Excursion 43

More on Crossing the Chasm

The key lesson from “Crossing the Chasm” is that entrepreneurs are often fooled by the behavior of a small subset of the target market that are enthusiastic about an innovation. These “Technology Enthusiasts” actively seek innovations and accept imperfect technologies in order to remain at the leading edge. But they comprise a very small segment of the market. Entrepreneurs misinterpret adoption by Technology Enthusiasts as proof that their innovation is market-ready. In fact, the vast majority of the market will only adopt the innovation when it has demonstrable economic benefits and established credentials.

Here is the innovation adoption bell curve, including Geoffrey Moore’s addition of “The Chasm.”

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The interpretation of this illustration is as follows:

The horizontal axis represents (from left to right) time from introduction of the innovation.

The vertical axis represents the % of the market adopting the innovation at any given time.

The area under the curve therefore represents the total % of the market that has adopted the innovation. When the innovation is first introduced (far left), only a few technology enthusiasts adopt the innovation. At the far right, nearly the entire market has already adopted the innovation, with only a few skeptics still in the adoption process.

The bell curve itself, and the distinct “customer segments” represented by the different areas/shadings, have been demonstrated with extensive research on technology and innovation adoption. The early adopters, labeled as “Technology Enthusiasts” and “Visionaries,” are a relatively small portion of the market (usually less than 20%). Moore observed that these segments adopt innovations based on economic and non-economic criteria. In other words, these segments purposefully take risks with new innovations.

The problem is that the major market segments emphasize economics almost exclusively. The aptly-named “Pragmatists” adopt innovations when the economic benefits are clearly evident. The “Conservatives” do so only after the economic benefits have been demonstrated by implementation by a majority of the market.

Why is this a problem? Because most new and growth companies tend to market innovations based in part, if not entirely, on non-economic factors. Just because an innovation is better, faster, or cheaper, does not guarantee economic benefits to the customer, especially if the customer already has an installed base.