Crossing the ...er... Chasm

Yesterday I went off on a rant about Crossing the Chasm. Within the technology world, that's sort of like mentioning that you don't care for the Bible all that much at a Rick Perry fundraiser. (The book blurb does call it "The bible for entrepreneurial marketing".) Oh yeah, and there's the fact that everyone I've ever asked for advice about making Butterflyzer fly has recommended the book or echoed everything in it. And I'm talking about people that know, that have, like, actually built a company based on its principles.

And so let's be clear right up front that just about every suggestion in the book makes complete and total sense -- not to mention that I must say that this is the only business book I've read -- apart from The New Business Road Test -- that seems to have been written for people who actually like to read and to think. After reading the book I at least now know all of the things that I'm doing wrong. For example, I don't know anything about a) marketing or b) management, but I do know about c) software development. Somehow I figure if I keep doing c), a) and b) will take care of themselves. That's wrong, apparently. I could respond to such reasonable but difficult to implement advice in one of two ways: I could take the advice, or attack the messenger. Guess which option I chose?

Now, the problem with ranting on Twitter is that someone might actually read those rants. Including the rant-ee. Who, in response to my sharing with the world that his book "bugged the shit out of me" and was "one of the more depressing books I've read", very graciously suggested:



Er.. So here they are, my rants, and Geoffrey Moore's all-too reasoned replies. Following that some additional observations, certified rant-free.

Geoffrey Moore: "This article is at the heart of Escape Velocity--Free Your Compamny's Future from the Pull of the Past. That said, I think Steve Jobs is not a replicable phenomenon, so we have to get this done with a "mere mortals" team."

Geoffrey Moore: "I agree. What I suspect we disagree on is what constitutes value-creating innovation because over time it does become harder and harder for established enterprises to succeed with disruptive innovations. In that sense, serial entrepreneurs--the great disrupters--do need to move aside, ideally to go off and do it again via a next-generation start-up."

Geoffrey Moore: "-- Twitter is so the wrong medium for us to have this really interesting discussion--the linearity of any one chasm-crossing does not preclude others, but to be fair to your point, it gets harder and harder for bigger and bigger companies to cross chasms. Bezos is indeed like Jobs in his willingness to make "chasmatic" bets at scale, so when we play choose-up for management teams, you get to start with two all stars!"

Geoffrey Moore: "My final "ouch!" I am torn between suggesting you read Escape Velocity, or just writing me off entirely."

First off, I haven't read Escape Velocity so my responses will be the poorer for that.

I think my critique comes down to two real objections. First, there is linearity and narrowing of markets. The book seems to argue for a very hyper-focussed approach, and given the tiny resources a new company has, that makes a tremendous amount of sense. It's close to indisputable. On the other hand, if a technology is really disruptive, it's going to be difficult to tell a priori just what it disrupts best. Especially if that disruption involves network effects. That's sort of the tongue-in-cheek argument I was making in this post.

I tend to analyze things from the perspective of complex adaptive systems. The problem that jumps out at me when looking at the above approach is that in the ecology of capital, those ideas that are least general and more simplistic will be favored, simply because -- all other things being equal -- those will be the easiest to identify an initial market for. As someone struggling somewhat precariously at the pioneer stage, this is a real problem for me. If everyone demands that one have a market clearly identified, how do I get the resources to identify that market, especially given that the market identification process involves creating enough of the technology to actually see the disruptive effect?

Along with this there we have the observer effect. We have certainly seen that the companies that succeed in the venture capital arena closely follow the strategies spelled out in Crossing the Chasm. But do the companies succeed because they have the best strategy ex-ante or because they are most co-adapted with the culture of venture capital, which is heavily invested in the Chasm model? (And I fundamentally don't buy the naive classical view that some capital sources will evolve to fill the open niche.)

To whatever extent the above arguments hold, we're missing out on a lot of possibilities. To that extent, any really transformative technological innovation would then come from large companies willing to take risks on complex and general technologies. And when you look at it, that's exactly what Apple and Amazon are doing. They're hiring and finding ways to value the actual innovators that might have been working in a garage somewhere twenty years ago. (Do we even have any good examples of the garage model in the last few years? I can't think of any, but that doesn't mean they don't exist.)

Now, to the extent those arguments don't hold, you'd want to do everything that the rest of the book suggests. And I'd stipulate that in the very large majority of cases, that would in fact be the right thing to do. But we shouldn't forget that innovation is the canonical fat-tailed phenomenon. What that implies is that the potential benefit from the minority of cases where real innovation doesn't fit into the Chasm model box could very greatly outweigh the benefit from those that do.

But the fact is that -- back in the real world -- we should assume that they even if they don't hold the observer argument means that any potential innovative company must behave as if they do. And yes, that's the part that bugs me, because it does seem to have depressing consequences. Because it means that you don't get to have a company that is truly driven by a core belief in innovative product and innovative people unless you already are Jobs or Bezos. And you don't get to work in one unless it's Apple or Amazon. (I realize I'm making an extreme case here.)

I think that explains why those companies are able to attract people who actually have something unique to contribute. The obvious question to ask is "why aren't there more companies like that"? And especially, "why aren't there any [ok, very many] non-gigantoid companies like that"? No, I don't think it is simply because of the unique, raw talent of these two CEOs and that no-one else has the vision, passion or creativity to do the same thing. I think it's actually because no-one else has had the balls and the money to do it. Don't forget, Steve had to spend a decade in exile because venture capital thought that selling sugar-water was the best model for a 'mature' technology company. The real question is "what is it about the current setup that prevents other companies from doing it?" "What did Jobs and Bezos overcome that others haven't been able to?" In my book, a large part of the answer is that what is in the way is actually "a culture that commodifies ideas, driven by people looking for the simplest, most repeatable and predictable business model possible".

Here my concern is actually not so much with the serial entrepreneurs -- as suggested, they can more or less fend for themselves. Now, some of those people will also be the true innovators, but my sense is that (especially in the web space) more and more of those people are actually closer to professional managers and tech-savvy investors than passionate innovators. My concern is for the people actually doing the innovation. And it turns out that, perversely, they are on the losing end of the stick any way you look at it. And so this was the part that I found so depressing. Not because it isn't correct, but because it probably is:

"In the development organization, pioneers are the ones who push the edge of the technology application envelope... Their brilliance fuels the early market, and without them, there would be no such thing as high tech.
Nonetheless, once you have crossed the chasm, these people can become a potential liability.. In the meantime, they are not likely to cooperate in the compromises needed, and can be highly disruptive to groups seeking to carry this agenda out. It is critical, therefore, that as the enterprise shifts ... that pioneer technologists be transferred elsewhere..if necessary to another company." [I think the word we're struggling for here is "fired".]

"The final world on pioneer technologists, I suppose, is that they are in the same bind as authors -- a fate I can identify with. Like authors, they are compelled to conduct their craft regardless of whether anyone will pay for it. As such their negotiating position is fundamentally weak, and their normal compensation reflects it."

Let's be clear: these are the very people without whom none of the innovation that drives any company growth can or would have occurred in the first place. Geoffrey acknowledges that "casting aside people, dislocating their lives and threatening their livelihood, is immoral", but I can't help but read that as an awkward admission of an inevitable consequence. And I wonder how many technologists know that this is very literally the playbook that their company management and funders are using, and what they would do if they did? I know that I would neither want to join a company or to hire people for a company that thought this way. In fact, my experience is that many companies -- certainly the ones that I admire -- don't really think this way: most people simply aren't that venal. Rather, it seems more of a kind of macho posturing for the benefit of the funding community. Still, isn't that kind of sad?

So at core, I am not making an economic or business argument, but an ethical, even spiritual, one. I'd like to see people living happier, more fulfilled lives. I guess I should be embarrassed to admit that, but there it is. Unfortunately, we live in a world where business concerns are orthogonal and often actually opposed to human concerns.

Happiness requires a sense of community, of shared responsibility, common interest and diversity of ideas and styles. Healthy dynamic systems need that kind of diversity, that soft-permeability, and they need it in day to day interactions, not just through the periodic purging process demanded by investors as a result of moving to another stage in the Chasm life-cycle. If you look at any social system -- with the notable exception of those constructed via the crushing, simple-minded logic of modern capitalism -- that's exactly what you see. Why can't we build companies of all sizes where people from all ends of this spectrum co-exist? Wouldn't that be a worthy goal, or do we as always fall back on the argument that business is about what is, not what we would like it to be?