Hi Tech Business Strategy: The Technology Adoption Life Cycle (Crossing the Chasm Part 1)
The following is the first of several posts about high tech business and marketing strategy, based on the bible of high tech marketing, Crossing the Chasm.
We can’t implement a promotional plan before we understand the decision making cycle and just how technology is adopted. Selling to the uber-geek early adopter requires a different strategy than selling to your mother and selling to a small, disruptive startup is also going to require a different strategy than selling to a global behemoth.
We know that, right? But do we know how to map a promotional and strategic plan throughout the entire technology adoption lifecycle. In order to develop a plan, first we should understand how technology is adopted.
The technology adoption lifecycle is a model from the 1950s and 1960s (first used to understand how farmers purchased corn!) that intended to describe how new ideas and new technologies spread in different cultures. According to Wikipedia:
The technology adoption lifecycle model describes the adoption or acceptance of a new product or innovation, according to the demographic and psychological characteristics of defined adopter groups. The process of adoption over time is typically illustrated as a classical normal distribution or "bell curve." The model indicates that the first group of people to use a new product is called "innovators," followed by "early adopters." Next come the early and late majority, and the last group to eventually adopt a product are called "laggards."
According to this model, the process of technology adoption takes place at a steady pace, with the first group (making up about 2.5% of the population) being the innnovators, the next group (another 13.5%) are the early adoptors, and than a larger growth happens next – the 34% that are the early majority, immediately followed by another equal group, the late majority, followed by the laggards, the remaining 16%. While each group is not equal in size, according to this model, progression naturally flows from one group to the next. Thus, when developing business strategy, one simply pinpoints their location on the map and develops and adapts naturally as your company develops along the cycle.
So – why do so many startups fail and don’t gain majority support?
According to Geoffrey Moore, it’s because this model – first developed for agriculture – is flawed. According to Moore, companies get stuck in the chasm – the gap between innovators and early adoptors and the rest of us.
The model is wrong and so the strategy based on winning is also flawed.
Technology adoption doesn’t take place at a continuous place.
Rather, it gets stuck in the chasm before experiencing tornado-like rapid growth.
This is Moore’s revised model:
According to Moore, there is a gap – a chasm – between the Early Market and the Mainstream Adoption. It’s not continuous and it’s possible to get stuck in this chasm.
In order to avoid getting stuck, Moore outlines a series of prescriptions and strategic requirements, including positioning, price, product, and place, in order to cross the chasm between the early market and market to the main street.
Yup, you must start with business strategy.
The next several posts will outline strategies that high tech companies, especially startups, can put in place in order to win their market and sell disruptive products to the mainstream.