product into the mainstream.

The essence of the theory is that innovations are absorbed in stages by different groups split into the early market and the mainstream market. According to Moore, the marketer should focus on one group at a time. The chasm is this separation between the early market and the mainstream.

In the early market, first are the Tech enthusiasts who want to get their hands an the latest, hottest new thing, even if they have to put up with faults. Next come the Visionaries who are interested in major technological advances to secure themselves a competitive advantage.

Next comes the far larger mainstream market, starting with the Pragmatists who make up about one third of the entire market will start to adopt a new product once the technology has proven itself. This cohort is looking for only incremental improvements and are key to obtaining market dominance. The Conservatives are next. This group is as large as the Pragmatists. They take time to win around and want easy-to-use products. Lastly, the Skeptics are a small group, often overlooked, highly resistant to new tech.

Key to success with the mainstream is to deliver a whole product – a product that is not only without flaws but also supported by complimentary services such as well-designed customer service channels, good returns policies and guarantees etc that make the core product a compelling proposition. If a successful firm can traverse the chasm, it can create enough momentum to establish the product as the accepted standard in its market (eg the iPhone in the premium smartphone martket).

Watch out for

Moore’s theories only apply to disruptive innovations. Arguably the best model to explain incremental innovations is the standard bell curve (without the chasm) of Rogers’ original technology adoption lifecycle model.

Not all products and services are intended to cross into the mainstream. This is particularly true of digital services and new media channles that consciously target very niche markets, the so-called long tail. The internet has reduced the costs of distribution to almost zero, which means the minimum viable audience is now much smaller for companies and entrepreneurs to achieve an acceptable return.

Resources

Levitt, T., (1986).The Marketing Imagination. The Free Press
Moore, G., (2014). Crossing the Chasm, 3rd Edition: Marketing and Selling Disruptive Products to Mainstream Customers. Collins Business Essentials
Rogers, E. M. (2003). Diffusion of innovations (5th ed.). The Free Press
Always Be Learning

It’s more a credo to live by rather than a mental model, but I’ve categorized it as a mental model. Sue me.

A central tenet in Ray Dalio’s Principles and beloved by Warren Buffett, Charlie Munger, Elon Musk and other highly successful investors and businesspeople, Always Be Learning – or ABL – is about how we learn, and how we learn from our mistakes and our failures.

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.
Charile T. Munger

I will write more (and more coherently) on this later. Probably.

It’s better to have tried and failed than to live life wondering what would’ve happened if I had tried.
Alfred Lord Tennyson

Watch out for

It works best with dispassionate reflection, which is easier said than done since we’re programmed to rationalize our mistakes.

It’s not about failing fast. It’s about learning fast.

Resources

Baid, G. (2020) The Joys of Compounding: The passionate pursuit of lifelong learning. Columbia University Press
Dalio, R. (2017) Principles. Simon & Schuster
The will vs skill coaching matrix

This model will help you become a better coach and make your team more productive.

Leaders who adapt their style to the employee and the task in hand are more likley to be great coaches. This is “situational leadership,” according to Paul Hersey and Ken Blanchard. Max Landsberg developed this thinking in his book The Tao of Coaching and introduced the will-skill matrix.

Key to applying this model is figuring out where the team member is in terms of skill and will. This is crucial because the way you deal with a lack of skill or competency is worlds apart from how you’d deal with a lack of desire and motivation.

As coach, you’re trying to move everyone to the high will, high skill quadrant, top right.

What to do in each quadrant

Watch out for

This is a task-focused technique. Be wary about slipping into generalities about the person overall. It’s easy to make a sweeping diagnosis. Resist the temptation! You could fall prey to the “Golem effect” where your low expectations of (let’s call him) Bob after he failed in a task carry over and impact the next task, which Bob can perform competently and it’s a task that he is enthusiastic to do. The Golem effect is the opposite of the Pygmalion effect where the performer lives up to the high expectations of the observer like a self-fulfilling prophecy.

Try to avoid the temptation to micromanage where possible. It’s fine to set out the “what” but it’s more rewarding for them to figure out the “how.”

Be wary of the Dunning-Kruger effect, especially for young and inexperienced recruits. It’s your job as manager to work out the difference between confidence and competency.

On the flipside, be careful about becoming too hands-off with top performers by slipping into a laissez-faire approach. Often motivation will wane if employees feel like they don’t have the recognition for the tasks they’re doing, have lost sight of the purpose or because tasks are no longer a stretch and have become rote and mundane.

Resources

Hersey, P., Blanchard, K., (2008) Management of Organizational Behavior: Leading Human Resources. New Jersey/Prentice Hall
Landsberg, M., (2015) The Tao of Coaching: Boost your effectiveness at work by inspiring and developing those around you. Profile Books
BCG’s growth-share matrix (or the Star principle)
Here’s a model for categorizing which businesses to invest in, start, nurture, attempt to turnaround, wind down or sell.

Created by Bruce Henderson for the Boston Consulting Group, the BCG growth-share matrix or the Star principle is a lens through which businesses can focus their activities. It can also be used as a template for investing (particularly in start-ups and young companies), as a guide for prospective employees looking to join a start-up, or as a north star for would-be entrepreneurs.

In summary:

Star businesses are what everyone is after: a business or product that is growing fast with a high market share. Stars usually require cash to grow.

Cash cows are businesses with high market share and slow growth. As the name suggests, they generate lots of cash in excess of the reinvestment required to maintain market share.

Question marks are characterized by low market share and high growth. They usually require more cash than they can generate.

Dogs are low growth, low market share businesses. Get out and cut your losses.

Watch out for

Be careful not to apply the model too simplistically. “Cash cows” still need investment to maintain market share – they can’t be milked indefinitely.

Henderson said that companies need a portfolio of products to “truly capitalize on its growth opportunities.” Cash cows help fund star businesses. Dogs should be avoided. Question marks can be converted to stars with added funds or cut.

Remember all products (and businesses) have a lifecycle. Stars eventually become cash cows as growth slows or they get overtaken by rivals and become question marks and dogs. Henderson said: “The value of a product is completely dependent upon obtaining a leading share of its market before the growth slows.”

Richard Koch, in his book The Star Principle, applies stricter criteria to his concept of a star business. In his version, the star must be the market leader in its niche and the market niche must be capable of growing at least 10 percent a year, on average, over the next five years.

The star of the portfolio is a rare and wonderful thing: its value is also rarely recognised and, typically, it’s strategically mismanaged.
Bruce D. Henderson

Resources

Henderson, B. (1970). The Product Portfolio. BCG
Koch, R. (2008). The Star Principle. Piatkus
Koch, R., Ferriss, T. (September 2020). Richard Koch on Mastering the 80/20 Principle. Podcast
The important vs urgent matrix (or the Eisenhower Box)
Here’s a useful model for working out what you should do and when.

To organize your time, start with the two easy quadrants:

Important and urgent. These should scream out at you. It could be a crisis moment or a task that’s essential to your long-term career prospects or core business.

Neither important nor urgent. These are tasks you should probably drop or delegate to someone else.

Next, turn to the trickier quadrants:

Not important but urgent. Try to delegate these tasks or automate them. Over the short to medium term set up your work environment so that you can reduce the tasks in this bucket.

Important but not urgent. The golden quadrant. This is where the big gains are made. These tasks are fiendishly difficult to set aside time for and are usefully the first tasks to be pushed to the bottom of your to-do list and dropped. Resist the temptation.

Watch out for

Keeping “busy”. We think we’re being productive when we’re bashing away at a keyboard, sending emails, answering rote customer queries, attending meetings without any action points. We’re not. We’re just putting off working in the golden quadrant. The opportunity cost of this “busy” work is that our long-term goals and aspirations are moving further into the future.

Procrastination. We often don’t attend to our long-term goals because we’re aiming for perfection and fear falling short of our own high expectations. A common antidote to this feeling is keeping “busy” and tackling urgent but not important tasks. The Mere Urgency Effect study shows how people favour tasks with very short-term deadlines because they’re likely to get more immediate, more certain payoffs.

We overestimate what we can achieve in a day. This mostly means the non-urgent tasks are pushed into tomorrow. Fortunately, we also tend to underestimate what we can achieve in a year, so dedicate some time each day to your long-term goals and compound your growth.

Resources

Boyes, A. (July 3, 2018). How to Focus on What’s Important, Not Just What’s Urgent. Harvard Business Review
Watkins, M. D. (March 31, 2007). The Urgent vs. The Important. Harvard Business Review