With so much hype surrounding the technology over the past few years, you’d think blockchain was a cure for cancer. But not only has it deflated, unless you’re a deep-in-the-weeds developer working on solving very specific problems, you might even be sick of hearing about its glory by now.
Gartner Hype Cycle
Gartner has done a pretty good job of defining the Hype Cycle for technology. For those who aren’t familiar, the Hype Cycle is a macro view of a given technology based on market behavior. Their most recent version for blockchain looks something like this:
But while the Hype Cycle is often used to examine a particular technology from a broad market perspective, the real meat and potatoes of understanding can be found in a much older model.
Crossing the Chasm
Back in 1991, a really smart guy named Geoffrey Moore wrote an amazing technology marketing book called Crossing the Chasm. I remember being so excited to get my hands on a copy because at the time, it was an elucidation of all my own learnings.
Moore identified two kinds of change:
- Disruptive, or discontinuous, innovation gets us to change our behavior or the products we use.
- Sustaining, or continuous, innovation entails steady improvements and upgrades to products that don’t make us change our behavior.
Within these broad categories, there is a spectrum of innovation, some requiring significant adaptation on our part, some not requiring much of us and some falling between the extremes.
Disruptive change is the price of modernization. Sooner or later it comes to every product; sooner or later all consumers must adapt their behavior. Companies need to learn how to handle disruptive change.
High-tech industries happen to have substantial experience managing disruptive change, and companies from other industries can benefit from this experience.
The kinds of customer that will buy a product exhibit a range of adaptability to novelty, divided into five categories: Innovators, Early Adopters, Early Majority, Late Majority and Laggards.
- Innovators seek out novel technology; it’s like a hobby for them. There aren’t many genuine Innovators, and because they’ll try new things, they are important. Other people see them use new things and feel braver themselves about trying them. Innovators like technology for its own sake. They are nerds. They are willing to overlook all sorts of problems with new technology in order to be on the cutting edge. They demand honesty. They want highly competent tech support. They want to be the first to get the new product, and they want the product cheap (which is their greatest paradox).
- Early Adopters are quick to understand the benefits of new technology. Unlike the Innovators, they don’t love technology for its own sake. This group relies on its own intuition and vision to make investments and buying decisions. Early Adopters are visionaries. They are highly motivated. They are looking for breakthrough technology — game changers — and they are willing to invest in and pay for that technology. But they usually have high (unrealistic) expectations and they get disappointed easily—meaning, they’re the first to jump off the train when things get difficult.
- Early Majority are practical minded consumers. If a product seems useful, this group will try it. However, the Early Majority are cautious of fads.
- Late Majority consumers wait for something to become well established. They don’t feel confident in their ability to deal with technology and often buy from big companies. For Late Majority consumers, the technology has to be seamless, intuitive and easy to use without any thought.
- Laggards are those consumers who, for personal and/or economic reasons, are not looking to buy new technology. They simply don’t care. They’re the ones still using a flip phone in a 5G world.
Most people fall into the Early and Late Majority categories, but understanding each group is crucial for marketing to them. Each of these groups has its own response to disruption. Each group has its own psychographic profile as well.
The High Tech Marketing Model uses this Technology Adaptation Life Cycle as a framework. Markets are developed according to the model, starting with Innovators and working down to Laggards.
This process turns out to be harder, though, in real life than it is in theory. It isn’t a simple thing to sell to one group and then adjust one’s marketing to sell to the next segment down the line. Some groups are different from each other; the same strategies just won’t work.
Understanding the Gaps
There are cracks between each of the segments. The crack between Innovators and Early Marketers, for example, arises when there’s new technology that motivates the Innovators, but not the Early Markets, because there aren’t any practical applications for the technology (and this group doesn’t know what to do with it).
The crack between the Early Majority and the Late Majority occurs because members of the former group are willing to learn a little about their technology in order to use it, while the latter won’t put energy into learning.
The biggest gap is the one between Early Adopters and Early Majority. This gap is so significant that it isn’t a crack so much as it’s a chasm.
Both groups can superficially appear similar — the difference is the expectations of the customer.
Early Adopters are looking for a change agent. By adapting early to the change, they hope to beat their competitors. They know that being first with new technology likely means that there will be glitches and problems, but they are comfortable with that.
The Early Majority, on the other hand, is looking for productivity improvement. They favor evolution over revolution; they want things to work smoothly.
Because these two groups are so different, the Early Adopters don’t serve as examples and role models for the Early Majority.
The Early Majority need a reference, they need to see how the product works for someone like themselves.
Of course, the real money is to be made by selling to the Majority. The Early Majority folks are pragmatists. They’re risk averse; they don’t want beta anything. They’re hard to win over, but once you’ve done so, they’re loyal.
Crossing the Blockchain Chasm
If you overlay the Technology Adoption Lifecycle with the Gartner Hype Cycle, you can see we’re very clearly in the chasm moving from Early Adopters towards Early Majority.
Where there was a lot of general enthusiasm and interest in the broad technology topic between the transition of Innovators to Early Adopters, the hard grind to apply the technology to real-world solutions is in full swing.
And it’s ugly. It’s hard. It’s where bullshit hype goes to die.
This is where the broad tech gets verticalized into industry niches and use cases, and nobody necessarily even cares about the core tech anymore—especially as actual solutions emerge for non-technical problems.
Pre-Chasm vs. Post-Chasm Companies
Before the chasm, a company often makes all sorts of commitments, promises to get ahead. After the chasm, everything has changed, but the company is still entangled in these prior commitments.
While the best thing is to avoid making these sorts of commitments, this is admittedly easier said than done. Gotta’ show a path to revenue and even actual revenue to get the funding needed to continue moving forward.
The needs of a post-chasm organization are different from those of a pre-chasm organization. Before the chasm, a company’s goal is to reduce investor risk and grow the company. After the chasm, the goal is to make money.
Venture capitalists love the classic hockey stick curve, depicting a gentle rise in revenue until the product takes off and the revenue curve turns sharply upward. But the hockey stick is a flawed model. In reality, revenue is more likely to look like a staircase than a hockey stick — it rises rapidly and then plateaus, then the pattern repeats.
And that’s where we’re at now as an industry. The hipsters and hypsters are on their way out of business. The true value creators can find their day in the spotlight.