“We are crossing the river by feeling for stones.” Deng Xiaoping
In this Blog:
- An Introduction to “Crossing the Chasm”
- Why it is so Important for: Scaling Social Ventures
- Why it is so Important for: Avoiding the Curse of the Zombie Venture
- Why it is so Important for: Social Innovation/Systems Change
- Some Issues We Are Grappling With Regarding “Crossing the Chasm”
- A Potpourri of Crossing The Chasm Quotes
An Introduction to “Crossing the Chasm”
There it was, another budding social entrepreneur telling us the success of their venture hinged on the implicitly modest goal of “capturing only two percent of the Calgary market”.
Keeping our present-day budding social entrepreneur in mind, let’s jump back to the early sixteenth century. Santorio Santorio, when not explaining to people that his first and last names were indeed the same, invents the first clinical thermometer. But that thermometer was cumbersome: It was almost a foot long and took 20 to 25 minutes to register a patient’s temperature. It also had reliability problems. As well, because physicians typically diagnosed fevers by touching various parts of the patient’s body, many worried that thermometers would lead to the “de-skilling” of their work.
It wasn’t until the mid-19th century, some 250 years after the thermometer’s invention, that it was able to make the jump to ubiquity. It did so with the help of Sir Thomas Allbutt, who invented the first practical medical thermometer, and Carl Wunderlich, who proposed the radical idea of tracking an illness by reading the patient’s temperature at regular intervals, (and yes, the history of the thermometer is riddled with people with ‘interesting’ names).
We think there is a common thread between our present-day budding social entrepreneur and the history of the thermometer. It isn’t that the former makes our blood boil in a way that can be measured by the latter. No, the common thread is a theory known as “crossing the chasm”. “Crossing the chasm” could offer intriguing insights on:
- how social enterprises grow;
- how a social innovation, or any idea, actually changes a system; and
- why so many ventures and great new ideas sputter out.
As such, “crossing the chasm” may be one of the most important, but little known, changemaker theories of our age. But a word of warning: “crossing the chasm”, as explained in Geoffrey Moore’s wonderful book of the same name, is very tech focused. That said, he does indicate it applies “…any time we are introduced to products that require us to change our current mode of behaviour or to modify other products or services we rely on.” Obviously, that fits social innovation, systems change, and many social enterprises, to a tee.
Moore breaks up the potential users for a new idea or product into five basic types:
- Innovators (aka Techies);
- Early Adopters (aka Visionaries);
- Early Majority (aka Pragmatists);
- Late Majority (aka Conservatives); and
- Laggards (aka Skeptics).
As you proceed from Innovators all the way to Laggards, each previous segment acts as reference base or mechanism for meeting the needs of the next segment. What makes it tricky is each segment has distinct needs. As described by Moore:
“Indeed, making the marketing and communications transition between two adoption segments is normally excruciatingly awkward because you must adopt new strategies just at the time you have become most comfortable with the old ones.”
This produces a gap between each segment, with the biggest gap being between Early Adopters and the Early Majority. The gap between Early Adopters and the Early Majority is so big that Moore describes it as a chasm (note: when we say “crossing the chasm” we mean the entirety of Moore’s theory, not just the chasm between Early Adopters and the Early Majority). Unfortunately, he also suggests the key to true financially stability – or systems change – is successfully capturing the Early Majority.
The following chart breaks down the first three segments into their key traits (to keep the chart to a workable size we omitted the Late Majority and the Laggards. Click here if you want more information on those two groups):
2.5% of population
|13.5% of population||34% of population|
|Motives||Actively seek risks and new challenges to be the 1st to use a technology [new ideas].
Pursue new technology products [new ideas] aggressively.
|“… enjoy new innovations and are comfortable taking social risk but are largely motivated by its potential to drive their success.”
They want to take a quantum leap forward/breakthrough in how business is conducted in their industry or by their customers just an improvement won’t do.
|Want to make a percentage improvement – incremental, measurable, predictable progress.
Don’t like risk.
|Resources||Well off, social and financial cushion that can absorb the potential losses if something doesn’t work.||Affluent.||Less affluent.|
|Perspective on Price||They want everything cheap. Partly due to budgets but mostly it’s a problem of perception – they think all technology should be free or at cost and they have no use for “added-value” arguments.||Visionaries are willing to pay more – indeed, they like doing so as it means seller has money to put into the product. They also like the prestige of paying for the best.||Pragmatists are reasonably price-sensitive: “They are willing to pay a modest premium for top quality or special services, but in the absence of any special differentiation, they want the best deal.”
Will pay about 30% relative to the competition.
|Other characteristics||They will put up with a lot of flaws, all in the name of moving technology forward. “They make great critics because they truly care.”
Innovators can typically be accessed through technical press and related media.
|“Being the first, they also are prepared to bear the inevitable bugs and glitches that accompany any innovation just coming to market.”
They are in a hurry: “They see the future in terms of windows of opportunity, and they see those windows closing.”
Visionaries can typically be accessed through technical press and related media.
|Because they are so many people in this segment winning their business is fundamental to any substantial profits and growth.
Don’t say ‘state of art’, pragmatists want to hear ‘industry standard’.
“If pragmatists can live with a problem for another year, they will.”
Communicate along industry lines or through professional associations.
|How cross to next segment||“… their endorsement reassures the other players in the marketplace that the product could in fact work.”
To go from Innovator to Early Adopter you must translate a hot technology product into a “major new benefit”.
|Because of the incompatibilities, Early Adopters do not make good references for the Early Majority. “And because of the early majority’s goal not to disrupt their organizations, good references are critical to their buying decisions. So what we have here is a catch-22. The only suitable reference for an Early Majority customer is another member of the Early Majority, but no upstanding member of the Early Majority will buy without first having consulted with several suitable references.”
The hardest segment to cross – a chasm.
|“… though they look to the previous group for guidance, they often have practical considerations that make it hard to adopt a change.”
“The key lesson is that the longer your product is in the market, the more mature it becomes, and the more important the service is to the customer. Conservatives, in particular, are extremely service oriented.”
Returning to our budding social entrepreneur who is seeking to capture two percent of the Calgary market, what that two percent actually means changes significantly depending on which of Moore’s segments they are targeting. Two percent of the population represents:
- 80% of all Innovators;
- 15% of all Early Adopters;
- 6% of all of the Early Majority;
- 6% of all of the Late Majority; or
- 13% of all Laggards.
But the percentage changes are only half the story – the social enterprise must make sure they are addressing the specific needs of their target segment or they will have a zero chance of their two percent.
Implications for Scaling
In addition to what we will say in relation to social innovation and systems change, “crossing the chasm” has two crucial implications for scaling:
- While many social enterprises may feel they don’t need to scale to the size of organization that involves the Early Majority, that could doom them to being a ‘zombie venture’ (see below) and/or to relying on Innovators and Early Adopters to stay alive. The problem with the latter course is those two segments are all about the next new or big thing, so relying on them as loyal customers is very risky.
- The bigger issue is how “crossing the chasm” changes the way we need to look at scaling. Typically, scaling has been described as moving from proof of concept (that your idea will work and you can sell it) to growing sales. As the five different segments of “crossing the chasm” have different needs, you will have to prove your concept in a different way each time you seek to grow into another segment. In other words, there could be as many as four types of scaling once a venture gets past ‘proof of concept’.
Avoiding the Curse of the Zombie Venture
As we dug deeper in our research regarding what it takes to build capacity in social enterprises, one of our biggest surprises came regarding our belief that bad ideas, bad planning and/or bad execution would kill a venture. Boy, were we wrong:
“Most products – even ones that fail – do not have zero traction. Most products have some customers, some growth, and some positive results. One of the most dangerous outcomes for a start-up is to bumble along in the land of the living dead.” Eric Ries, The Lean Startup
The land of the living dead, or zombie ventures as we like to call them, are ventures stuck in limbo, getting just enough sales to survive, but not growing towards the level of impact they want. Being a zombie venture can be particularly excruciating for social ventures – they don’t want to quit because that would mean letting down the social cause they are dedicated to, but as time goes by not being able to achieve their actual goals gets increasingly awkward for them and their partners/funders/board etc.
When your first customers ‘bite’ on what you are selling, it is tempting to think it’s a sign that you are on your way. And you may well be. But those customers may be a ticket to your becoming a zombie venture. How do you figure out which trajectory you are on? Follow this path:
Three Key Steps
Step 1: have a strategy for moving along the segments in “crossing the chasm”;
Step 2: make sure the customers you are getting are within your targeted segment; and
Step 3: make sure those customers are giving you what you need, over and above sales, to move along the segments. That means they are giving you: a) feedback/ideas on how to improve your offerings, and b) the word of mouth you need. If you are unsure whether you are getting the results you need, de-risk the situation as much as you can by doing small experiments to find out for sure. If the results from the experiments are good, cautiously move forward, ideally with bigger and bigger tests. If the results are bad, cautiously do further testing or tactfully withdraw from or postpone the relationship.
Implications for Social Innovation/Systems Change
“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” Arthur Schopenhauer
“It takes about seven years to convert the average man to the acceptance of a solved problem.” Thomas Edison
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” R. Buckminster Fuller
Change is hard, and systems change is incredibly hard. We do not mean to in any way diminish the importance of key theories and insights such as systems/complexity/dynamic theories, wicked problems, emerging futures etc., but we wonder if we would make more progress on systems change if “crossing the chasm” was better understood and utilized.
For example, the three quotes that began this section are pretty iconic statements reflecting both the difficulty of and path to change. They also provide some validation to “crossing the chasm” as each reflects the arch of adoption of the Late Majority and the Laggards (and possibly the Early Majority): Before ideas are proven, these groups will naturally ridicule any new idea only to then embrace it when it becomes the established way of doing things.
Here is an important insight from Moore about the Early Majority (remember, being embraced by the Early Majority is the key point where something solidifies itself as the new reality, i.e. systems change):
“[The Early Majority] want to buy a productivity improvement for existing operations. They are looking to minimize the discontinuity of the old ways. They want evolution, not revolution. They want the technology to enhance, not overthrow, the established ways of doing business. And above all, they do not want to debug someone else’s product. By the time they adopt it, they want it to work properly and to integrate appropriately with their existing technology base.”
Not only does this has huge ramifications as a ‘how to’ for system change, what it effectively means is, as hinted by Buckminster Fuller, by the time a radical innovation takes hold of the system it is no longer really radical, it’s the safe option/the way things now work.
To look at this from another angle, consider a recent conference that called for disruptors to advance systems change. Of course, disruptors are crucial to the change process, but such a call will only appeal to the Innovators who love the new for the sake of the new. If that disruptive idea wants to make its way through the population segments and on to systems change, it will have to slowly transition from ‘new’ to ‘new and useful’, and to do so in increasingly safe/proven and ‘full solution’ ways. In other words:
“Invention is not disruptive. Only customer adoption is disruptive.” Jeff Bezos, Founder, Amazon
Our final note on the implications “crossing the chasm” may have for systems change relates to any time an exciting new idea fails to live up to its potential. For example, increasingly leaders of the lean startup movement are talking about “innovation theatre”, where people ‘talk the lean startup talk’ but seem be going through the motions of the lean startup methodology. Another example occurred when the leader of the Total Quality Management ended up abandoning his own idea due to his frustration over what it had become.
Or consider when new ideas start off with exciting potential only to fall to the lowest common denominator. We distinctly recall that when it was first introduced Corporate Social Responsibility (CSR) was about much more than branding, but branding seems to be all it has become. Or how about the idea of partnership/collaboration? Certainly partnership/collaboration is a crucial concept, but in becoming ubiquitous it seems to have become meaningless. Indeed, Jocelyne Daw’s insightful piece “Ten Signs You’re in a Real Partnership” is a wonderful attempt at refocusing that discussion.
Or how about Warren Buffett’s “three i’s” explanation of how good ideas usually go so wrong:
- First come the innovators, who see opportunities that others don’t.
- Then come the imitators, who copy what the innovators have done.
- And then come the idiots, whose avarice undoes the very innovations they are trying to use to get rich.
Is this happening because we are ignoring the principles of “crossing the chasm”? Specifically, if an idea jumps to the Early Majority before it is ready (i.e. proven/safe/made fool-proof), what is going to happen with it? It will be wedged into their current way of thinking. In other words, it will sink to the lowest common denominator.
We recently had a conversation with a social entrepreneur who had an exciting new idea. As the buzz relating to her venture built up, a major company made a major purchase. She sensed they weren’t using the product properly, but thought it was their loss and was happy to take the funding to help grow her social enterprise. This is one of the great and surprising challenges facing social entrepreneurs today, and may be a new wrinkle to Moore’s theory: There is such a growing pressure on the Early Majority to be seen to be doing good or to be innovative that they will buy products or use ideas even though those products haven’t fully gone through the chasm (been proven/safe/made fool-proof). Chances are this means the product or idea will fail them. This may be because they are idiots in the way Buffet describes them (i.e. greedy), or it may be because, as the Early Majority, they have the best intentions but simply don’t have it in them to utilize a product or idea that isn’t proven/fool-proof.
This problem echoes what we wrote about in “A Key Glimpse Into the ‘How To’ of Social Entrepreneurship”, only we had not knitted up how it connected to “crossing the chasm”.
Here is another challenge social entrepreneurs who jump the chasm before they are ready will face: When the product/service/new idea fails the Early Majority, as it surely will, that segment isn’t going to blame itself (imagine someone saying “Great product/service/idea, but we weren’t smart enough to use it”, especially if they are motivated by brand considerations), they are going to blame the quality of the product/service/new idea. That means the social entrepreneur will have to face members of the Early Majority bad-mouthing the idea – the kind of rep that is a killer when you are crossing into that segment. In short, by jumping the chasm before the product/service/new idea is ready, the social entrepreneur could be ‘poisoning the well’.
How to avoid this? See the three key steps we described above in ‘avoiding the curse of the zombie venture’.
Some Issues We Are Grappling With Regarding “Crossing the Chasm”
- We are pretty sure “crossing the chasm” applies to social issues (a huge thanks to Aaron Hurst and his wonderful book The Purpose Economy for connecting the two), but to what degree does it do so and are there any nuances that change when we move from tech to social issues?
- Moore believes that “crossing the chasm” only applies to business to business (B2B) activities. Is that really the case?
- We are intrigued by the notion that each organization may itself be populated with Innovators, Early Adopters, the Early Majority, the Late Majority and Laggards (Moore talked about this in his book). What implications does this have for how changemakers approach and navigate an organization?
A Potpourri of Crossing The Chasm Quotes
By now you can tell that we highly recommend the book Crossing the Chasm. For those of you have made it to the end of this blog (you may be an Innovator or Early Adopter as defined by “crossing the chasm”!), here are some additional great insights from it:
“Most companies fail to cross the chasm because, confronted with the immensity of the opportunity represented by the mainstream market, they lose their focus, chasing every opportunity that presents itself, but finding themselves unable to deliver a salable proposition to any true pragmatist buyer” (80).
“Market boundaries occur, in other words, at the point of failure of either the value proposition or the whole product. By contrast, the other market-making factors – alliances, competition, positioning, distribution, and pricing- do not impact the size of the market but rather the rate of market penetration” (221).
“Until break-even cash flow is achieved, nothing is secure, and your destiny is not under your control” (222).
“The great benefit of adopting the discipline of profitability at the outset is that you do not have to learn it later on” (222).
“Early market development efforts typically do not respond well to massive infusions of capital- in the 1980s we saw this with IBM PC Jr. and Prodigy; in the 1990s with pen-based computers and video-to-the- home, in the last decade with RFID chips for inventory management and smart grids for electric power distribution. You simply cannot spend your way into the hearts and minds of technology enthusiasts and visionaries” (224).
Note: The Deng Xiaoping quote comes from Adam Kahane‘s great book Collaborating with the Enemy. Quotes that aren’t attributed have been taken from Crossing the Chasm, Geoffrey A. Moore, 3rd edition. The story of the history of the thermometer is derived from “What Your Therapist Doesn’t Know”, Tony Rousmaniere, The Atlantic, April 2017, which also profiles a wonderful social enterprise, the Calgary Counselling Centre.
[author] [author_image timthumb=’on’]https://tricofoundation.ca/wp-content/uploads/2018/02/Trico-sun.jpg[/author_image] [author_info]This blog is part of the Trico Foundation’s effort to capture what it learns as it works to close gaps in society by building capacity and innovation in social entrepreneurship. The flagship effort in this regard is our A.S.E.S.S. TLC (Tools, Links and Coaching) page where you can find most of our thinking on these issues and worksheets designed to help advance your social enterprise idea. Stay tuned for further blogs on the entrepreneurial mindset (including effective learning, and overcoming cognitive bias) and the mechanics of successful social enterprises. If you have any questions about the content of this blog, please contact us at firstname.lastname@example.org.
We are excited by the progress we are making, but know we still have much to learn. We would value your perspective and feedback. Please join the conversation on twitter.[/author_info] [/author]