Crossing the Internal Chasm
We are all familiar with Geoffrey Moore’s concept of “Crossing the Chasm,” which applies to new-to-the-world products entering an undefined market. However, little has been written or said about the internal chasm that a new product (along with the product manager) must often cross inside their own company to become successful in a B2B market.
Picture this: when you released your new product several months ago, the launch was flawless. Your positioning is crisp and your value proposition is well-articulated. The beta test / pilots are confirming that the product is solid and solves your customer’s business problem. The sales force is enabled and prospects are starting to trickle in.
But there is trouble in paradise, and it is coming from inside your organization…
First, some early prospects are asking for the features which you could not include in the first release due to a lack of time and resources. These prospects decide to wait until the features they deem necessary are included in your product, leaving you without immediate closing opportunities. Yet, unfortunately, you no longer have the resources for a new release or agile iteration.
Second, the sales force is busy selling the legacy products they understand well and account managers are suspicious of the risks associated with your new product. Each is waiting for the other to sell it first so they can minimize the risk to their own accounts, so only a few brave souls are pitching your new product to your customers.
Third, many people in your organization, including your fellow product managers who were not too happy about your new product consuming precious R&D resources for months, are now anxious to focus attention on their own products and projects. The naysayers are getting in “I told you so” mode and your management is starting to wonder if your product is a loser.
Meanwhile, your competition is starting to get organized against your product and has now positioned their offering against your new product quite effectively.
You and your product are stuck in the internal chasm.
Don’t worry, it is normal. Remember, product management is not for the faint of heart.
There are several ways to handle this particular issue, ranging from the tactical to the strategic. Here are a number of options which you may want to consider. Please note that each of these options is not incompatible with the others, – they could all be implemented simultaneously:
1) Change the incentives. Modify the sales force incentive plan to provide a SPIF (Sales Performance Incentive Fund), or even better a specific quota for new products. While this may not entice the majority of the sales force to abandon their “wait and see” attitude, it may change the behavior of a few hungry account managers,
2) The rolling thunder approach. Consider your launch as a work in progress and update your prospects, analysts and your internal constituents if and when you make progess in the marketplace. Read more about this concept here.
3) Opportunistic move. Capitalize on a lead customer who is interested in pursuing a sales cycle although the product is not complete in their view. The lead customer may be a large strategic customer for your company, or it may be an important new customer which your organization was not able to reach before in the past via its existing products. The key is to ride on your company’s obligation to please that lead customer to justify more investment for your product. Of course you want to make sure this investment results in features that can cover other customer needs. This is a long shot, and a lead-user may not be available. The lead user tactic can also backfire, as it is clearly dependent on maintaining the interest of one or several individuals working for your lead customer. Furthermore, many unfortunate events can occur when relying on a lead customer: they can find other ways to resolve their business problem, or champions may leave or be reassigned while they wait for your product to be ready. However, with perseverance, this option can bring you new, important customers that can be referenced both internally and externally, and, in time, get you out of the chasm.
4) Organizational move. Convince your management that the current organizational structure does not optimize the chances of success for new products in general, not just yours. This is the most systematic approach and it may be the most important contribution you can ever make to your organization. Point out that new products usually do not come out right the first time and they always need a few tweaks to be truly market ready. Analysts often joke that Microsoft products must wait for the 3.0 release before getting attention. Propose a dedicated structure for all new products that can ensure that your R&D firepower does not disappear overnight after your product is launched. You may consider having a dedicated sales force that works with or replaces the existing one for new products. The new structure will give your sales force the strong signal that your product is here to stay and that, should they bring a top prospect that is interested in your new product, their back is covered.
Granted, it is always better to have the sales incentives arranged prior to the launch, a strong lead-user program ready when your product is and an organization tailored to support new products before you submit your business case, but better late than never.
We spoke about Geoffrey Moore at the beginning of this post, and you may want to read his latest book which treats organizational issues for new products “Dealing with Darwin.” Distribute a few copies around to legitimize your call for reorganization.
Getting new products out to the point of revenue is really difficult. Many new products fail.
What do you need to make your new product successful enough to cross your internal chasm?
Barry Paquet (3)
mark (3)
David Locke (2)
Greg Strosaker (2)
kk (2)
To the customer, the transition to a web service should look continuous. You do this by providing them with account management features before you move the product to the web.
To the company, the move to being a provider of web services is a big change. It requires the company to change. It is disruptive. But, the disruption should happen at the level of the executive. The market should drive the executive. That chasam should happen at a distance from the product manager, unless that product manager is in a product strategist role.
The transition to a web service actually happens with the transition to Moore’s late market. That transition required cost management, because margins thin and growth is over, so you present growth numbers by squeezing the business. That transition required something Moore called “task sublimation,” and it turns out that moving to the web automatically sublimates tool tasks, and eliminates feature bloat that provided geeks with customizations. Those customizations are no longer needed. Changing the application framework changes the features used at the hit end of the frequency of use power curve, automatically. You will insert a few new tool tasks, but you will subsequently reduce them, so the user is focused on their goals.
Since moving the organization to web services is disruptive, you might want to take Christensen’s advice and create a separate company to do this phase of Moore’s technology adoption lifecycle. If you don’t create such a separation, you will have people to layoff, and they won’t be there the next time you build a product. Pay attention to the fact that your pricing will change, the buy will change, your sales force will become redundant, and you will have to focus revenue generation on sidebands once your functionality finds its revenue baseline. You will need to find your multisided markets, so you can act as a platform. You will deal with premium and free. A web service company is an entirely different animal from a product company.
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Thank you David for your very insightful and detailed comment.
Just to make sure we are on the same page, this post dealt with any new product, not just a transition from a product to the same functionality, but delivered as a service.
I am ashamed to say that I must catch up on my Christensen reading (I have only read the Innovator’s dilemma), but I agree that as you move to a web service offering, the cost structure, the channels, and the type of customers become different.
You must also face the fact that some of your exisitng customers may want to go the service route, which may further hit your profit margin.
Keep on commenting. Thanks
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My comment originates in Moore’s technology adoption lifecycle. It applies to all categories of goods, but it puts goods at different points in the lifecycle. A consumer good is always a late market good, because of the economics involved.
I’ve had to deal with the early adopter posts claiming that the early adopter has changed. Well, no. The technology B2B early adopter is different from the consumer early adopter.
The fundamental issue relative to disruptive technology is population uncertainty. Poisson games deal with population uncertianty. So Moore’s normal curve can be reconstructed as a series of Poisson distributions. Poisson distributions enable Markov processes, which are key to Hidden Markov nodes.
These two points leads to a reframing of Moore’s technology adoption lifecycle. The technical enthusiast exists in each phase of Moore’s lifecycle. The early adopter exists in each phase as well. This means that there is a chasm in each phase. A consumer good does not begin at the far left of Moore’s lifecycle. You can cross that chasm anywhere in the lifecycle with any good or category.
I agree with Christensen’s separation concept, but for a few more reasons. Sadly, Christensen has not succeeded in selling this concept during his consulting engagements. His consulting firm has returned to orthodox processes as a result.
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If one has a perception that the “launch was flawless” but there is “trouble in paradise” that includes:
- Missing capabilities because of the features selected
- Insufficient sales force support
- Conflicts with other product managers
the launch was not flawless. Stated another way, the beliefs and choices made during development were not validated during the early, actual sales.
Although the initial suggestions to handle these problems include “incentives” or a “rolling thunder approach” that may help to meet the promised quota, this will not prepare the development organization or the managers to improve the development process for the next products.
How will this company achieve and maximize a sustainable competitive advantage through new product development, innovation, and growth? I suspect that the mismatches illustrated in this post can be used to inspire the appropriate solutions.
By Mark Hart OpLaunch: Non-reductive, collaborative approaches to achieve launch success in new product development. NPDP
posted 5 days ago
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Mark I fully agree with your comments. While the product manager met all his or her launch objectives, the launch is flawed by a structural organizational issue, which is usually not fixable by product managers themselves. What we advocate here is that they act as the individual who can identify the issue for their new product as well as future products. It is a lonely courageous endeavor, but it is a necessary one when this type of issues occur.
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