2015.01.09 Crossing the Innovation Chasm

Among innovators, Crossing the Chasm, originally a book by Geoffrey Moore (boiled down to a few pages here), refers to the point where a product goes from being attractive to early adopters to applying to the general public.

Many entrepreneurs have paid the price for bringing a product to market too early.

What is too early?

In entrepreneurial terms, one version of too early is when an idea is so game changing that it is not possible to convince investors that it is feasible. Another version is when the technology is not mature enough to reach a price point where people may want to buy.

It may indeed be too early to produce the product with such cost efficiency that it can reach the mass market. But maybe you can start with a product that could be great for a niche of highly skilled professionals?

One problem with products at this stage is that the people from whom you want funding (link in Danish) and these highly skilled customers don't necessarily overlap. Investors or their hired hands may react to many products as "mass market consumers" and from this perspective they may not be able to follow the steps that you see for realizing your vision.

If your initial target customers are not like your potential investors, you have to get these target customers onboard to vouch for the validity of the market you want to address. (Heck, you may even ask them to invest.)

Many products may eventually move from this early version into a general consumer product when the price of technology comes down, but your niche market has to carry your business until such a time comes.

Examples of this development have be seen in mobile phones, digital cameras, solar panels, DNA sequencing...

So let us say that you do get funding and you are able to line up some of these highly skilled customers. There still has to be enough of them to carry your company until you have been through several product iterations and the technology has come down in price.

In a small country like Denmark, this might be an issue. 'Too many companies end in "the Jaws of Death"' says the chairman of the Danish Market Development Fond Carsten Bjerg (the article unfortunately only in Danish).

His regret is that too many start up companies die between prototype and sales - in what Moore calls "the first gap".

As I read the article, Carsten Berg's concern is with inventors who work from the angle "is this possible/interesting to develop?" vs. "is this addressing a problem people are willing to pay money to get solved?"

My addition is that you also have to be sure it is a relevant problem for enough people.

Sometimes that requires looking at markets that are bigger than the home country. And that can be scary (and make some people think "you have grown too big for your breeches".)

Many entrepreneurs have learned the hard way that these are considerations better made before incorporating, since who owns the Intellectual Property may play a role in who can buy your products - and who will fund you along the way.

Fortunately, learning about the US market doesn't need to be an "all or nothing" approach if you are Danish. Plenty of people are happy to answer your questions and you can reach them through organizations like Silicon Vikings, Innovation Center Denmark, The Danish American Chamber of Commerce, or private consultants like Advant.

Getting good advice early can help you not end in the "Jaws of Death" and towards "Crossing the Chasm".