Top Tips on Managing your Company Structure as your Product Grows
This is a continuation of a series of blogs that provide a summary of the book “Crossing the Chasm” written by Geoffrey Moore. In this blog, we go over the difficulties that the company faces as it transitions through the Technology Adoption Lifecycle and product management strategies that help us to make our product a success.
The chasm between the Early Adopters and Early Majority markets is more than a marketing problem. The first problem arises when a company makes all sorts of promises to the innovators and the visionaries prior to the chasm. After the chasm, the market demand and behaviour change, however, the company is stuck in their previous commitments. The solution to this problem, which is easier said than done, is to stop making promises and commitments to early clientele.
As the product gets adopted through its market adoption lifecycle, the needs of the organization change. Prior to the chasm, the goal is to grow the company while reducing investor risk, but after the chasm, the aim is to be a cash machine. So this change calls for a total restructuring of the company after the chasm has been crossed, in order to satisfy the requirements of the pragmatists.
Then we have the venture capitalist. A venture capitalist invests their money in a start-up hoping for a hockey stick curve model for the revenue but the reality is that revenue grows more like a staircase. So the hockey stick model is pretty flawed and it’s essential to know this in order to avoid getting ravaged by vulture capitalists.
In essence, every business plan should include the Technology Adoption Lifecycle and the strategy to cross the chasm. The company culture needs to be established around profit generation right from the beginning so it continues with revenue growth. This culture will need to adapt as customers transition from being visionaries to pragmatists. This won’t be easy for every company as the employees have to go from being “pioneers” to “settlers”. While pioneers need the hype and the energy of creation and invention, settlers strategize to maintain growth and structure. As a result, temporary roles need to be created.
Another topic of conversation is compensation. The contributions of pioneers and settlers vary from one another and they need to be compensated accordingly. The sales relationships that are maintained and groomed by the sales staff have to be compensated appropriately. The technical department should be offered equity when possible but keep in mind, they do prefer the liquidity of cash, as we all do.
The struggles of a company as they cross the chasm continues. The most important thing to acknowledge is that early market success does not translate into market growth. Crossing the chasm will be inevitable.