If you can’t “Cross The Chasm”, it can cause entrepreneurial spasm! So what does it mean to cross the chasm, and how can we do that effectively? 

 

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CROSSING THE SPASM  

Karla Nelson:  Welcome to the People Catalysts Podcast, my friend, Allen Fahden. 

Allen Fahden:  Yeah, and I’m excited. We’ve got a very different book today. 

Karla Nelson:  Yes. It’s interesting. It wasn’t that long I read this book, maybe only 10 years ago or so. It’s a great book. It’s interesting because it’s based off of the same 110 years of marketing research, the law of diffusion of innovations, which The WHO-DO Method™ is based off of. It’s interesting. It could be applied in so many different ways. It’s really interesting how it’s applied in this book to marketing. We will be talking about Crossing the Chasm by Geoffrey Moore. But for the purpose of this podcast, the title is going to be Crossing the Spasm. 

Allen Fahden:  Because that’s what happens when you get all messed up and you don’t deal with some of the things that the book is listing. It’s sort of like your back going out. Everything goes into spasm. 

Karla Nelson:  Yeah. Being an entrepreneur can put you into spasm there too. Of course, the marketing. This is a marketing book, right? Marketing is something that’s absolutely critical. It’s the lifeblood of any business. This particular book, it was published initially in ’91. Then, it was revised in ’99 and 2014. I think it was somewhere around 2005 or so when I picked up the book the first time. It really focuses on high tech companies during their startup period and using the law of diffusion of innovations, and how it makes a significant impact on disruptive innovation in high tech and how to get customers then to adopt, use, purchase that technology, and how each of the innovators, early adopters, early majority, late majority, and laggards. They don’t even talk about laggards in the book. They never bring that up once. 

Allen Fahden:  That’s too bad because laggard jokes are kind of fun. 

Karla Nelson:  They are kind of fun, aren’t they? Moore starts off with just explaining the law of diffusion of innovations theory. Allen, you and I know this. We have a whole podcast on it, one of the first podcasts that we did, because we wanted to set the foundation. Everett actually didn’t even create … Well, he put his name to the model, but there was already, what, 15, 20 years of research from Japan and all these different countries and- 

Allen Fahden:  It was farmers originally trying to get these late adopter farmers to grow new crops, and they couldn’t figure out why they wouldn’t do it. Then, they realized that they’re just people who are naturally late adopters. That category of farming had been around long enough to get a lot of me-too people in it. 

Karla Nelson:  Yeah. It’s been applied in so many different ways. This book is applying it. Our method and the assessment is based off of it. Six sigma, lean startup, lean manufacturing. We could keep on going on, and on, and on. The law of diffusion of innovations has been applied in many different ways. 

But for this book, it talks about the chasm that happens between the early adopters and the early majority. He refers to that early adopter. He doesn’t really talk about innovators so much, Allen, in the book as you know, but he refers to them as enthusiasts. Then, the early majority, he refers to them as pragmatics, or practical. He makes the case that these early adopters, the visionaries and enthusiasts, have a very different set of expectations than the pragmatics. That chasm then refers to shifting your marketing and adoption of your technology from those early adopters to the early majority. 

Allen Fahden:  Yeah, that’s right. A little bit more on the chasm, before you get to the chasm, you get these false positives. You sell to the early adopters. Of course innovators, 2.5% of the early adopters, I’m one of those. I’m the idiot who waited in line in 2007 to buy the first iPhone. I waited eight hours in line only to find out I’d paid $200 too much, and I didn’t care because I had had two extra months before they lowered the price with one of those elegant pieces of technology ever. 

Karla Nelson:  Yeah. It’s funny in the book. I think I read this in the book is that because we’ve done so much on the law of diffusion of innovations obviously, but they pay for the privilege to be first that earlier. 

Allen Fahden:  Yup, that’s true. 

Karla Nelson:  … the privilege to be first. Think about the big screen TVs that It used to be 50 $40,000 that are like. 

Allen Fahden:  That’s right. That’s right. Look at me, I got one of these. But it’s all very predictable and products will actually migrate their way through innovators. The first 2.5%, early adopters, the next 13.5%. Then, here’s what Moore says is the chasm between early adopters and early majority who are the next 34%. The interesting thing is if you add up innovators, early adopters and early majority, that’s about 50% of the people. It just so happens that about 50% of the people are movers and shakers in our model. 

Now, one of the things that we did that’s different from this is we’ve, of course, talk about shakers as natural thinkers and movers as natural doers. There’s another distinction which is really important when you’re going inside the company and applying it to work. Then, of course, back to Jeffrey Moore, he’s got the late majority at 34%. These are the later adopters. In laggards. I can’t resist at least one, the person who wouldn’t buy an electric car until the last gas station in America which closed. That’s the last 15%. 

Karla Nelson:  I know a couple of those. They’ll talk about it. They just won’t do it. 

Allen Fahden:  Our validations study. We’ve talked to a thousand people and we found pretty much the same numbers as far as diffusion of innovation. It really hasn’t changed in over a hundred years. The chasm, of course, and this is just in terms of his book, is a place where all of a sudden with that first 16% of the market of the innovators and early adopters, everything’s easy. It’s all going beautifully. You’re building new factories, and you’re producing stuff and selling it through the roof. All of a sudden, the bottom drops out of the market. 

That’s because once you cross that chasm between the early adopters, and early majority, another set of words there, they become more practical. Early majority, late majority becomes more conservative and then the laggards of course are down right. It’s like that’s a time to pivot. We can all prepare for that, which is once we get through the early adopters, now we’ve got the start addressing objections because these are the people who are going to say, “Oh, I don’t want to buy that. It’s too much money,” or you haven’t thought it through or I’m a little worried about what some of the tradeoffs are going to be. If you don’t pivot and change your strategy, you go right back down. 

Karla Nelson:  Yeah. That’s the biggest area to pivot from that Moore talks about in the book. He also says, which I think this is unique and would be really challenging, it’s easier said than done, but that you should focus on one group of customer at a time. I think it’s the dissonance between the early adopters and early majority of their expectations, we’ll get in a little bit more involved in this later on in the podcast. But between the early adopters and the early majority because their expectations are so different, it’s like to move from the innovators and early adopters. It’s like a little bit of a shift, right? 

But, then all of a sudden it’s like, “Whoa, I want a full, you know how to use this because as I want, I want a complete solution here.” Yet, the early adopters and innovators are like, “Hey, I’ll just give you my money and I don’t care if I use it anyway.” 

It’s a very different, and it’s different expectation is they don’t expect an entirely like finished product. He also talks about to be successful. We’re taking a long time to review this book simply because it’s really meaty. We can’t talk about what’s missing until some of the listeners may not have actually read the book. We’re spending a little bit more time than we usually do on most books just explaining kind of the difference in regards to most marketing books and how this applies directly to technology and high tech specifically. 

He talks about the bandwagon effect from that, Allen, which is building that momentum. It’s super important to understand each group how you’re going to market to each group and then build that momentum. It’s almost like shifting gears in a car like … instead of like, like you said, dropping out and falling through. 

Allen Fahden:  You better get that car into the shop, right? 

Karla Nelson:  Yeah. It’s just like right off the cliff into the cathode. I think that many business strategies and marketing books again have based off the law of diffusion of innovation. But to have that single market to focus on I think is really, really interesting that he focuses on. He’s like, “Take it down almost like just dominate the market immediately.” He also defines what I talked about just a moment ago, which was that whole product. When you move through that chasm from the early majority or the early adopters to the early majority is that they want to know how to use it, how it fits with other tools. 

They want to know that it addresses an important problem. There’s a compelling reason to buy. One of the examples I think that was really good that he listed in the book was Quicken. Everybody knows Quicken, right? Well now, it’s QuickBooks. It’s gone through a couple of different names now that I think about it. But, initially, it started out for the bill-paying family member who uses a PC is tired of filling out the same checks every month after month. 

Quicken automatically tracks all your check writing. Unlike managing your money, our system is optimized specifically for home bill paying. It’s just really quick and concise and identifies the market, identify as the problem and identifies the solution. That’s not something that the early adopters would need. They’re like, “Woo. I can put all my finances in a computer.” I mean, they’re okay with playing with it. 

You don’t have to have it all in the beginning because, obviously, you’re focusing on those early adopters, but understanding that that’s going to come and having a strategy from the beginning. 

And then the other thing, I think which I thought was interesting, Allen, and I’ll let you comment on this, is that most tech companies I don’t think would focus potentially on starting out all of your sales offline, so your technology companies. They’re going to look at purchasing online, downloading. Way back in the day, remember, they actually had CDs. When this was written, we were probably still, gosh, maybe we weren’t doing floppies. Oh my gosh, we were doing floppies still in ’91 now that I think about it. Remember those squares, not the black floppies but the- 

Allen Fahden:  Yeah, the smaller ones. 

Karla Nelson:  The hard … Those were the most common. We were just moving to CD in the computer even though we already had DVDs for the TV. Think about having to go in and take this and upload it into your computer and the software. How are you focusing on selling that? I think it was interesting when he talked about that sales are based off relationships. Make sure that that initial target market focusing on direct sales. 

Allen Fahden:  Yeah. I mean it’s the opposite of what you think. It’s like engineers, high tech. It’s just everything yells like go on line to do this now. Now, maybe the book was written since it was written in 1991, really nobody was online except maybe the government. 

Karla Nelson:  Yeah. There was no Google. 

Allen Fahden:  Right. Maybe that’s why. But even still, the whole idea of a relationship with sort of the stereotype of tech. They’re just like oil and water. 

Karla Nelson:  I thought that was really interesting and unique. The last two things I just want to touch on before we get into kind of how you could put gasoline and a match on these strategies is, first is make sure you have competition. I can’t tell you how many pitches I’ve been in where somebody is pitching to raise money and they’re like, “Who’s your competition?” They’re like, “Well, we don’t really have competition.” 

Well, there’s a huge problem with that. He underlines that most people, if they’re investors are just rolling their eyes going, “Come on.” That’s special. But at the end of the day, psychologically, if you don’t have someone to compare yourself to, people don’t know what box to put you in. It was interesting because when you start out focusing on your niche area that you’re going to take down, ensure that you have competition there that you can identify. 

Then the last piece was that your distribution and pricing will drive your invasion of the marketplace. There’s I don’t know, five different offerings, I think, he talks about, enterprise offering, end user, somebody running a department head, engineers and small businesses that are probably going to be your five that are going to use technology. 

He basically says they need different support mechanisms. Their price point’s completely different. The reason for purchasing is different. I thought that was unique because a lot of times companies, especially out of the gate, they’re like, “You can be my client if you fog a mirror. It doesn’t work that way. Then, they end up just not being successful because they’re trying to be everything to everyone. I think it’s really good at segmenting that. 

Allen Fahden:  Yup. 

Karla Nelson:  Let’s chat about what’s missing then. One was obvious to me, Allen, which was talk about a chasm, he jumps right over the team, and doesn’t use the law of diffusion of innovations with the team. He just spoke internally, yeah. I don’t even know if he talked about the team once in the book. 

Allen Fahden:  No. 

Karla Nelson:  I thought that was a huge, like, “What?” I understand it’s a marketing book, but you’ve got a market to your internal team of adopting new ideas and innovations and developing them. They’re the ones doing all the hard work to make it happen. 

Allen Fahden:  Absolutely. If you don’t have them in the right place at the right time, doing the right thing, you will be painfully slow. Plus a lot of things may die and you might kill your best ideas. At the time he wrote this book, no one had any conception of actually taking the law of diffusion of innovation inside the company for the team. 

Karla Nelson:  Actually, who else has? Yeah. We’ve pioneered it because I have not seen … You know what? Agile has a bit of that. They’re not specific as specific, but at least they have a start. You know what I mean? Somebody does a piece. 

Allen Fahden:  Right. But, of course, this existed long before that and the work we’ve been doing inside the companies. That’s not to be bragging about it, but it was remarkable how few people could even … They used to say the Native Americans couldn’t see the ships out in the harbor because they had no context from which to see them. They were just like invisible to them way back and when the Mayflower was there and everything. 

Anyway, you’ll be faster to market once you understand the law of diffusion of innovation as applied internally because you get buy-in from your team. To give you a quick example, when we were called upon to work with a major package goods company that was … You know these names but we’re not going to tell you. We had a half a day with them. There was the problem. There was a major, major product innovation going into test markets from their main competitor. 

They wanted to do something. They wanted to introduce like a parody product to what the other company was doing so that they could kind of muck up their test market results for the competitor. Of course, the engineers, many of whom are shakers and/or shaker-prover combinations, they wouldn’t even a commit to a schedule to get this project done. We had a half day with them in the morning. They were completely, “We’re not going to do this.” Why not? Well, it’s terrible. We’re not going to do a parody product. We want to do one with superiority, that’s beneath us to do a parody product. 

Karla Nelson:  It’s got to be a good idea. 

Allen Fahden:  Yeah, good idea and my idea. It’s just a typical shaker kind of a thing. What we did was we talked in the model. Then, it just so happens that the Super Bowl was going on in one of these … The team that won, one, because of their defense at the last minute. They tackled somebody on the one-yard line from the other team who was going to score on them, and it’s the last second win the game, and then they would lose it. But they were able, with the defense, to tackle the person on the one-yard line, clock ran out. 

Then, even though the quarterback at the time was pretty much the hero of the game, we asked them, “Who’s the hero? Is it the quarterback? Is that the offense or is it the defense who tackled that person on the one-yard line?” All of the sudden, they got the idea that you could be a hero playing defense. All these shakers, it would be the only way, visual kind of a metaphor, the only way that shakers could understand something like this. They immediately said, “Okay. Let’s do a schedule.” Within about two and a half hours, they completely shifted, went 180 degrees completed this schedule for doing a parody of me-too product just to play defense. 

Karla Nelson:  Yeah. This is probably a product you have on your shelf at home, which is pretty kind of fun, right? 

Allen Fahden:  By the way, their one proviso was that, of course, once we mess up the competitors’ test market, we get to come up with a superior product correct. They said, “Oh sure. You can do that.” 

Karla Nelson:  That’s always fun. They are going back and forth and back and forth. By using the process in less than half a day, you get everybody to sit in the right space doing that right thing at the right time. It’s the same way you get your customer to adopt purchasing. You get your team to adopt ideas. You get 100% buy-in. Now, you’re not pushing apart car internally just … Think about it. If you’re asking them to use the same method internally with the team, how much better you think they’re going to get it when you’re using it externally with your client? 

Allen Fahden:  Yeah. If you want to get your shakers to work on it, just make sure that you somehow find a way to present it as new, cool, you’ll be the first to do it and then boom, you’ve got them. 

Karla Nelson:  Yeah, I love it. I love it. I just have to ask you the million-dollar question here, Allen, because we get asked this all the time or we get to ask this question all the time or ask this question to somebody else who’s teaching in regards to the law of diffusion of innovation specifically with your customer, how do you know what they are? How do you know where they lie on the law of diffusion of innovations? 

Allen Fahden:  There’s many times we’ve been in the back of the room at some of these professional groups, and they bring in a couple of consultants who are speakers, and they’re talking about change programs. They say, “Well, how do you get a change done?” The consultants say, “Oh, you just find the early adopters and you start with them.” That’s a law of diffusion of innovation. One of us will usually raise our hand in the back of the room and say, “Oh, how do you find the early adopters?” Well, we don’t know that exactly. You find them somehow. 

Karla Nelson:  A little bit of uncomfortable for a while. 

Allen Fahden:  You find them somehow, and you go to them first. Well, and that’s why we haven’t assessed. 

Karla Nelson:  Yeah. At the end, we’ll share with you, because it is going to be … We’re in a beta test and it is absolutely free for you to go and check that out. We’ll talk about that in a little bit. The other thing is that it identifies who you are. But then, it identifies as who you need to go to. It’s like, first, it identifies the assessment is who you are and then how you … The spaces just like you’re talking about football, where are you at in relation to everyone else on your team and how do you work together in order to get things done, adopt new technology, roll out the marketing plan, all of that stuff that ends up then touching your clients. 

Of course, you can’t really go out and assess your customers. I mean you can understand what market that you’re focusing on. But it’s a guess at that point. I mean you’re guessing. I think Simon Sinek had it the closest is speak to what you think the why that they would- 

Allen Fahden:  Exactly. 

Karla Nelson:  … gravitate towards. I mean that’s about- 

Allen Fahden:  Who’s going to have a different why. What you do is you segment your market, not by finding them with any methods. You just put out that message that will appeal to them. Then, you’ll come out and- 

Karla Nelson:  Yeah. That’s about as close as you can get with your customers. But understanding what Moore says in there is understanding what group you are marketing to helps you because you definitely know that when you’re marketing to the innovators and the early adopters, that’s going to be very, very different when you’re marketing to the late majority. 

It’s completely different. Understanding that I think was really neat how we put to the customers, but understanding within your team is actually revolutionary. It’s kicking it up a notch then just jumping over your team and moving straight to your client. 

Allen Fahden:  Absolutely. Why is that? Because what you can do is get rid of all the failures that you have in a meeting with your team by understanding the fit in the sequence. How do people fit together end to end? Who do I hand it off to? Well, actually, I hand off to the mover. I’m a shaker. I love coming up with ideas and movers. The one who’s not going to kill the idea, they’re going to pick the best one. It’s always forwarding. 

What we’re talking about is two basic phases. One is the beginning phase. What do you do? That’s ideation whether we’re inventing a product, we’re doing a messaging strategy, whatever. That’s the beginning. Then the end is we’ve got to get it implemented. It’s not implemented that goes nowhere. That’s the implementation fix ideation, implementation. 

Karla Nelson:  Absolutely. The other thing that I think is interesting and kind of missing there is part of it is how you buy your product, but what your relationship with your team and technology, and how that’s different. They talk about how the relationship in each segment on the law of diffusion of innovation is different in relation to your product, but not necessarily how is your team and everyone on your team’s relationship with technology different. 

It’s not only using technology to produce the technology. You see what I’m saying? It’s like you have to figure out the relationship with your internal group, because you have tech companies and people that know nothing about technology. But they’re absolutely critical in developing it. I think it’s there. You go jumping over the team that it’s so critical to get to that point of having the opportunity to then market to the customer because movers, shakers, provers and makers. Allen, if you want to speak to that for a second, we all have different relationships with technology. 

Allen Fahden:  Yeah. We’ve done a lot of work helping people adopt technology. Believe it or not, different people adopt technology for different reasons and at different times. I’ll give you a quick overview. The shaker, if you’ve got technology, I’m one of those. I’ve got probably 150 apps in my phone because I just love to download apps. Oh that’s new. I’ll use it some time. I’m paying for it. 

Karla Nelson:  I can attest to that. You’re the person that has 60,000 unread emails. I’ve got 21 right now. It got up to like 68 yesterday, and I started freaking out. 

Allen Fahden:  Yeah. It’s comforting to me to have thousands of friends. A shaker likes new stuff, and we’ll buy it because it’s new. It’s cool. I want to have it. That’s pretty much it. Then, I lose interest. I go onto the next thing that’s new and cool that I want to have. There’s a piece. Now, the interesting part about that is that most of the ways of teaching technology are not for the shaker at all. In fact, the mover. Now, they buy it and, you know I’m talking to you. You know that, but you don’t want to be bothered with the specifics, right? 

Karla Nelson:  Oh no. But we’ve got to fix the problem with the technology, but yeah. I don’t need to know all the specifics. I just want to hand it off to the prover to do some due diligence on which product’s the best. 

Allen Fahden:  Yeah. Now, here’s the prover who probably has more patience now. You get later in diffusion of innovation and you get to the later adopters. They have more patience, and they could probably more easily learn it. But that paradox about all this is that the early adopters who wants the technology don’t have the patience to learn it. Later adopters who have the patience to learn the technology don’t really want it. 

For example, the prover will look at the technology and say, “Yeah. There’s too much wrong with that. I don’t think they’ve really thought this thing through. Why would we bring that in here?” Then, the maker who’s really got the patience, this is the … Most of the documentation and all the education, the learning of softwares is created for the maker. It’s iterative step by step. You do a sample project and so on. 

You just focus all the way through. Well, the maker is the only one who can focus, but the makers actually does go out that new technology there because it’s going to upset everything. You’re dealing with paradoxes all the way through this. The people who love the new stuff, they don’t want to learn it. The people who are willing to learn it don’t want the new stuff. 

Karla Nelson:  Yeah. Exactly. The point that we’re making there is understanding your team and their relationship with technology helps you help them adopt the technology, have them do the parts of the work that they’re going to be best at so that you can develop whatever it is that the product is. Also, not chuck it at them because when you think about technology, Allen, I never thought about this before, every one of the core natures of work have such a different relationship with it. That’s why those billions. I can remember the study that we did podcast on. It was like how many billions and billions of dollars. 

Allen Fahden:  It was $30 billion of- 

Karla Nelson:  Wasted. 

Allen Fahden:  Wasted simply by unadopted technology. 

Karla Nelson:  Yeah. It just sits there. 

Allen Fahden:  Somebody buys a big chunk of technology and hardly anybody in the company uses it. 

Karla Nelson:  Because it’s critical to have all four coordinators of work involved and at different times. Then after you move it through, you get it to a point. You get to the area where our good friend, Warren Buffett says, “I hate innovation,” because as soon as you’ve got … There you go, law of diffusion of innovations. As soon as you get to the maker, they’re on the later adopter scale, they don’t mind doing the same thing every single day. What kind of companies does Warren Buffett like once it print money? That means- 

Allen Fahden:  Yeah. Cash flow, don’t do anything. 

Karla Nelson:  Right. Yeah. We’re just going to hang out here because … Exactly. When you think about it and you apply that, it can be applied in so many different ways. Well, awesome podcast, awesome book. That was a great discussion, Allen, and a really rich discussion. We’ve gone through so many different types of books, and I really enjoyed the marketing aspect of this sense. We’re kind of marketers at heart. 

Allen Fahden:  Yeah. The team and marketing are so parallel in this case if you pay attention to the law of diffusion of innovation. If you don’t pay attention to it, you know it is the law so you can get in trouble. 

Karla Nelson:  It is a law. It is a law. Remember, run the process with your team first and then- 

Allen Fahden:  I can see you getting pulled over by I wake up, “Oh, what you pulled me over for, officer?” Yeah, violating the law of diffusion of innovation. I’m going to have to write you up. 

Karla Nelson:  You know what? Allen, you came up with a great idea for like a training or something like that that to say as soon as somebody … because we do trainings. Often, when people are just like so in love with the way that they always do it …. I mean they can’t help themselves that you’ve got to have people leave the room. 

Allen Fahden: What we usually do is have them push their chairs out, but a lot of times, you can’t manage it. You literally have to have only the shakers in the room or only the provers and facilitate that over and over again because they can’t deny who they are. It becomes absolutely obvious. It’s funny when you’re playing a game. It’s not funny when you’re putting together a strategic plan or a company. Would that be funny because we have all these words that we use like, “Okay. Great idea. Hold that.” Can you imagine if we just handed out tickets? Allen Fahden:  I can see bringing in the tow truck and impounding your car conference table. 

Karla Nelson:  There you go. All right. 

Allen Fahden:  Law of diffusion of innovation and not just a good idea. It’s the law. 

Karla Nelson:  Yeah. All right. Remember, run the process with your team first. Use the law of diffusion of innovation. Understand who was on your team and use the assessment, The WHO-DO Assessment™. Define the who and for a limited time while we’re beta testing our next run of The WHO-DO Assessment™, it will be free. There’s a link to it on our website and in the show notes. 

Feel free to jump in. We’d love to have you be a part of our beta test. There’s area for feedback as well, and you can access the website at the peoplecatalysts, and that is plural because we need you all, but we don’t need you at the same time, .com. Thanks so much for your time today, Allen. 

Allen Fahden:  Thank you, Karla. 

Karla Nelson:  Until next time, farewell.