Book SummaryCrossing the Chasm, by Geoffrey Moore

1-Page Summary1-Page Book Summary of Crossing the Chasm

Periodically, a new high-tech innovation will transform the way we live or do business and propel its inventors to wealth and fame. More often, though, new high-tech products seem to stagnate and die instead. In Crossing the Chasm, marketing consultant Geoffrey Moore provides an explanation for this, and he presents a strategy for introducing your product effectively into the mainstream market.

His explanation is grounded in the “technology adoption life cycle” (TALC), which predicts how innovations are adopted by different segments of society as a technology matures. Moore argues that there’s a little-recognized gap or “chasm” in this model between the early market and the mainstream market—and failure to cross this gap accounts for the failure of many high-tech products.

In this guide, we’ll discuss Moore’s analysis of the TALC and his strategy for crossing the “chasm,” a strategy that includes targeting a niche market, forming corporate alliances to ensure the customer gets a complete solution, positioning your product as the market leader in that niche, and setting up an effective distribution channel. For each step, we’ll compare Moore’s perspective to other analysts’, including marketing consultant Regis McKenna and sales coach Oren Klaff.

(Shortform note: Moore’s strategy is intended specifically for business-to-business marketing, and thus, he presents most of the principles assuming the target customer is a business, although there are elements that could apply to individual consumers as well.)

The Technology Adoption Life Cycle

To understand Moore’s strategy, you need to understand the chasm between the early and mainstream markets, and to understand the chasm, you need to understand the Technology Adoption Life Cycle (TALC), also referred to as the “diffusion of innovations.”

As Moore explains, the TALC predicts that as a technology matures, the number of potential new buyers first increases (as the technology starts to catch on) and then decreases (as you run out of potential customers who haven’t already bought it), following the profile of a bell curve. The area under the curve represents the total number of customers for the new technology. This area is divided into five categories of prospective customers, as shown in the figure below.

(Shortform note: This concept was originated by George Beal and Joe Bohlen of Iowa State College, who, in 1956, published studies on when farmers adopted new agricultural technologies (such as fertilizer and hybrid seed corn). Six years later, a communications professor at Ohio State University named Everett Rogers expanded upon Beal and Bohlen’s research in a book titled Diffusion of Innovations, which popularized the concept outside of the farming community and made it relevant to other industries.)

(Shortform note: Moore states that the boundaries between these five categories lie approximately at the standard-deviation intervals on the bell curve. However, the graph that he presents in Crossing the Chasm depicts the boundaries further from the center than the standard deviation intervals would be. Moore provides no explanation for this, so presumably, his graphic simply wasn’t drawn to scale. However, in our figure above, the boundaries are marked at the standard-deviation intervals.)

Psychographic Categories of Customers

The TALC model divides customers into five categories based on their “psychographics,” the combination of psychology and demographics that dictates their purchasing behavior. These categories are:

Innovators

Innovators are the first to buy new technology. According to Moore, they love new technology just because it’s new technology, but they’re often on a limited budget because they usually work highly technical jobs, rather than positions in upper management.

(Shortform note: While Moore describes innovators as having limited budgets, Beal and Bohlen assert that innovators have high net worth and are typically influential people in their communities. Perhaps the difference arises from studying them in different contexts. An engineer working in industry might have a limited budget for assessing experimental technologies, while a self-employed farmer would only be able to experiment if he had the money to do so.)

Early Adopters

Early Adopters are the second group to buy new technology. According to Moore, early adopters are usually visionary business managers: They don’t value new technology for its own sake, but they have enough technical insight to identify the strategic advantages that new technology can provide.

(Shortform note: According to Beal and Bohlen’s original characterization, early adopters tend to be younger and more highly educated than members of the early and late majority, and are the most likely category to hold public office. Moore doesn’t mention these characteristics, which again may be a function of context: In a farming community of the 1950s, a college degree would make a farmer stand out as exceptionally educated, while in high-tech industries, almost everyone has an advanced degree. So too, perhaps early adopters in rural farming communities tend to be more involved in municipal politics, while early adopters in high-tech companies tend to be more involved in corporate politics.)

Early Majority

The Early Majority are the third group to adopt new technology. According to Moore, they are pragmatic people, who are interested in...

Crossing the Chasm Summary Shortform Introduction

Periodically, a new high-tech innovation will transform the way we live or do business and propel its inventors to wealth and fame. More often, though, new high-tech products seem to stagnate and die instead.

In Crossing the Chasm, Geoffrey Moore provides an explanation for this and presents a strategy for introducing your product effectively into the mainstream market. First, he discusses the different categories of buyers who become interested in a product at different stages of its technological maturity. Then he shows how their different perspectives create a gap, or “chasm” between the early market and the mainstream market.

Moore outlines a strategy that companies can use to move their products across this “chasm” to enter the mainstream market. He notes that his strategy is intended only for business-to-business products, as opposed to consumer products, although some of the principles he presents are applicable to consumer products as well.

Moore aimed his theories at business executives, to help them act decisively when they reach the chasm. Since the book’s publication, it has become a standard text for managers, engineers, and students, as well.

About the...

Crossing the Chasm Summary Part 1 | Chapter 1: The Technology Adoption Life Cycle

According to Moore, there is a “chasm” between the early market and the mainstream market. Innovative products often flourish in the early market and then stagnate and die in the chasm instead of succeeding in the mainstream market as well.

To understand Moore’s strategy for crossing the chasm and entering the mainstream market successfully, you need to understand the chasm between the early and mainstream markets. And to understand the chasm, you first need to understand the Technology Adoption Life Cycle (TALC).

(Shortform note: The TALC, also known as “diffusion of innovation,” was developed by Beal and Bohlen, two agricultural extension agents working for Iowa State College in the 1950s. They developed the model based on studies of when farmers started using new agricultural innovations, such as fertilizer and hybrid seed corn. Others soon generalized the model to technological innovations outside of agriculture.)

As Moore explains, the TALC predicts that as a technology matures, the number of potential new buyers first increases (as the technology starts to catch on) and then decreases (as you run out of...

Shortform Exercise: What’s Your Psychographic Category?

Recall the psychographic categories of the TALC (technology adoption life cycle):

• Innovators love new technology for its own sake.
• Early adopters want to gain an advantage with new technology.
• The early majority look to how others around them feel about a new technology.
• The late majority want to keep up with the status quo.
• Laggards are skeptical.

Think of the last time you bought (or downloaded, subscribed to, etc.) a high-tech product, such as a new software program, an electronic gadget or other tool you didn’t have before, or a medical treatment/drug that recently became available. What did you purchase, and what were your motives for buying it? Which category do you think you were in when you made that purchase?

Crossing the Chasm Summary Chapter 2: The Gaps in the Technology Adoption Life Cycle

We have discussed the TALC (Technology Adoption Life Cycle). Now we’re ready to discuss the flaw in the TALC model that gives rise to Moore’s “chasm.”

Moore explains that the traditional TALC assumes that sales to the five psychographic categories of customers transition seamlessly from one to the other as the technology matures. Sales in earlier categories build momentum, prompting adoption in the next category. This matters because maintaining sales momentum is the key to success.

(Shortform note: In The Tipping Point, Malcolm Gladwell expresses precisely this sentiment. He argues that the key to making an idea or product wildly successful is to build momentum until it reaches the “tipping point,” or “critical mass,” after which popularity growth becomes self-sustaining. Gladwell does not discuss the TALC, per se, as his book does not focus specifically on innovative technological products, but his book nevertheless provides an example of the emphasis that marketers place on building momentum when promoting an idea or product in a contiguous population.)

However, according to Moore, the categories don’t transition...

Crossing the Chasm Summary Part 2 | Chapter 3: High-Level Strategy

In the first two chapters, we discussed Moore’s explanation of the technology adoption life cycle (TALC), and how the gaps in the TALC create a chasm between the early market (innovators and early adopters) and the mainstream market (early majority, late majority, and laggards).

In this chapter, we’ll first discuss Moore’s general strategy for succeeding in the early market. Then we’ll consider Moore’s argument for why a company must cross the chasm, after which we’ll present an overview of Moore’s strategy for crossing the chasm, which uses a metaphor based on the World War II D-Day invasion to discuss focusing on a niche market.

Moore’s strategy can be broken down into four main steps, which we’ll elaborate on in the next four chapters: choose your niche, provide a whole product, position your product, and set up distribution.

Early Market Strategy

According to Moore, the best-case scenario for a high-tech startup to sell to the early market follows approximately this chronology:

1. You develop a breakthrough technology with at least one compelling application.
2. You show it to tech-savvy innovators, who agree it is revolutionary.
3. You connect with early...

Crossing the Chasm Summary Chapter 4: Strategy Step 1—Choose Your Niche with Customer Profiles

As we discussed in the previous chapter, the first step to crossing the chasm is to select a niche market. In this chapter, we will discuss how you select an appropriate niche.

Intuition Versus Analysis

Moore observes that, prior to crossing the chasm, you can’t survey your early-majority customers or otherwise gather data on them, because you don’t have early-majority customers yet. This makes it difficult to commit to a decision that will determine the fate of your company, because you don’t have enough data to substantiate your choice analytically.

As Moore points out, without enough data to make a rational decision, you are compelled to make an intuitive decision. Moore observes that we’re often better at intuitively predicting the behavior of individual people better than we are at predicting the behavior of vague categories like “the electric vehicle market.” Thus, he recommends that you envision a target customer by generating hypothetical customer profiles, which we will discuss in the remainder of this chapter.

(Shortform note: Moore is not the only one to advocate intuitive decision-making in situations like this. [Malcolm Gladwell encourages you...

Shortform Exercise: Identify Your Selection Committee

Imagine that your current company has developed a revolutionary product and is choosing a niche that will propel you across the chasm. You’ll need a niche selection committee, which consists of the smallest group of decision-makers in your company—every person who would be able to veto the decision.

Who would you include on your selection committee, and why? (What is each member’s role, or how could they block the decision if they’re not included?)

Crossing the Chasm Summary Chapter 5: Strategy Step 2—Provide a Whole Product for Your Niche

Now that you have identified a target customer who has a compelling problem your product can solve, you need to make sure your target customer can buy the complete solution. In this chapter, we will discuss Moore’s “Simplified Whole Product Model,” which we briefly introduced in our earlier discussion of the psychographic categories of customers. Here, we’ll explore Moore’s advice on how you can use the model to identify your whole product and how you can make sure the whole product is available to your target customer.

Understand the Whole Product Model

Levitt’s Whole Product Model

Moore starts his discussion by introducing Theodore Levitt’s “Whole Product Model,” which consisted of four nested circles:

• The center ring is labeled the “generic product,” and represents the core technology, or the core product that you produce.
• The next circle represents the “expected product,” or the solution that your customer expects to get once your product is set up.
• The third...

Shortform Exercise: Identify Your Whole Product

Recall Moore’s simplified whole product model, which shows the core product in the center, with the outer circle divided into sectors, each of which represents another piece of the whole solution. Think about the most recent product your company started selling. If you’re not involved in selling anything, think about a product you recently purchased.

Briefly describe your core product.

Crossing the Chasm Summary Chapter 6: Strategy Step 3—Position Your Product

Once you’ve selected your target niche market, you can begin to develop your marketing strategy. Product positioning drives your marketing strategy because, according to Moore, positioning is the most significant factor in a customer’s decision to buy your product.

Recall from Chapter 1 that “positioning” refers to where potential customers place your product on the market landscape, or how they view it in relation to the competition. Also recall that innovators and early adopters tend to position your product based on its technical qualities, while the early majority position it based on its reputation and market share.

Thus, as you enter the mainstream market, your product’s positioning will depend substantially on its reputation with key influencers and on the perceived competition. In this chapter, we’ll discuss Moore’s advice on how to identify your competition, develop a clear positioning statement, provide evidence to back up your claims, and communicate your message to your target customers or the key influencers who can reach them.

The Dynamic Positioning Cycle

Regis McKenna echoes Moore’s assertion that positioning is the most important factor in...

Shortform Exercise: Identify Your Competitors

Recall that Moore identifies two types of competitors: A market alternative is a product that directly competes with yours for a share of the same market. A product alternative is a product based on the same core technology, but not being used for the same purpose or competing in the same market.

For this exercise, think of the product your company most recently started selling. If you’re not involved in selling anything, then think of a product that you recently purchased.

Briefly describe the product.

Crossing the Chasm Summary Chapter 7: Strategy Step 4—Set Up Distribution

The final step in Moore’s strategy for crossing the chasm is to secure a distribution channel that can actually sell your product to your target customer. Note that in this chapter, a “distribution channel” is what you use to distribute products to your customers, in contrast to a “communications channel,” which you use to tell people about your product or positioning claims, as we discussed in the previous chapter.

Noting that different types of distribution systems are better able to reach different types of customers, Moore advises that your choice of channel and your pricing are the most significant factors in the effectiveness of distribution.

In this chapter, we will first discuss Moore’s advice on the most effective distribution channels for reaching different types of customers, and then consider his advice on pricing.

Defining a “Distribution Channel”

It is worth noting that Moore seems to use the term “distribution channel” in two slightly different ways:

Most of the “distribution channels” that he describes when contrasting different types of customers seem like systems you would typically set up internally, so your “distribution channel” would be a...

Crossing the Chasm Summary Conclusion: Post-Chasm Strategy

In the preceding chapters, we’ve discussed Moore’s strategy for crossing the gap from the early market into the mainstream market. Just as you have to transition marketing strategies to cross the chasm, there are other changes that need to take place as your company transitions into the role of a mainstream vendor. In this chapter, we’ll discuss the changes to company financial structure, personnel, and the role of R&D that Moore identifies as necessary to survive in the mainstream market.

Financial Structure

As Moore explains, start-up companies in the early market often run on investment capital from venture capitalists. In this environment, the company’s survival depends primarily on managing investment risk. He explains that sales in the early market are not so much a source of funding for the company, but a way of demonstrating that the product is marketable, which gives the financial backers a sense of security.

However, he points out that companies in the mainstream market must be able to sustain themselves on their own profits.

Furthermore, he identifies two pitfalls of depending on venture capital for your company’s operating budget. First, he warns that...