Review

This is a product management classic. The key insight is that you have to think about your Go To Market Plan differently depending on where you are in the technology adoption lifecycle. The hardest moment is crossing the chasm from early adopters to the early majority. You’ll likely have to change your approach to do it. It’s a great reminder that strategy should always be contextual. It’s worth reading Obviously Awesome by April Dunford too, as she has plenty to say about the positioning formula referenced in this book.

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The Innovator’s Dilemma

This book is a product management classic. A great framework for how disruptive technologies change market dynamics. It’s full of great insight for challengers and incumbents. The book is clearly well researched. The conclusions are both surprising and straight forward. A must for anyone trying to innovate and break into a market. Well worth the time.

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The Product Momentum Gap

Within this book, there is some valuable insight. While I wouldn't adopt the methodology completely, there is value in it. The Product Value Creation Plan in particular has merit beyond addressing the 'Product Momentum Gap', and I find it odd that the authors chose to combine the two.

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Book Review and Summary: The Cold Start Problem by Andrew Chen

Discover Andrew Chen's The Cold Start Problem, a must-read guide on overcoming the challenges of building networked products. Learn about the five key concepts behind network effects: Cold Start Problem, Tipping Point, Escape Velocity, The Ceiling, and The Moat. This book explains how to navigate early-stage struggles, like the vicious cycle of small networks, and build interconnected, self-sustaining atomic networks. Unlock strategies for growth, retention, and scalability, while maintaining a competitive edge in mature markets. Perfect for entrepreneurs and product managers seeking to solve network challenges and achieve lasting success.

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Key Takeaways

The 20% that gave me 80% of the value.

• The point of greatest peril lies in making the transition from…an early market dominated by a few visionary customers to… a mainstream market dominated by a larger group of pragmatist customers.
• The Technology Adoption Lifecycle applies to products that require us to change our behaviour or modify other products and services we rely on (also known as discontinuous or disruptive innovations).

• The divisions in the population curve are roughly aligned to where standard deviations would fall.
• You need to take advantage of your day in the sun before the next day renders you obsolete → there’s a window of opportunity.
• The chasm that separates the early adopt­ers from the early majority is the most formidable and unforgiving transition.
• The early adopters are looking for a change agent to get ahead of others. They’re willing to work through bugs and glitches.
• The early majority want to buy a productivity im­provement for existing operations. They want it to work and integrate into their operations
• Early adopters therefore aren’t good references for the early majority. But references are important to the early majority, because they don’t want disrupt what they’re doing.

• Marketers segment because there’s no meaningful marketing program that can be implemented across customers who don’t reference each other

• Innovators: The Technology enthusiasts. First to adopt, want to get new things. Want access to technically knowledgeable people. You need to find the ones who have access to the big boss
• Early Adopters: The Visionaries. Have the insight to match technology to strategic opportunity → create high-risk projects inside their company. Highly motivated, driven by a dream (Steve Jobs, Henry Ford, JFK). Looking for breakthroughs, order-of-magnitude returns. Not price-sensitive. Alert the community to technical advances. They are in a hurry, they have a narrow window of opportunity.
• Typical problems in early markets:
• the company has no expertise in bringing a product to market
• the company sells the vision before it has the product
• marketing falls prey to the crack between the enthusiast and the visionary
• Early majority. The pragmatists. The bulk of market volume. They do not want to be pioneers. Learnt that the leading edge, can be the bleeding edge. CEOs are not uncommon. You have to understand their values and problems to sell to them. Business demands push them to adopt. They like to see competition to get costs down, and to have an alternative to fall back on. Price sensitive. To sell to them you need to be patient, meet them where they are, make partnerships and alliances.
• Late Majority. Conservatives. Against discontinuous innovation. Stubborn. Fear high tech. Invest only at the end of the cycle. Priority is not getting stung. Won’t support high margins, but make up considerable volume. Like things to be bundled and work together. Opportunity for low-cost trailing edge technology. Focus on convenience not performance.
• The importance of the product, when compared to surrounding services, becomes less important as you move through the profiles. The longer your product has been in the market, the more important the service element to the customer.
• Laggards. The Skeptics. Do not participate in the high tech marketplace, except to block purchases. Watch out for the ones with influence. Point out the differences between the sales claim and the delivered product.

• To enter the mainstream market is an act of aggression. You are an invader. The target customer doesn’t want to hear from you, the companies that already serve them will react in a hostile manor.
• Author uses the D-Day analogy, the channel is the chasm, mainland Europe the mainstream market. You need to secure the beachhead (your first market segment) then push out to total market domination.
• You need to focus + focus on a target you can leverage to long-term success
• You need to satisfy the needs of the customer, with the whole product (the complete set of products and services needed to achieve their result)
• Concentrating your effort in one small segment will make the word of mouth effect stronger
• You can also establish yourself as market leader in your small segment. The mainstream like buying from the market leader. The only way to win dominance quickly is to target a small market. The big fish, small pond approach.
• The key to moving beyond the niche is to select the right segment to begin with. One that will connect you one or more adjacent segments.
• Your target beachhead segment should be..
• Big enough to matter
• Small enough to win
• A good fit with your crown jewels

• Focus all your resources on achieving dominance in your niche market.
• Divide up the universe of possible customers into market segments
• Evaluate each segment for attractiveness
• Develop estimates of size, distribution and how well defended they are
• Pick one and go after it
• Many fail, and instead suffer from hesitancy, lack of confidence. It’s a high-risk, low-data decision.
• You need to use informed intuition, rather than analytical reason
• Focus on your target customer (not segment or market). Focusing on the customer gives us some real clues about how to approach. Build a library of possible target customer profiles.
• Basic information.
• Through observation, find out…
• Desired outcome (What are they trying to achieve?
• Attempted approach (How they’re solving it today?)
• Interfering factors (What goes wrong? How and why?)
• Economic consequences (So what? What is the impact of the challenge?
• Replay the scenario with the new technology…
• New approach: with the new product, how do they do the task?
• Enabling factors: what is it about the new product that helps?
• Economic rewards: what are the costs avoided or benefits gained?
• The Market Development Strategy Checklist:
• Target Customer (is there a buyer?)
• Compelling reason to buy (Are the economic consequences sufficient?)
• Whole product (Can our company help field a complete solution?)
• Partners and allies (Do we have the relationships to fulfil the whole product?
• Distribution (Do we have a sales channel in place → target customer + whole product)
• Pricing (Is price consistent with budget and value gained?
• Competition (Has this problem been addressed by competition already?)
• Positioning (Are you a credible provider of products and services to the target niche?)
• Next target customer (If successful, do the partners and customers facilitate entrance into neighbouring niches?)
• Don’t go after more than one target at once.
• Size of market needs to be big enough to matter, small enough to lead and a good fit with your crown jewels

• Providing the whole product becomes more important in the later part of the market adoption life cycle.
• The whole product model:
• Additional software, additional hardware, system integration, installation and debugging, change management, training and support, standards and procedures
• Every additional new target customer will put additional new demands on the whole product.
• Review the whole product to reduce it to it’s most minimal form
• Review the whole product from the participants point of view

• Any force can defeat any other force, if it can define the battle.
• You have to create your competition. Competition becomes a fundamental condition for purchase (in the mainstream market).
• Move from product-issues to market-issues.

• The market-centric value system must be the basis for the value profile of target customers when crossing the chasm

• The two alternatives above are your reference competitors.

• Position yourself as having the best of the alternative product, and the best of the market alternative
• Positioning:
• Creating competition is a watershed moment in positioning
• Positioning is the single largest influence on the buying decision
• Positioning exists in people’s heads, not in your words
• People are highly conservative about entertaining changes in positioning
• Positioning is about making your product easier to buy
• Four stages in the process:
• Name it and frame it
• Who for and what for
• Competition and differentiation
• Financials and futures (proving staying power)
• Positioning: the claim, the evidence, communications and feedback and adjustment.
• Your claim needs to be transmittable by word of mouth.
• All touch points need to reinforce the message.
• Positioning formula:
• For (target customers—beachhead segment only)
• Who are dissatisfied with (the current market alternative)
• Our product is a (product category)
• That provides (compelling reason to buy).
• Unlike (the product alternative),
• We have assembled (key whole product features for your specific application

• The number-one corporate objective, when crossing the chasm, is to secure a distribution channel into the mainstream market, one with which the pragmatist customer will be comfortable
• Look to attract customer-oriented distribution with one of your primary lures being distribution-oriented pricing
• The two big distribution questions: Is it priced to sell? It is worthwhile to sell?

Deep Summary

Longer form notes, typically condensed, reworded and de-duplicated.

Part 1: Discovering the Chasm

Introduction: If Mark Zuckerberg can be a billionaire

• The point of greatest peril lies in making the transition from…an early market dominated by a few visionary customers to… a mainstream market dominated by a larger group of pragmatist customers.
• The gap between the markets is so big, it’s a chasm. Crossing the chasm should be the focus of the marketing plan, and the focus of the company until it succeeds
• Technologies start as a fad. No market value but great properties and a bunch of early adopters. The rest of the world watches.
• Sometimes a value proposition is discovered, that can be predictably delivered to a mainstream set of customers.

1. High-Tech Marketing Illusion

• The Technology Adoption Lifecycle
• Applies to products that requires us to change our behaviour or modify other products and services we rely on (a.k.a. discontinuous or disruptive innovations).
• Continuous innovations don’t require changes in behaviour

• The divisions in the curve are roughly aligned to where standard deviations would fall
• The early and late majority fall within one standard deviation of the mean, the early adopters and laggards within two and the innovators are way out there three away.
• You need to take advantage of your day in the sun before the next day renders you obsolete → there’s a window of opportunity.
• The chasm that separates the early adopt­ers from the early majority is the most formidable and unforgiving transition.
• The early adopters are looking for a change agent to get ahead of others. They’re willing to work through bugs and glitches.
• The early majority want to buy a productivity im­provement for existing operations. They want it to work and integrate into their operations
• Early adopters therefore aren’t good references for the early majority. But references are important to the early majority, because they don’t want disrupt what they’re doing.
• Early majority customers need references from early majority customers.
• Marketers end up operating without a reference base and a support base (when those two things are really important to the buyers)

2. High-Tech Marketing Enlightenment

• First Principles:
• Marketing: taking actions to create, grow, maintain or defend markets
• A market:
• A set of actual or potential customers
• for a given set of products or services
• who have a common set of needs or wants
• who reference each other when making a buying decision
• Marketers segment because there’s no meaningful marketing program that can be implemented across customers who don’t reference each other
• Innovators: The Technology enthusiasts. First to adopt, want to get new things. Want access to technically knowledgeable people. You need to find the ones who have access to the big boss
• Early Adopters: The Visionaries. Have the insight to match technology to strategic opportunity → create high-risk projects inside their company. Highly motivated, driven by a dream (Steve Jobs, Henry Ford, JFK). Looking for breakthroughs, order-of-magnitude returns. Not price-sensitive. Alert the community to technical advances. They are in a hurry, they have a narrow window of opportunity.
• Typical problems in early markets:
• the company has no expertise in bringing a product to market
• the company sells the vision before it has the product
• marketing falls prey to the crack between the enthusiast and the visionary
• Early majority. The pragmatists. The bulk of market volume. They do not want to be pioneers. Learnt that the leading edge, can be the bleeding edge. CEOs are not uncommon. You have to understand their values and problems to sell to them. Business demands push them to adopt. They like to see competition to get costs down, and to have an alternative to fall back on. Price sensitive. To sell to them you need to be patient, meet them where they are, make partnerships and alliances.
• Late Majority. Conservatives. Against discontinuous innovation. Stubborn. Fear high tech. Invest only at the end of the cycle. Priority is not getting stung. Won’t support high margins, but make up considerable volume. Like things to be bundled and work together. Opportunity for low-cost trailing edge technology. Focus on convenience not performance.
• The importance of the product, when compared to surrounding services, becomes less important as you move through the profiles. The longer your product has been in the market, the more important the service element to the customer.
• Laggards. The Skeptics. Do not participate in the high tech marketplace, except to block purchases. Watch out for the ones with influence. Point out the differences between the sales claim and the delivered product.

Part 2: Crossing the Chasm

3. The D-Day Analogy

• The early market becomes saturated. The mainstream market aren’t comfortable. Investors are pushing for results.
• To enter the mainstream market is an act of aggression. You are an invader. The target customer doesn’t want to hear from you, the companies that already serve them will react in a hostile manor.
• Author uses the D-Day analogy, the channel is the chasm, mainland Europe the mainstream market. You need to secure the beachhead (your first market segment) then push out to total market domination.
• You need to focus + focus on a target you can leverage to long-term success
• The consequences of being sales-driven in the chasm are period are fatal. Instead you need to secure a beachhead in the mainstream market.
• You need to satisfy the needs of the customer, with the whole product (the complete set of products and services needed to achieve their result)
• The catch is that the ‘whole product’ commitments are expensive → so you need to put your best people on this
• Concentrating your effort in one small segment will make the word of mouth effect stronger
• You can also establish yourself as market leader in your small segment. The mainstream like buying from the market leader. The only way to win dominance quickly is to target a small market. The big fish, small pond approach.
• The key to moving beyond the niche is to select the right segment to begin with. One that will connect you one or more adjacent segments.
• Your target beachhead segment should be..
• Big enough to matter
• Small enough to win
• A good fit with your crown jewels

4. Target the point of attack

• Focus all your resources on achieving dominance in your niche market. Essentially this is the classic ‘market entry problem.’
• Divide up the universe of possible customers into market segments
• Evaluate each segment for attractiveness
• Develop estimates of size, distribution and how well defended they are
• Pick one and go after it
• Many fail, and instead suffer from hesitancy, lack of confidence. It’s a high-risk, low-data decision.
• You need to use informed intuition, rather than analytical reason
• Focus on your target customer (not segment or market). Focusing on the customer gives us some real clues about how to approach. Build a library of possible target customer profiles.
• Basic information.
• Through observation, find out…
• Desired outcome (What are they trying to achieve?
• Attempted approach (How they’re solving it today?)
• Interfering factors (What goes wrong? How and why?)
• Economic consequences (So what? What is the impact of the challenge?
• Replay the scenario with the new technology…
• New approach: with the new product, how do they do the task?
• Enabling factors: what is it about the new product that helps?
• Economic rewards: what are the costs avoided or benefits gained?
• The Market Development Strategy Checklist:
• Target Customer (is there a buyer?)
• Compelling reason to buy (Are the economic consequences sufficient?)
• Whole product (Can our company help field a complete solution?)
• Partners and allies (Do we have the relationships to fulfil the whole product?
• Distribution (Do we have a sales channel in place → target customer + whole product)
• Pricing (Is price consistent with budget and value gained?
• Competition (Has this problem been addressed by competition already?)
• Positioning (Are you a credible provider of products and services to the target niche?)
• Next target customer (If successful, do the partners and customers facilitate entrance into neighbouring niches?)
• Don’t go after more than one target at once.
• If you don’t have a compelling answer for Target Customer, Compelling Reason to Buy, Whole Product or Competition then you’re going to struggle. You can’t make up for it elsewhere.
• Size of market needs to be big enough to matter, small enough to lead and a good fit with your crown jewels

5. Assemble the invasion force

• Whole product marketing. Wiring the market place. For your target customer and a given application, create a marketplace in which your product is the only reasonable buying proposition.
• To secure a monopoly you need to understand:
• What the whole product consists of
• How to organise the marketplace to provide a whole product that incorporates your company’s offering
• 4 Levels of Whole Product completeness:
• Generic Product: shipped in the box, covered by the purchasing contract
• Expected Product: what people think they’re buying, little config required.
• Augmented Product: fleshed out to provide the maximum chance of success
• Potential Product: the product’s room for growth, as more ancillary products come to the market. E.g. AppStore sales for Apple
• Providing the whole product becomes more important in the later part of the market adoption life cycle.
• The whole product model:
• Additional software, additional hardware, system integration, installation and debugging, change management, training and support, standards and procedures
• Every additional new target customer will put additional new demands on the whole product.
• Review the whole product to reduce it to it’s most minimal form
• Review the whole product from the participants point of view
• Partners and allies →
• Difficult to pull off. Look better on powerpoint than in reality. Decision cycles can be out of sync, incentive differences
• Develop relationships slowly
• Purpose: accelerate the formation of whole product infrastructure within a specific target market segment in support of a segment-specific compelling reason to buy
• Build clean interfaces between parties

6. Define the battle

• Any force can defeat any other force, if it can define the battle.
• How far you have to go to serve a customer depends on the competition.
• You have to create your competition. Competition becomes a fundamental condition for purchase (in the mainstream market).
• Use the Competitive-Positioning Compass (focus on the values and concerns of the pragmatists)

• You need to move from environment of support among visionaries, back into one of skepticism among the pragmatists. Move from product-issues to market-issues.

• The market-centric value system must be the basis for the value profile of target customers when crossing the chasm

• The two alternatives above are your reference competitors.
• Position yourself as having the best of the alternative product, and the best of the market alternative
• Positioning:
• Creating competition is a watershed moment in positioning
• Positioning is the single largest influence on the buying decision
• Positioning exists in people’s heads, not in your words
• People are highly conservative about entertaining changes in positioning
• Positioning is about making your product easier to buy
• Four stages in the process:
• Name it and frame it
• Who for and what for
• Competition and differentiation
• Financials and futures (proving staying power)
• Positioning: the claim, the evidence, communications and feedback and adjustment.
• Your claim needs to be transmitted by word of mouth
• All touch points need to reinforce the message
• Positioning formula:
• For (target customers—beachhead segment only)
• Who are dissatisfied with (the current market alternative)
• Our product is a (product category)
• That provides (compelling reason to buy).
• Unlike (the product alternative),
• We have assembled (key whole product features for your specific application

7. Launch the invasion

• The number-one corporate objective, when crossing the chasm, is to secure a distribution channel into the mainstream market, one with which the pragmatist customer will be comfortable
• Look to attract customer-oriented distribution with one of your primary lures being distribution-oriented pricing
• Distribution-oriented pricing:
• Value-based pricing: good for early market cycle
• Cost-based pricing: good for end of cycle
• Competition-based pricing: you can demand a premium if you’re market leader
• Vendor-orientated pricing:
• From enterprise related costs. Not great when you’re crossing the chasm
• Distribution-orientated pricing:
• The two big distribution questions: Is it priced to sell? It is worthwhile to sell?