IGE105 – Communication Technology in a Changing World Dr. Ken Cosh Week 7

Review  A layered view of communication What 2 layered models have we discussed? Why is communication considered in ‘layers’?

Review  Communication Styles Face to Face  Personal Space  Eye Gaze  Gestures  Context  Turn taking  Breakdown & Repair Text Based  Emoticons  Netspeak  Different turn taking environments Cotemporality? Simultaneity? Sequential?

This Week  Technology Adoption Why do we buy technology? Why did you buy your last phone?  Because you had a problem / need?  Because you wanted a new one after your friend showed you their cool new one? Are you the first or the last to buy a new gadget?

Technology Adoption Problem Search for Solutions Select Solution TrialAdoption A Need

Technology Adoption AwarenessInterestEvaluationTrialAdoption A Want

What kind of person are you?  Innovator?  Early Adopter?  Pragmatist?  Traditionalist / Laggard?

Innovators  Committed to new technology If it doesn’t help us today, surely it will soon  Technology for technology’s sake  The kind of person you turn to for advice when getting new technology

Early Adopter  Visionaries Adapt technology to solve a real problem Figures out how new technology can be used to gain a competitive advantage  Be the first By being the first, they’ll gain an advantage

Pragmatists  The majority of people So lets split them;  Early Majority  Late Majority

Early Majority  Evolution NOT Revolution  Adopt innovations once established a track record  Employ the innovators to get their advice

Late Majority  Pessimistic about potential value in new technology  Get innovations when under pressure  Price sensitive, skeptical and demanding Rarely satisfied as unprepared to invest heavily in the right product -> leads to more skepticism  Around 30% of market

Laggards / Traditionalists  Don’t engage in technology Except to criticise it  Challenge the hype of technology

Technology Adoption Lifecycle I EA EM LM L

Marketing an Innovation  Seed the idea with the Innovators Innovators educate the Early Adopters  Keep the Early Adopters happy Early Adopters are a reference for Early Majority  Leverage sales to Early Majority Most money can be made here Ensure product matures & stabilises to be of interest to Late Majority  Ignore the Laggards

Technology Adoption Lifecycle I EA EM LM L The Chasm

 The gap between Early Adopters and Pragmatists. Innovators will always adopt new technology Early Adopters like to find an innovative use for technology, to test it before the masses But will Pragmatists see any real benefit from the new technology?  Many high tech companies suffer during the ‘chasm’, as sales pick up through early adopters but stop before Pragmatists.

Failing in the Chasm  Many products / companies fail to bridge the chasm – such as?  Why? New / alternative technology supersedes and early adopters move on Pragmatists are unconvinced Not targeted / differentiated enough Idea fails to satisfy a real need Is really a “Me too” product

Success in the Chasm  This is still a hot topic around silicon valley  Some companies manage to break through  Often following strategy suggested by Moore Based on the D-Day invasion of Europe

D-Day  Our long-term goal is to enter and take control of a mainstream market (Eisenhower’s Europe) that is currently dominated by an entrenched competitor (the Axis). For our product to wrest the mainstream market from this competitor, we must assemble an invasion force comprising other products and companies (the Allies). By way of entry into this market, our immediate goal is to transition from an early market base (England) to a strategic target market segment in the mainstream (the beaches of Normandy).

D-Day  Separating us from our goal is the chasm (the English Channel). We are going to cross that chasm as fast as we can with an invasion force focused directly and exclusively on the point of attack (D Day). Once we force the competitor out of our targeted niche markets (secure the beachhead), then we will move out to take over additional market segments (districts of France) on the way toward overall market domination (liberation of Europe)…

Strategy from Moore  Target the Point of Attack "Target a specific market niche as your point of attack and focus all your resources on achieving the dominant leadership position in that segment." Includes identifying the primary market identifiers: target customer, compelling reason to buy, whole product, and competition; and secondary market factors: partners and allies, distribution, pricing, positioning, next target customer.

Strategy from Moore  Assemble an Invasion Force Create the whole product, "by thinking through your customer's problems-- and solutions-- in their entirety". This includes the core product plus everything else you need to achieve your compelling reason to buy, including additional software, hardware, systems integration, installation and debugging, training and support, standards and procedures, etc. These may be provided in-house or by using partners and alliances.

Strategy from Moore  Define the Battle Create the competition, define positioning and develop the elevator pitch  1. Focus the competition within the market segment established by your must-have value proposition  2. Create the competition around what, for a pragmatist buyer, represents a reasonable and reasonably comprehensive set of alternative ways of achieving this value proposition. Do not tamper with this set artificially excluding a reasonable competitor  3. Focus communications & demonstrate the validity of your claim

Strategy from Moore  Launch the Invasion Distribution & Pricing Led by a Direct Sales force  “Direct sales is the optimal channel for high tech. It is also the best channel for crossing the chasm.”

Strategy Summary  The key to moving beyond one’s initial target niche is to select strategic target market segments to begin with. That is, target a segment that, by virtue of its other connections, creates an entry point into a larger segment.

Bridging the Chasm  Cases Documentum Linden Labs (Second Life) Centra Software

The Chasm in Web 2.0  So has Facebook crossed the chasm?  How about Twitter?  Myspace?

Web 2.0 Chasm Note, these numbers are simply based on US Internet Users

Web 2.0 Chasm  Is Facebook really Late Majority? If so profits should decline – how about Facebook’s free service? Declining ‘percieved value’?  How about MySpace? Did it not bridge the gap? Did it not niche itself correctly?  Linked In? Twitter?

Reality for Web 2.0 companies  Created by individuals  Funded by VCs  Existing in a rapidly changing world  Moore’s theories came from 1991 based on the Adoption model from the 50’s – Are they still relevant in today’s world?

The VC’s Care  VCs are investing in the business of risk  VCs will invest in many companies in the hope that one of them cashes out  You don’t make money with Early Adopters – you HAVE to cross the chasm to the majority market  On average 20 pages of a 70 page business plan is dedicated to crossing the chasm, and how the product

Do Start Up’s Care?  Before you cross the chasm, you’ve got to get to the chasm  What works for the Early Adopters, might not work for the main market Early Adopters live and sleep new tech… The main market gets confused with more than 1 button

Do Start Up’s Care?

Rethinking the Chasm  Technology is changing SO fast Old Bloggers are blogging less, and tweeting more MySpacer’s are playing in Second Life  We only have so much time And Early Adopters like playing with the next new thing  How can we get to the chasm, let alone cross it?

The Purchaser Perspective  Why should I invest in new technology? As an individual… As a company…  Will the new technology be beneficial? Information costs money…  And can’t be 100% certain!  Firms are unable to estimate the value of new technology with certainty

When to Adopt?  What advantages can be gained from being an “Early Mover”?  What advantages can be gained from being a “Late Mover”?  Where would you want to be?