Reference no: EM131721290

Case Scenario: Safesforce.com Crosses the Chasm

In 1991, Geoffrey A. Moore, a lecturer and management consultant, wrote an influential book titled Crossing the Chasm. The book became an instant must-read for managers, entrepreneurs, and investors. The book was updated in 2009 and again in 2014. It has been described as the bible for understanding why some technology oriented start-ups grow into large firms while others stall or languish in terms of adoption and firm growth. The book's premise is that there is a chasm between the early adopters of a product (the technology enthusiasts and visionaries) and the early majority (the pragmatists). The key insight is that to cross the chasm, firms must first dominate a niche of early adopters and expand from a position of strength. The concept is related to the technology adoption life cycle. The stages in the technology adoption life cycle are innovators, early adopters, early majority, late majority, and laggards. Start-up products initially appeal to "innovators," who are people who like to try new things but are seldom willing to spend much.

Then come the early adopters, or visionaries, who are willing to take a chance on a new product if it solves a burning problem. After the early adopters come the early majority, which is the largest segment. The early majority will only buy if a product is complete and is heavily recommended by others. If it's not recommended, they won't buy, regardless of how well a product suits their needs. Next is the late majority, which buys only after a product has become the standard. The laggards, which bring up the rear, rarely buy. The chasm is hard to cross. Ironically, it is not the early adopters that convince the early majority to buy. In fact, the early majority typically mistrusts the enthusiasm of visionaries. They start buying when credibility is established and momentum within their own group starts to build. In his book, Moore suggests techniques to successfully appeal to the early majority, and cross the chasm, including issues pertaining to a firm's target market, its positioning strategy, its marketing strategy, and a number of other important factors.

It's well worth the time to read the book to learn the techniques and capture the subtleties. Salesforce.com is an example of a company that has crossed the chasm. Prior to Salesforce.com, software was a product that was sold on disks that clients would install on their computers. The software would then need to be integrated into the clients' system, which typically cost more than the software itself. By the time the software was installed, there were often updates available. Many clients would forgo installing the updates, at least for a period of time, to simply avoid the additional hassle and expense of installing them. Salesforce.com introduced a better way. Its better way was software-as-a-service, later abbreviated as SaaS. The idea was that instead of selling software on disks to be installed on a client's computers, there would be only one copy of the software, running on Salesforce. com computers, which multiple users could access simultaneously via the Internet. The sales pitch was compelling. By adopting Salesforce.com's solution, a client would no longer incur the costs and headaches involved with installing, updating, and maintaining software.

What's interesting is the way Salesforce.com managed the rollout of the product and how the firm eventually crossed the chasm. In regard to the rollout, the company picked a single market to go after, salespeople, and no one else. There was nothing in the product for marketing, customer service, or any other division in a company. Salesforce.com focused exclusively on the United States as its target market, partly to stay close to their customer. The firm also chose to initially target techsavvy industries. The result was a product designed to achieve a singular objective-helping salespeople make their quota. As a result, salespeople loved it. And because they loved it, they told other salespeople about it, and adoption grew virally. The number of early adopters grew. Credibility was built as the product was displayed at tradeshows and was talked about in mainstream media. Eventually, companies such as Merrill Lynch saw the merits of the service and signed on. Salesforce.com crossed the chasm and started appealing to the early majority and a wider number of users. The irony of the Salesforce.com story, which is the essence of Moore's insight, is that by picking a single niche market, and establishing sufficient credibility that the early majority took notice, Salesforce.com was able to cross the chasm faster than it would have if it had created a much more robust product initially and tried to appeal to a broader cross-section of markets.

Questions for Critical Thinking

1. Select at least two other firms that you believe have crossed the chasm. Briefly summarize how the firms rolled out their products (or services) and what you believe their key steps were in successfully crossing the chasm.

2. In contrast to question #1, list at least two start-ups that you are familiar with that produced products or services that you believe never crossed the chasm. Briefly describe why you believe they never crossed the chasm.

3. Do you believe consumer products cross the chasm (or fail to cross the chasm) much like technology products?

4. In regard to adopting technology products, do you see yourself as an early adopter or as part of the early majority? how does your answer affect the manner in which you buy technology products?