Book Review: Crossing the Chasm
Commentaries and Notes
The vast majority of Product Management related books I come across focus quite heavily on things like ideation, development processes and using quantitative and qualitative user data to test your value hypothesizes.
This is, of course, very important when building an IT product, but can sometimes come across as a bit disconnected from the day to day reality of working with an enterprise B2B product where the decision-maker with a budget to invest oftentimes is far removed from the end-users whose usage data we later track in our system.
Even more, speaking with the sales and marketing organization can sometimes make you feel like you come from different planets as you try to understand each other's needs and goals.
If you sometimes find yourself in a similar situation, Crossing the Chasm might make some things click for you as it did for me. Put simply, this book is the product management book to read when it comes to B2B product management and market development.
1. Initial Product-Market fit will only get you so far
[Early] adopters do not make good references for the early majority. And because of the early majority’s concern not to disrupt their organizations, good references are critical to their buying decisions. So what we have here is a catch-22.
In order to illustrate different stages of market development, the technology adoption life cycle is used as a framework.
One of the core claims of the book, and which has given it its name, is that after finding success with early adopters, just as many B2B companies start scaling up their sales efforts to target the majority market, they will reach a chasm.
The product that was having great success among the early adopters will be found wanting and in order to have success in the more pragmatist early majority, a new strategy and focus will be needed.
Psychographics of different categories of buyers
What is happening here is that there is a clear shift in expectations between the types of buyers. The innovators and early adopters are happy to buy the product for its technical prowess alone and are expecting to have to adapt to shortcomings on their side. Given that the value of the technological shift is great enough — any amount of pain will be paid off in time anyhow, and the potential upside outweighs the risks as being the first to adopt it will mean an advantage over competitors!
The pragmatists in the early majority, on the other hand, are rather looking for a solution that fits within their current processes and that will give predictable incremental improvements over time. Great potential upsides will not be enough to outweigh a perceived risk to the pragmatist. Thus, social proof of having other pragmatist companies in the same vertical already having adopted your solution and thereby proving it to be risk-free is vital. After all, nobody ever got fired for buying IBM.
2. Solving the catch-22
If the only way to sell to pragmatists is to be perceived as risk-free, and the only way to be perceived as risk-free is to already have a track record with selling to pragmatists, what can you do?
The answer is to find a niche market that you can conquer and dominate. Even though pragmatists generally wouldn’t be willing to buy an, in their eyes, unproven solution, there is bound to be some specific verticals in the market that are currently so unserved by existing alternatives that they would be willing to risk it, given that you really can solve their pain points.
Identifying this segment will become the company’s D-day strategy and provide the focus for both product development and marketing efforts even though that means underserving vastly larger parts of the overall market.
This is generally what makes companies fail following through on the strategy, it’s too tempting to target a larger more lucrative segment or multiple segments in parallel, which will start spreading yourself thin. Especially in a sales-driven organization where demands from a few large customers in other segments might derail your product roadmap completely with the following adhocracy in terms of what features get developed.
Thus it deserves to be reiterated; the market segment you target doesn’t have to be neither the largest segment nor your ideal target market. What it must be, is the segment with the most important needs unfulfilled and that, therefore, will be the most open to trying new solutions.
Once this market vertical has been successfully conquered, expansion to nearby segments will follow much more easily.
3. The Marketed Product and the Actual Product
Crossing the Chasm makes some really good distinctions when it talks about a company's product. The external perception of your product existing in people's minds will always differ from the actual product. For enterprise software, it is common for buyers to use Request for Proposals (RFPs) which basically are checklists of various features that the product should have.
What does it mean in practice though that a product has a checklist feature such as for example fine-grained access rights or an audit log of who changed what? No matter how great your documentation or accurate your marketing, your buyers will form expectations that not always will match reality.
What this highlights is that the expected value of buying a product will not be the same as the value actually achieved. The actual value of the product will by necessity be discovered post-purchase.
In practice, this is commonly but often not outspokenly reflected in the division between departments having sales and marketing vs. product and engineering. The former is primarily responsible for the marketed product image, whereas the latter is primarily responsible for the actual product that customers use.
One aspect of product management is to ensure that the marketed product stays closely enough aligned with the actual product to avoid too much customer disappointment, but let’s be clear.
It should not the product manager's primary job to satisfy sales and marketing, which is what happen in organizations that are too sales-driven.
Rather, product management should ensure to satisfy the needs from sales and marketing but then focus on optimizing the actual value created for the customers post-sales. This same sentiment is beautifully summed up by Marty Cagan of the Silicon Valley Product Group, that a successful product organization “discover and deliver technology products that your customers will love — and that will work for your business.”
4. The Core Product and the Whole Product
The second distinction made in the book ties back to the different needs of different types of customers. Whereas the innovators and early adopters are visionaries who buy a piece of technology and themselves figure out how to make it work, what the pragmatist is looking for is not so much a product as a solution to a problem.
This encourages a holistic product view that not only covers the core technical product but also understanding the Whole Product, or what is sometimes also called the jobs to be done.
When pragmatists are buying your product, what they are paying for is also the support, professional services, and account management that comes along with it. What your product does is important, but more important might be how well it integrates with the other systems they use and if you are offering a platform, how easy it is to find developers and companies that are able to build on top of your platform, as well as whether there exists already built add-ons they can use.
All these things help create an ecosystem around your product that to the pragmatist makes up the value proposition more-so than your core product itself.
The fact that such ecosystems generally spring up around market leaders further explains why gaining a big share of a smaller segment is better than a smaller share of a larger segment. By becoming a market leader in your segment and building an ecosystem supporting you, you build what Warren Buffet would call a moat around your business which makes it much harder for new competitors to enter the market.
Summa Summarum
This has served as a summary of the main takeaways from the book. More than the initial takeaways though, I expect Crossing the Chasm to remain a reference I will go back to many times in the future to re-read parts as relevant to situations.
Since it has more of a marketing focus than tech development, it doesn’t replace reading books focused more on agile processes and product development, but rather acts as a great complement to contextualize the product development work within the larger framework of growing a successful B2B product in the market.
All in all, highly recommended for anyone working with B2B product management.
