Saturday, 25 November 2006

A Review of 'Inside the Tornado' by Geoffrey Moo-re

From Kansas to the land of Oz – From down on the farm in deepest Kansas, CEO Dorothy and her cow (the cow is the organisation – the wisdom of cows) had just circumnavigated the chasm trying to escape the mundane, they had won their game in the bowling alley and were suddenly caught up inside a tornado, in search of the marvellous land of Oz! “We’re not in Kansas any moo-re!”; the story so far in ‘crossing the chasm’ has already been told, the story now is very different! Geoffrey Moore’s sequel is focused on mapping the marketplace beyond the chasm, and through the subsequent stages of the ‘Technology Adoption Life Cycle’ (TALC) and on down the yellow brick road!

Playing to win in the bowling alley

Moore describes this as a period of niche-based adoption in advance of the general marketplace, driven by compelling customer needs and the willingness of vendors to craft niche-specific whole products. To play the bowling alley requires this niche marketing strategy that is highly customer-centric, focused on economic buyers. The bowling pins are set up so that when you get the strike you then move into the tornado. The head pin is the focus of the crossing-the-chasm effort, every other pin is then derived from the head pin breaking down by technology application on the right and industry segment on the left. Each application and segment niche needs to be completed before moving to the next. The reward in the bowling alley is to make money now and accumulate credits toward being declared the Gorilla in the tornado!

Surviving the tornado – From Cow to Gorilla!

Moore describes this as a period of mass-market adoption, when the general marketplace switches over to the new infrastructure paradigm. In order to survive the tornado, there is then a need to push in the opposite direction towards a mass-market strategy for deploying a common standard infrastructure. There are some warning signs from the buyers who are generally pragmatists, when they move, they move together, they will all pick the same vendor, and once they decide to move they will move as quickly as possible. Then let the tornado begin… virtually overnight, demand outstrips supply and there will be a huge backlog of customers. If you want to survive just ship the products and ignore the customer; no segmentation, no customisation, just ship and optimise the supply chain! The dominant market share leader will become the ‘gorilla’, the one or two strong competitors will become the ‘chimps’, and the rest just ‘monkeys’

On the main street and down the yellow brick road

Moore describes this as a period of aftermarket development, when the base infrastructure has been deployed and the goal now is to flesh out its potential. On the main street the forces push back again towards a customer-centric approach, focusing on specific adaptations of this infrastructure for added value through mass customisation in order to pave the way down the yellow brick road, which then eventually leads to the ‘end of life’ zone when the technology is then being replaced by newer technologies. Easier said than done, your customers hate you, your employees are burned out and demoralised, senior managers are great political fighters, and the bank want to talk! If you thought you had won, think again, life on the street is about to get tough. It is now time to sell and focus on end user niche markets and getting them to spend on added-value extensions to the product (+l marketing).

On the road to Oz, look out for the enemy, remain competitive, and occupy your position

The argument of this book and ‘Crossing the Chasm’ is that marketing strategy changes dramatically at each point on the Technology Adoption Life Cycle. Moore emphasises that in order to make this journey, organisations need to agree on where their products are on the TALC model and employ the appropriate strategy – Don’t segment in the early market – Segment to cross the chasm – Don’t Segment in the tornado, just ship – Segment on main street but not the same as in the bowling alley!

The road to Oz can be perilous and in particularly, Moore indicates that the economic effects of the tornado deconstructs and constructs the power structure in the market so rapidly that it very difficult to work out who are your friends and who are the enemy! In the bowling alley and tornado, eliminate the partners recruited pre-chasm (reduce the big fish from the deep water to medium fish), and then when on main street, find small fish for the shallow waters.

Within the newly forming market structure, companies must then compete for competitive advantage based upon their status within it (Are you a Gorilla, a Monkey or a Chimp?) and where on the TALC model? Product leadership moving to customer intimacy in the bowling alley, and then operational excellence in the tornado, and back to customer intimacy on main street. The company needs to position itself in the hierarchy of power and defend it against all challengers, by occupying the place between the system of purchase choices available, and the system of companies interacting to make the market.

Moore ends the book on a final point saying that moving effectively through the epic journey to Oz is the ultimate challenge for any organisation, demanding the best from its leaders who shift style through the different stages of the journey, and to get the organisation to “follow the yellow brick road…”

Wednesday, 15 November 2006

Crossing the Chasm Book Review

Geoffrey Moore’s book Crossing the Chasm is an account of the methodical marketing strategy that he believes is required to transfer a high technology product from conception to the mainstream market. Moore begins by describing the modifications required to the traditional Technology Adoption Life Cycle (TALC) and sets a case for the presence of discontinuity within the life cycle due to the ‘cracks’ and the ‘chasm’. Moore then defines each section of the cycle as comprising of a type of purchaser; distinguishable by their purchasing tendencies and their requirement for a product. This is shown diagrammatically below.

In summary, Moore defines the early market, the early majority, the late majority and the laggards.

The early market consists of the innovators and visionaries. Innovators tend to be interested in technology products because they represent technological advancement and typically, have an insatiable enthusiasm for technology products. They will tolerate errors and require little support but consequently they will not pay highly for technology products. By comparison, the visionaries are interested in new technology because of their potential strategic importance and return on investment.

The early majority are less interested in taking risk and are consequently strongly drawn to the market leader and whole product technologies, expecting that they are supported. This group is loyal once one over and peers regularly refer to one another. They are also reasonably price sensitive paying more for differentiated products.

The late majority or conservatives are often afraid of high technology products and only use them because they are pre-requisite for performing required tasks; they simply have to. They invest when a product is at the end of the life cycle and when prices have been reduced by increased market share.

According to Moore, the laggards believe that the product which is delivered is not the same as that which was expected to be delivered at the time of purchase. They are therefore portrayed in a negative light, interested in blocking future purchases.

However, the main body of text is dedicated to a 4 stage strategy for crossing the chasm, akin to the execution of the D-Day landings.

In Target the Point of Attack, Moore describes the requirement to identify the market for your product and the process required to do so. It is suggested that target customer scenarios are developed, and that the customers compelling reason to buy is assessed by rating factors. Additional guidelines are provided, such as target a segment of similar size to you and do not enter a market in which the forces you expect to work for you are working for someone else.

Assemble the Invasion Force:
This section is driven by the requirement to achieve market leader status in the targeted market/s so that the product/company becomes favourable to the early majority. It identifies the requirement to provide a whole product and that partners and allies may be required to assist in this.

Define the Battle:
Moore suggests that the position of a product within the market determines the early majority’s decision whether to buy it. Moore emphasises the requirement to position a high technology product so that it is easy to buy. He defines this as positioning and describes the procedure as putting the correct perceptions, in the right place with the right people, at the right time for market adoption.

Launch the Invasion:
Moore believes that utilising a distribution channel, from which the early majority will buy, and a pricing procedure, which reflects a market leading product, is essential to the success of crossing the chasm. He states that the price should be comparable to, rather than less than, the competition.

This book is written as though Moore is sharing his experience with a colleague, making it approachable. To its credit, it is littered with examples to assist the readers understanding but which, possibly due to my limited knowledge of the industry, seem unfamiliar and dated. However, the result is to make the reader consider where in the technology adoption life cycle current, high technology products are and what marketing strategies are being used to promote them. This exercise (refer figure as additional blog entry) makes the theories seem equally logical and relevant now.

Similarly, consideration of Moore’s revised Technology Adoption Life Cycle (TALC) Model, forces the reader to consider the type of adopter they are and, as one of the later majority, to consider the feasibility of becoming one of the more appealing characters identified by Moore.

Generally, Moore’s analysis is quite thought prompting. For example, if there is a clear, mutual interest between the innovators and high technology companies, could this model have been used to predict the emergence of Opensource? Could it not be argued that the innovators are the group most likely to exhibit altruistic tendencies?

Additionally, how is Moore’s model for crossing the chasm affected by the law of the diminishing firms? For companies with a small number of employees, it is likely that the product developers (already likened to the innovators) will be more involved in the sales procedure begging the question; will these people be able to relate sufficiently to the early majority?

Finally, there were times when I was felt that more information was required. Specifically, Moore skates over strategic alliances which one might suspect to change a companies marketing strategy significantly. Not only would this change the size of the niche market a company could pursue but could it not also mitigate some of the risk associated with new markets and open avenues into new ones. However, it is understood that where Crossing the Chasm ends, Inside the Tornado begins….