|Accelerating Past the Chasm:
Marketing, Adoption, and Discontinuity
‘The consumer is not a moron. She is your wife' - David Ogilvy
During the bubble, marketers buzzed about the chasm and the adoption lifecycle. Innovators – the uber-geek visionaries who picked up technologies first – used innovative products in different ways than the rest of us. The needs of the mass market, it was said, were fundamentally different than the needs of the technological elite.
Much of the marketing theory of the last few years can be boiled down to this simple distinction: ‘high technology’ is suitable for ‘innovators’, and ‘low technology’ is suitable for ‘pragmatists’, who are not interested in ‘excess technology’. This leads to the observation that there’s a gap, or chasm, in the needs of innovators and pragmatists, which must be crossed by complex marketing strategies. But is this really true? Are these distinctions still valid? How can a firm know what is ‘excess technology’ and what isn’t? If there’s a chasm, why are more and more consumers hacking, tweaking, and interconnecting their tech goods? Could the chasm theory have even helped the collapse of tech markets, by delivering watered-down goods to tech-savvy consumers which didn’t meet their expectations?
That was 1998. This is 2003. What’s changed? Everything. Fundamentally, and paradoxically, for those that like to think of the bubble as a fleeting delusion, the early adopter has become the mass market, because of the potent forces unleashed during the bubble. They are, for marketers, strategists and would-be innovators, now one and the same.
Heresy? Not nearly. One thing is clear: the adoption curve is steepening exponentially for successful innovation. DVD’s were the most rapidly adopted innovation ever – until mobile and wireless devices recently displaced from DVD from that throne. And it’s easy to imagine another technology being taken up even faster than wireless.
Acceleration fundamentally changes the dynamics of adoption – and renders the old categories meaningless. Let’s take the example of DVD’s. The earliest adopters quickly discovered that while DVD offered technological superiority, it also offered less mobility, by building barriers around compatibility – the now infamous region-encoding scheme by Macrovision. So they quickly discovered – and demanded – hacks to get around it. At the same time, they spent a significant amount buying DVDs.
Film industry execs assumed that the mass market’s needs would be fundamentally different from those of innovators. They figured that the mass market would be happy with region encoding, and spend less on DVD’s. Instead, two things happened. First, the mass market began to demand region-encoding removal on a global level. Firms responded by beginning to produce multi-region DVD players. Second, DVD sales were a runaway success – more people bought DVD’s than any other medium in the history of recorded media. In short, the mass market demanded the same features – and responded with the same kind of buyer dynamics – that the so-called early adopters did. The only difference, really, was the way that the marketing droids had segmented them – according to age, sex, geography, etc. But what was the point of such distinctions, when they had no relation to the needs of consumers?
The disappearance of the chasm is really about a discontinuity in consumer needs for technology goods, which destroys all of the old distinctions that adoption segmentation was based on. There might have been a chasm between the needs of ‘innovators’ and ‘pragmatists’ before – but now, consumer needs have shifted because of technological discontinuities and ruptures in market dynamics. This shift in consumer needs in effect renders all of the old adoption segments irrelevant. In effect, it turns everyone into part innovator and part pragmatist.
Let’s first look at accelerated adoption. There are three fundamental drivers of acceleration in adoption, which are interrelated: the Net, interconnectivity, and hypercompetition. The Net’s impact is easy to understand, though most marketers still try their best to discount it: it enables people to get the information they need about which goods meet their needs much faster and cheaper than was possible before. At the same time, it enables everyone to become part innovator, because they can easily find simple hacks, tweaks, plug-ins and add-ons for the goods that they buy. Hypercompetition, which is in part enabled by the Net, Because hypercompetition increases the potential search costs consumers face in finding goods which they derive value from, it turns everyone into a pragmatist –they simply don’t have the time to play with all of the various goods and service available to them.
Finally, interconnectivity is about complementarity. Many technological goods can be connected to – and are often dependent on – a broad range of other technology goods. Interconnectivity drives accelerated adoption because people realize combinatorial benefits from interconnected technology goods – and conversely, realize little benefit from disconnected goods. Interconnectivity lets everyone be a pragmatist and an innovator simultaneously – by combining and recombining goods in different ways, to realize pragmatic benefits through user innovation. At the same time, interconnectivity means that those rare goods which meet shifted consumer needs become even more valuable – because their value is driven in larger and larger part by other goods consumers already possess.
Now, I’d like to argue that there are three segments of adoption for most technological goods: preadopters, the mass market, and postadopters. Of these, the bulk of the market – probably close to 80 or 90 percent – is the mass market. But there is no chasm anymore: the needs of preadopters mirror those of the mass market. It’s only postadopters who have fundamentally different needs – and they usually represent little revenue to most firms, and can be picked off by niche plays.
The significant difference between preadopters and the mass market isn’t what they need from innovation, but where they fall on the accelerated adoption curve. And that difference in timing is driven by differences in information and benefits – not, crucially, by the kinds of costs the two groups are willing to pay, which was the basis for old marketing theory: that the earlier you adopt, the ‘higher’ technology you need, and the more it costs you in time, effort, hassle, and money.
Preadopters are a very special set of people, and can play a critical role in helping your product succeed – if you’re willing to learn from them. They’re the geeks who are willing to invest significant time, effort, and money in your good before – often even before it’s been officially released – in critique, discussion, and, most troubling for many businesses, hacking, tweaking, and cracking. Marketing droids think of these people, on the rare occasions that they notice their existence, as mere buzz-building tools. But that’s a major strategic error.
Preadopters are like radar. What they’re doing with your good highlights the future difference between what your good offers, and what the mass market’s needs are. That’s what their hacks, tweaks, critiques, and discussions are all about – trying to bring your good in line with their needs and expectations, which are mirrors of the mass market’s. The most successful tech firms of the post-bubble era have instinctively felt this, and targeted their learning capabilities at co-opting and absorbing preadopters and the critical knowledge they possess. In fact, preadopters help firms to learn about one of the oldest but trickiest dynamics of technology markets: that goods which get established as dominant designs often aren’t the most technologically advanced, but instead those which offers users the right combination of features, value, price, and technological superiority. Preadopters can guide you in the right direction; managers, marketers, and focus groups can’t. It’s not that preadopters are ‘early adopters’ willing to accept ‘buggy’ or problematic products – far from it. They’re reflections of the mass market itself.
The (new) mass market is a little bit the same and little different. Their needs mirror those of preadopters. In the past, the mass market has been viewed as needing watered-down technology embedded in simple, locked-down devices with limited features and functionality. Not so anymore: now, the mass market wants feature richness and a wealth of functionality. In this sense, their needs mirror those of preadopters, who are willing to hack, tweak, and critique products until they meet their demanding criteria for pragmatism and innovation. In fact, the mass market is even willing to put in similar amounts of time hacking and tweaking goods as preadopters – what we might call user innovation. The examples are all around us – in video games, where users are (hesitatingly) willing to install their own patches and tweaks; in the digital media market, where users are willing to invest much time and effort in interconnecting goods; in the mobile market, where users demand new and richer features from mobile devices in accelerated time; in the handheld market, where user innovation is the order of the day even in the mass market.
The main difference between the two markets is simply where they fall on the accelerated adoption curve. There is no chasm in needs anymore. Preadopters and the mass market don’t adopt at different times because preadopters are willing to pay higher pioneering costs (because they’re ‘in love with high technology’), and the mass market is more sensitive to marketing. Rather, neither ‘segment’ is now sensitive to marketing, and both are willing to pay pioneering costs. They adopt at different times for three reasons, which are related to the benefits they stand to realize, rather than to the costs they are willing to pay.
First, because preadopters are more plugged in – information reaches them first, because they’re often the superconnectors of their local networks. This is a viral effect. Second, because preadopters own more connected goods – they possess more complements to interconnect with new innovations, so those new innovations have combinatorially greater value to them. Put another way, we can say that the opportunity costs of not investing in a new complementary innovation rises as the number of interconnected complements you already own increases. This is an economic effect. Third, because preadopters stand to gain intangible benefits that the mass market often doesn’t – like reputation effects, status effects, and technical knowledge. Ultimately, preadopters get pulled to new technology first because they learn about it first, and they stand to gain more from it – not simply because they want to indulge in a costly love affair with ‘high technology’.
Note that I’m not trying to argue that geeks don’t love technology – of course they do. But even geeks, when faced with a huge number of hypercompetitive goods and services, will choose to tinker with those that they derive the greatest benefits from.
Consider all three of these drivers in light of DVDs and WiFi, the two technologies I previously used as examples of accelerated adoption: clearly, how plugged in you were, how many connectable goods you already owned, and how much status, reputation, and knowledge you stood to gain from them drove where you fell on the adoption curve. What didn’t drive it so much was whether or not firms provided you high technology or low technology. In fact, for these two goods, there was no high or low technology. Post-adopters are the last segment which remains with truly different needs than the mass market. Post-adoption has two drivers. The first is circumstance: those people in niche markets, who, for some reason, cannot derive value from your good’s features as they stand. The second driver is exclusion. Those post-adopters who’ve opted out of a digital lifestyle completely are unlikely to fall into accelerated adoption, because they rarely use the Net, and don’t own any complements with which to drive interconnectivity. They’re also relatively immune to hypercompetition – because they’re still victim to the stale isolating mechanisms of brand, switching costs, and oligopoly. But this is a race of dying refuseniks – because, as the digital lifestyle provides more and greater pervasive benefits, the costs to opting out increase dramatically.
Accelerated adoption is helping turn most technology markets into winner take all markets. All of the same old mechanisms fueling positive feedback are still around – network effects, early mover advantages, scale economies – but accelerating adoption means that successful technologies will be picked up ever more quickly, and so will also be harder for competitors to displace. Conversely, the steepening of the adoption curve highlights the time-sensitive nature of technology markets.
Think about Google: most of the innovations it’s unleashed on unsuspecting competitors have in fact been learned from and influenced what’s buzzing in the small, superconnected, and influential community of preadopters. Google used the pragmatic and innovative expectations of preadopters as radar for the mass market – not as any indication of a chasm between the two segments. Furthermore, most of it’s innovations have been radical innovations that analysts and competitors alike didn’t think fit the limited (in their view) needs of the mass market – things like the Google Deskbar, Google News, and AdSense. But because Google ignored pundits, and focused instead on preadopters, it’s been able to build a nearly unassailable platform – a stable of complementary assets which provide users combinatorial benefits. Consider the counterfactual: if Google hadn’t used pragmatic and innovative preadopters as a proxy for the mass market, but instead used stone age marketing to water down innovations from early adopters to the mass market, it’s unlikely that it would have been able to sustain it’s advantage. Imagine Google without the innovations that have driven it forward. Hard to do? No – just think, if you’re old enough to remember, about Altavista, which never used preadopters to move it’s technology forward, but instead diluted it more and more for the mass market, until it had no innovation advantage left.
This is the kind of model that marketers who want to think strategically should follow in the future. Consumers aren’t morons – they don’t need diluted technology anymore. At the same time, they don’t need useless technology either. What they do need is the freedom to be both pragmatic and innovative – which shatters the standard distinctions between high and low technology, and pioneering and non-pioneering consumers. There is no more chasm. Adoption’s already accelerated past it – and your competition is too.
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