I’ve been having some marvelous debates recently about Chasm theory (oh so nerdy eh?). In an attempt to discuss this topic further I figured I should try to initiate a debate via blog and see if I can get people reading this to wade in on the topic further.
Geoffrey Moore introduced the notion of a “chasm” in the market development process for radically innovative products in his 1991 book, Crossing the Chasm. He proposed that the early stages of the Technology Adoption Life Cycle consist of the Early Market and the Chasm.
The Early Market (consisting of visionaries and technology enthusiasts): The market at this stage consists of visionaries and technology enthusiasts. The technology enthusiasts (often referred to as “innovators”) fundamentally believe that new technology is better than existing technology and will therefore always be amongst the very first to adopt new products. Visionaries on the other hand believe in technology as a path to competitive advantage and thus aggressively adopt any new technology to further their business.
The Chasm: In the chasm, the product category encounters a pause in market development. The length of the pause depends on how radical the disruptive innovation is. The pause often occurs as a result of weak or incomplete value chains and because pragmatists (the mainstream market) don’t trust visionaries as a reference. The success of the product category depends on the pragmatists’ view of the outcomes of the pilot projects initiated by the Early Market. In this phase, entrepreneurs need to analyze current pilot projects and developments to understand how an improved offering can serve niche markets in order to gain momentum in the next phase of market development.
While the notion of a chasm was certainly true in 1991, I’m not sure that the concept holds true today. In 1991 the role of computers and software in a company was not fully understood. The information technology department operated in corporate void as a necessary evil where the department was left alone to experiment with new technologies and to push the ones they felt could be useful for a company into other areas of the business. They had budgets with which they could experiment and play and operated somewhat independently of the company’s overall strategy.
Nowadays however, the role of software and technology in a business is much better understood as yet another tool through which a company can gain a competitive advantage. The role of the technology group is much more fully integrated into the strategy of the company and into its operations. Strategy is driving technology instead of the other way around.
Once business strategy comes to drive technological adoption, the role of the innovator and that of the visionary changes. They are now given responsibility to respond to strategic needs and to deliver value to the firm. Thus, external product innovators need to find companies where there is a strategic need, not just an interest in experimentation. As the role of the innovator has changed, so too has the habit of the early adopter. Since their objectives are now almost identical there is a greater likelihood that the early adopter will be willing to trust visionaries as a reference.
In consumer markets there is a much better understanding of technology’s potential. Faster technology adoption rates due to improved communication through social networks blur the line between innovators and early adopters. Buzz can be created much more quickly and early adopters are more prone to use innovators as a reference point for their own purchase decisions.
I’m interested in further debate on this subject. If this theory is correct, the work undertaken by suppliers of innovative technology must change and there may be new ways of marketing and pricing technology during its initial introduction.
So, if there is anyone out there reading this, it’s over to you.
Charles Plant has been the CEO or CFO of several successful software companies. He’s also been a management consultant, an investment banker, an auditor and an advisor at MaRS. See more…