Crossing the Chasm and Growth Hacking

What is the "chasm" in the TALC? How do you cross this "chasm"? What are the "Bowling Alley" and "Tornado" stages? and What is Growth Hacking? 

This week's blog will answer the above questions. We will also look at how we can apply what we learn from these answers in our entrepreneurship project.

Crossing the Chasm

Figure 1: Adoption Life Cycle

Two weeks ago, in a blog entitled "Stages of the Technology Adoption Life Cycle and their Importance" we spoke about the different groups of people in the Technology Adoption Life Cycle (TALC). Today, we will look at the "Chasm" portion of the Talc. Figure 1 on the right shows the Adoption Life Cycle, similar to the one in my previous blog. But this figure also shows other aspects of the TALC, including the "Bowling Alley" and the "Tornado". We will also look at these two sections of the TALC in this blog. 

The Chasm is a period of time between the Visionary adopters and the Pragmatic adopters. During this period of time, sales of a disruptive technology tend to stop completely. Just prior to the Chasm, sale of the product will be on a incline and then complete stop. Right after the Chasm, sales begin again and rise quickly. But why is there this period of time where sales stop?

The Chasm is the result of the contrasts that exists between the Visionaries and the Pragmatist. When Visionaries buy a new disruptive product, they are trying to get a jump on the competition, they are looking for a radical change between the old and the new, they are, as the name suggests, visionary people, looking for great new products. When Pragmatists buy a product, they look at how the product can improve productivity and efficiency of the existing operations. They don't necessarily want a completely new method that replaces the old. Because of the contrast in buying priorities, making the jump from visionaries to pragmatist is very difficult. During this "Chasm" period, many firms and start-ups fail because they might not recognize the chasm period.

Geoffrey Moore teaches us how to overcome this period of time in his book, Crossing The Chasm. He compares crossing the chasm to the D-Day invasion. The goal is to target "a very specific niche market where you can dominate from the outset". The same way that all the Allies put their efforts to invade the Beaches of Normandy on D-Day, June 6, 1944. By winning over a niche group of Pragmatists, allows the product to start gaining the acceptance of the Pragmatist market. Pragmatist, tend to buy based on reference from other pragmatists, it is important to win over the first group of pragmatist for this to happen. 

Most start-ups and small companies don't have the resources necessary to target a large market or all the pragmatists. If they do, their message will get diffused quickly before they convince anyone to buy the product. However, if they focus all their resources on a single niche target market, they have a better chance of winning the market. 

This initial step into the pragmatist market is known as the Bowling Alley. The idea is that a company should focus all their resources on knocking down the first pin (i.e. the niche market). The first pin knocks down the second, the second knocks the third and so on so forth, where each pin represents a market segment within the pragmatist group.

The bowling pin effect leads to the Tornado stage. In this stage, a company goes through huge growth rates, in the double and even triple digits. To understand how to cope with such fast growth, we need to first consider the concept of Growth Hacking.  

Growth Hacking 

Based on Franco Virriano, the co-founder and co-host of the #1 Business podcast, hacktostart.com, Growth Hacking is determining methods to grow a business. When starting with a new business idea, there are three key concepts that are needed to properly achieve growth, based on Franco. They are:

• The idea or product must be scalable. In other words, it must be possible to provide the product or service in an efficient way as the market grows. If the product idea is not scalable, a company will have a difficult time to grow. 

• Growth must be testable. Testing allows the company to make adjustments to the development of their idea. These adjustments help the company grow in a more efficient manner. 

• Growth must be trackable. If a company can't track growth, it will have a difficult time determining it's position on the TALC. Understanding growth is important, especially when preparing a marketing strategy. 

Making sure that these concepts are understood and possible by a company is essential before reaching the Tornado stage. If any of these 3 concepts fail, the company will face difficulties during the Tornado stage, which might cause the company to lose valuable market share. 

Application: Entrepreneurship Project

What we discussed above can be applied in our entrepreneurship project for the Telfer Business School class of MBA6262. As we discussed in our last blog, our product idea currently falls in the "Early Adopters" group of people, also known as the visionaries. Therefore we would be soon entering the Chasm portion of the TALC. As we validate the idea for the project, we need to determine which specific niche market would be the best to target as our first bowling pin. Determining the best niche market is essential. Missing the first pin can be catastrophic, since we would have focused all of our resources on it. 

Also, as we develop our idea further and determine changes to our Business Model Canvas, we need to keep in mind the concepts of Growth Hacking. We need to make sure our idea stays Scalable, Testable, and Trackable. 

Sources

Moore, G. (2014). Crossing the chasm: Marketing and selling high-tech products to mainstream customers (3rd ed.). New York: HarperBusiness.

Varriano, F. (2015). Growth Marketing. PowerPoint Slides.