How can you bring your cutting-edge products to a larger market, far beyond the walls of your own industry? Cross the chasm that separates us from the marketplace in today’s episode! Helping you navigate is the legend in the go-to-market world, Geoffrey Moore. He is an American organizational theorist, management consultant, and author of Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. Geoffrey shares the guide to navigate across the chasm of technologies with a game plan for marketing in high-tech industries. He provides insights into a great framework called ‘Target Market Initiatives’ and how it provides the avenue to overcome the challenges in a high-tech industry. Grab onto your seats as Geoffrey takes us across the chasm of technologies and towards a thriving business.
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Cross The Chasm Of Technologies: A Game Plan For Marketing In High-Tech Industries With Geoffrey Moore
In this episode, I have the honor and pleasure of hosting and talking to a legend in the go-to-market world, Mr. Geoffrey Moore. I’m sure we don’t need any further introduction. He’s a legend. With that, I’ll welcome him, and we’ll get into the conversation. Geoffrey, thank you so much and welcome.
Thank you for having me with your show. I appreciate it.
I’ll just start my show with this question. How do you view and define go-to-market?
It’s interesting because, like many of the people who read this episode, I work with companies on their go-to-market motions all the time. We all say, “We have an offer at one end. We have a customer on the other end. We want to connect the two of them.” The thing that I see most frequently is most companies tend to think of that from the product to the customer.
Particularly, outsiders can help them do, “No, do it backward,” like from the customer back to the product. Instead of thinking of the customer journey, how do I get this prospect through my funnel? Think about it the other way, which is to say, “How do I take this problem off my customers’ plate? How do I enable this opportunity for them?” It’s the same journey, but you’re looking at it through a different lens.
That’s a fantastic articulation there. That’s what I keep hearing from the founders who have been successful and building the startup as the go-to-market leaders I’ve had on this show. Some of them focus on the product, but they always eventually rotate to who we are solving this problem for and what the problem is in the first place, then tied back to the product, the solution, and aligning the teams internally. Be it product, marketing, revenue, and sales.
The reason why people don’t do it is that it’s not like we’re the two greatest people on the planet, but it’s harder to organize. In other words, it’s much easier to create one playbook starting with the product and send it in many different directions and to say, “I’m going to have many playbooks depending on the target customer and the target customer’s problem.” I have to start at the end and then work back to the center. That’s less efficient, but it’s much more effective.
I’m working with a client around building their product market and go-to-market function. The chief product officer comes back and says, “Do we need to invest in customer insights and customer conversation?” I said, “Yes, of course.” We need to invest in a customer insight program. It’s not like I can talk to someone in sales and get the brains and minds of the customer.
The salesperson wants a good playbook, but at the end of the day, they also want to make the club. They want to maximize their commissions. Being efficient is important to them. They will be as efficient as they can get away with, but the problem with that is as they become more efficient, the channel itself becomes less effective. From the point of view of the enterprise, any dollar spent is getting closer to the customer’s real issues and getting close to the real product market fit as opposed to the alleged product market fit. That’s a dollar very well spent because you’re going to save a lot in wasted effort. It’s coming from there.
That’s what I keep telling her and the team. You have to slow down to accelerate. People get into this mindset of, “I need to hustle.” It’s important to get products or campaigns out with hustle output focus versus, “Let’s slow down and see if we are solving the right problem in the first place.”
Getting a campaign out is like firing a gun as fast as you can. You might hit something, but it’s usually better to aim.
We can go on and on in this one topic alone, but let’s zoom out a bit. Please share with our audience your career journey. What took you down this path in the first place?
My career journey is not typical since I have a PhD in Medieval English Literature, which I don’t think is a normal requirement for a marketing professional. In any way, in my early 30s, we came back to California, and there were no jobs in academia, so I joined a software firm. I initially worked in sales. It turned what I learned in sales was I was good at opening and not as good at closing. That’s not a good quality for a salesperson, but it turns out to be a very good quality for the marketing person.
I ended up at a marketing consultancy called Regis McKenna Inc. Back in the ‘80s, it was iconic at that time. Regis did invent high-tech marketing for all intents and purposes. I was there for a few years, and that’s why I wrote the book, Crossing the Chasm, because it was a petri dish. Every tech company that matters to anybody, sooner or later, came through those doors. That was wonderful. Pattern recognition works if you see enough instances. The problem that most professionals have is in your career, you might only work at 3 or 4 or 5 companies. It’s not enough instances.
Even if you’re a professor at Stanford or Harvard, still you’re doing research on how many companies. It’s not the same as being on the battlefield day in and day out with company after company. The book led me to start my own firm. There were three firms that were created in the process as we went along. The last two things I’ll say about the arc in my career is in the ‘90s, it was very venture-focused. I became a venture partner at the end of the ‘90s, but it’s startup-oriented. How does a startup make this thing work?
Once the tech bubble imploded and we had the dot-bomb, then I spent much more time with established public enterprises. That work only culminated in the last business book I’ve written. Crossing the Chasm is the two that matter the most called Zone to Win, which is how you make that same disruptive journey if you’re the public play-held company, you don’t have venture capital backing, and you need the core business to fund the new business. There’s a bunch of challenges there. My card says Author, Speaker, and Advisor. That pretty much describes what I do.
I want us to go back in time, especially when you mentioned that you started your career in sales and then figured out that you’re good at opening but not closing. What was that a-ha moment? You did mention that, but what is that experience of a-ha moment that led you to do that?
When you don’t make quota, that’s a signal from the universe. To be fair, it’s always been easy for me to sell myself and my services. When I was representing a product, I knew the product was not quite exactly what the customer needed. I struggled with that a lot. You need at some point to suck it up, and I did, but I wasn’t any good at it. Remember, this is the ‘80s. In the ‘80s, sales were still a Glengarry Glen Ross stuff.
The olden days of car salesman.
It was the sales profession that you think, “I’m not sure I want to do this.” The salesperson now, by contrast, is an incredibly exciting career.
The point you mentioned, Geoffrey, about you not feeling good about the product where you’re working as a salesperson reminds me of some of the concepts of the top-tier salespeople. First and foremost, they’ll have their rituals and the discipline to get through whatever they need to do to build our bond and build a pipeline. The first and foremost is, do they believe in the product or service they are selling?
One of the things that helped me was this concept of the whole product because I didn’t learn that until I got into Regis. No product is going to solve 100% of the problem. Not if it’s a complicated problem. I was doing more B2B complex sales things. Therefore, it’s always a combination of orchestrating resources. The product is a critical resource. The customer turns out to be a resource. You have to help the customer bring their best talent to the table, then there are partners, and there are your own professional services.
Nowadays, there’s customer success. There’s all these resources to orchestrate. The subscription economy and a service economy, which is easier to opt out of than the old on-prem license and maintenance, has put vendors more on notice, “If you’re not going to deliver the value, you churn out of your business.” It’s good forces that are creating better practices.
That point in time in your career led you to figure, “Sales is not my thing,” and you move into the marketing side of the house, but then something happened where you’re not just doing pure marketing. Something led you to do research and write a book.
First of all, because I was an English Major and English Professor, I loved to write. They’ll find me dead at some point with a pen in my hand. The writing was there. It’s funny because people say, “How did you do the researcher for your book?” I never ever did research, but what happens when you are consulting? Remember, Regis was consulting primarily on positioning problems. “How could we help us position our company?”
When a big company comes in and gives you that assignment, they’re going to pay you a bunch of money. First of all, they take every study they’ve ever done with McKenzie or Bain or BCG, and they give you all their research right there. It’s like, “I’ll read it.” Basically, I was gifted with probably tens of millions of dollars of research for free because that was the first step of onboarding.
The next thing is all the research is great. Norbert McKenzie’s stuff is great. Somebody once said, “No plan survives first contact with the enemy.” What’s wonderful about when you’re doing this consulting is you get right down in the trenches, and you start seeing what our customers are saying, what our competitors are doing, and what the press is saying about your client. You realize, “That wasn’t what I thought was going to happen.” Interactive learning is valuable.
Maybe it’s possible because of what you started observing, you started writing, and that translated to original research or research material.
The classification was an original. By the way, it’s written in 1990. It’s still actively imprinted now. I’ve had to update it twice with examples. The content has never changed. The examples of change are pretty dramatic. What happened there was Regis had a playbook for PR, but we were being asked to do more strategic marketing.
What I mean by strategic marketing is this. The definition I would use there is marketing as a territory capture game, meaning, where can you stake out a market segment and become the market leader in that segment because markets are organized around leaders? You get all the ecosystem support you need to become a powerful and profitable company.
The leader gets the lion’s share of support and everybody else gets as much as they can get. If you can become a category leader like Apple or Tesla, way to go. Even if you can’t, if you just become a segment leader, you could at least get enough. It became a power discipline. It turned out that there wasn’t a playbook at Regis. There was a lot of tribal knowledge that was in people’s heads.
Regis took some investment money from a company. They said, “We like your practice manuals.” We don’t have a practice manual. I thought, “I’ll write something down,” and I did. I shared it with the partners, but the partners said, “We came here to work for Regis. Not for you.” I said, “No, this is you.” “This is me?” That’s what I did. That’s why I said, moving on, “I’ll take the book and run with it.”
That’s a great transition. I’m always curious, and I’ve heard this from my readers as well. It’s about what are those moments in life that led to that big inflection point of a-ha. Thank you for sharing that story and journey. Translating and coming back to what you do now, we all know what you do, but are you still in active practice advising the board and the CXOs?
I now spend a lot of time with CEOs. People say, “How do you know so many CEOs?” The answer is I haven’t died. We were all in the same cohort. They were product managers. They’ve got promoted, and I’ve followed along. As the demographic of my peers aged and the seniority age, my practice migrated. What I would have called a marketing practice in the ‘90s became a strategy practice in the early part of this century.
In the last couple of years, it’s almost an organizational development practice now because it’s like how you organize a global enterprise to aggressively pursue your current core business even when it’s under attack. Maybe even aging away, at the same time, get your bets in on the next wave of technology. When you’re a publicly held company, that’s a bear of a problem, lifetime employment. The other thing that happened when COVID came was we all started using this medium of Zoom. As a result, you used to say, “I could work with one client a day.” Maybe two, if I was lucky, but not normally. Now, it’s like, “10:00 or 12:00? 12:00 or 2:00?” It’s been much easier.
Your latest book, The Infinite Staircase, doesn’t have much to do with what you’ve done before.
The Infinite Staircase is me going back to my roots and saying, “What does it have in common?” Like every book I’ve ever written, it’s a framework book, but instead of saying, “What’s the framework for selling high-tech products?” this is the framework for understanding the universe and your place in it, which is a slightly larger market. It’s a larger topic. It’s not a smaller market. That book probably has the least readers of any book I’ve ever written, but I’m passionate about it. I love writing, and I care a ton about the topic.
The way I think about this, Geoffrey, is it’s a go-to-market for you as a person.
It’s a legacy book, too. We have grandchildren. It’s like, “Before you leave the planet, did you learn anything? If you did learn something, will you write it down, please, before you leave?” That was the objective.
For me, I would read it and study the Bhagavad-Gita because of life lessons. That’s my go-to-market book for life. That’s what it is.
I was trying to write my own little private notes to market book for life.
Let’s shift gears. You’ve worked at so many companies across the decades. You see the failures and successes of large companies and startups. You’re an active part of the investing community. If you can share with the readers a go-to-market success story and a go-to-market failure story.
What I’m going to do is primarily from the startup world because, first of all, they’re a little bit crisper and clearer. Second of all, large public companies can sometimes get cranky with you if you talk about them behind their backyard. This is from the days with the Wildcat portfolio or the two places. For example, now I’m on the board of a company called WorkFusion.
When they first invested in it, it was human-in-the-loop AI. This is well before generative AI and ChatGPT. The idea was that AI could learn to do complex human activities and supplement human professionals. We did it. We did a project with Disney and one of the pharmaceutical companies. We had interesting stuff, one with a big bank, but it was pre-chasm.
When I became involved with them, it was, “We have to become good at one thing and become that target market segment leader,” because we were spending a bunch of money but we weren’t gaining power. The choice was to work on the regulatory challenges of banks, particularly with respect to anti-money laundering, fraud, and the whole bunch of that dark stuff in the background, which has historically been in adverse media, people only.
We started the crossing the chasm problem, but the team and the sales force were not a natural acronym. We had to go through a significant replacement of leadership almost across the board, but the new team that came in did a wonderful thing. They said, “We’re going to call our products digital workers.” It says we have an artificial intelligence product that works on this problem. You’re going to meet Alex, Isaac, or Elena. Elena presents herself as if she is applying for the job of money laundering or fraud.
At that time, we started going after the HR budget as opposed to the IT budget. They started realizing, “We can’t ask the IT person. This thing’s got to be enabled in the cloud.” Anyway, they use that whole metaphor. As a result, first of all, it’s very easy for the customer to talk about it. Second of all, the customer can start saying, “My colleague Isaac.” They’re getting into it. Whereas before, it was like, “It’s artificial intelligence.” “I don’t know. Is that the terminator?” It had all the wrong distractions. I thought that was an interesting one to do. What’s happened is there’s a company that’s getting traction with the biggest banks in the world because they all have the problem.
They all need to use artificial intelligence to solve this problem eventually. These people are showing up saying, “That’s what we do.” They are guaranteed at that. Do they hit it out of the park? Most of the time, they do, but that’s not guaranteed. What is guaranteed with that go-to-market is you will get at that because you’ve now worked backward from the customer. Not forward from your technology, which is what they were doing before. They were going forward from their technology, saying, “We have a magic wand. What’s your problem?” instead of saying, “How are you handling these challenges in the security fraud area or the funding fraud?” You go, “Let me tell you about what we bring to the table.” That was a success.
Before we get into the failure story, I want to double-click on the story here about WorkFusion. There are two things that I took away from that. One is they changed the ICP. With an ideal customer profile, you have a persona, and they moved from it to the HR budget.
That’s correct. Their economic buyer ended up being the compliance officer who ultimately reports to the audit committee eventually. Instead of going to the IT, people are saying, “We have incredible technology.” They went to the compliance officer, saying, “We have incredibly efficient, essentially artificial people.” It did digital workers.
From your experience, what led to that translation or movement?
What leads to it is, at least in my experience, experiencing what it’s like to be in the chasm. What is it like to be in the chasm? In the chasm, you have cool technology, and people acknowledge that. The group will say you have good technology, and you have customers. The problem is you have no power. This means every customer you have in a different use case and a different industry.
It’s like trying to win the primary with two votes in Connecticut, one in New Jersey, and one in New York. We’re trying to become speaker of the house if you want to try that if you’re a Republican. The point is, what you want to do is to get 4, 5, 6, or 7 customers in the same use case and the same segment. By the way, it’s a use case that they have not had success with before. Now, you do change the game.
They’ve never heard you. It’s like Obama. When Obama gave that speech at the Democratic convention years before, he was nominated. Nobody ever heard about him, but then, all of a sudden, “Who’s this? I don’t know. He’s pretty good.” When you don’t have it, what happens is your sales cycles take forever to close and you don’t get inbound calls. For every deal you get, you had to do outbound to get it. On the other hand, when you do get across the chasm, you do get inbound calls, and the ecosystem does start to organize around you.
That’s what people refer to us as product market fit. You get the pull versus constantly pushing.
The market is not just the end-user customer. Not even just that customer and their economic buyer sponsor. It’s the ecosystem because it’s the partners who also make a living by filling out the rest of the whole problem.
It looks like your work on the team that you guided and advised was around, “Who are those segments of buyers whom we haven’t explored?” and, “Where we’re not getting enough traction. What should we revisit?”
We know that there was a use case in banking, but it was one of many. The problem with making it one of many is that when you go to the R&D people, there’s this list of feature requests to serve this use case and to serve that use case in terms of the other. Once the new team came in and started with the CEO, Adam Famularo, a wonderful Head of Marketing and Head of R&D, like world-class leaders, what they did was they said, “Tighten the aperture.” I was advocating for that on the board, but they did not do it. I’m just an author, speaker, and advisor. It didn’t say doer. You might say gag fly, but you didn’t say, “He’s going to do it for us.” They did it and did a magnificent job with it.
You mentioned about what are the signs that you look for. It’s a long sales cycle.
You get technology kudos. The other thing you realize is, “I’ve used the same reference every single sales cycle for two years because I only have 3 or 4 of them.” By the way, those people also want features to add to their world that are not on your roadmap or hard for you to deliver. You get caught up in these long, expensive products to maintain. They’re not getting traction. Meanwhile, nimbler people are running past you, and the category is doing fine, but you’re not.
That was a great example, Geoffrey, where you talked about the go-to-market challenges or the friction that WorkFusion was having and what the leadership team did to make the transition with different ICPs and different ways to position the products and the company. That’s a great insight and a great a-ha. Coming back to our earlier conversation or prompt where you’re going to share a go-to-market failure story.
This is another company that we invested in, a terrific company up in Seattle. It had to eventually shut down. This was founded by a woman and her team, who were expert consultants to the real estate market for large family dwelling problems. They had a consulting business where they were advising how to get better marketing. It was a marketing consulting thing with a very specific niche focus.
They said, “The systems these people have are horrible. They’re flying blind. We should write a system that would allow these people to get a much clearer understanding of which kinds of marketing programs are creating what kinds of returns.” It was a very straightforward idea. At a time when the whole single-family dwelling marketing thing was very visible, particularly with the COVID thing that came along, what happened was it wasn’t quite compelling enough. At first, everybody thought it was nice to have. That was no question. Almost everybody said, “You should have it,” but it wasn’t quite a must-have because the people who have this job in the real estate industry are somewhat abused.
They’re a little bit lower level. At the end of the day, the idea of investing in their productivity never got high enough on the stack. The truth is their lack of productivity was costing the homeowners a lot of money. The other thing is a little bit of a problem with the agency model in general, but the agencies were still making money.
The agency’s a little slightly counter incentive to have these people become more productive because that might reduce rather than increase it. There was a little bit of inauthenticity in the market, which was disturbing. The same thing happened in the advertising market with digital advertising and trying to make that more efficient at some point. You had the same problem. To be fair to the team, they focused on the market and had a couple of lighthouse customers, but they couldn’t quite get it over the line.
One of the things that I heard from a founder I asked him was, “What are your signs or what do you look for when you do the market research?” A couple of topics came up. First of all, at what level is this a problem? How big is this problem? Is it at a team level, VP level, CXO level, or board level? Subsequent to that is a top 3 or 5 problem at a board level.
The whole thing about the venture and about being an entrepreneur is the motto is to win or learn. You may not even win 50% of the time. There’s a lot of time when you don’t win, but it’s not okay to lose and not learn. You say, “Geoffrey, you didn’t win. What did you learn?” The phrase that came out of that particular exercise and learning was we ended up calling it a trapped value.
It’s the same idea you stated, which is when you’re looking at an investment, two questions. How much trap value is there in the current system? Meaning if your technology can fix the problem, how much value do you release? The rule of thumb I always like to use is if you give the customer back a dollar’s worth of value, they’ll be happy to give you a dime. At $0.15, they think you might be dodging.
What I’m thinking is, if you want to build a billion-dollar company, you better find $10 billion for the trap value. You can build any size company you want and multiply it by ten for the track. That’s number one. The second issue is how urgent it is for them to release this trapped value. The problem they remarkably had was the trap value was very real, but it wasn’t impacting enough of the core business to make it urgent enough to get to the board-level place. Was it a productivity problem for the middle? Yes. Would they want this thing every day of the week? To your point and your colleague’s point, it didn’t quite make the cut when you moved it all the way up to the top.
One of the big topics that is making rounds in the industry is compliance around AI. You open the news, the tech world. This is what it is. A lot of founders and would-be entrepreneurs are doing the research around this, and there’s the White House Bill of Rights, which was released in this spirit. There are other initiatives happening at the State level in California. Gavin Newsom has released or put it as a directive. What do you think that founders in this world of air compliance and regulation and risk mitigation should be looking at?
It’s interesting. Look at where we were with ESG a few years ago and where we are now. You would have said a few years ago, “The European Union is leading this thing.” Now we’re seeing this backlash against it. It’s even more necessary now than ever before with climate change. Watching the regulatory environment, particularly when it’s a highly complex problem to control, the problem with climate control is it’s very hard to bind, unlike financial fraud.
Financial fraud is a very easily bound problem. That’s why that’s very good regulatory compliance. FDA approval, which is a very clearly bound problem, is a good regulatory compliance. In any place, you have clearly bound ones, but when they’re more ephemeral like AI responsibility, that’s not a bound problem. Therefore, to say, “I’m going to go after that market,” no. Maybe eventually, there will be bound subsegments that will come out, but it’s way too early to do that.
If I double-click on the topic of AI compliance, there is algorithmic discrimination that might be happening on data privacy. People know. It’s been beaten to the dead. Other systems then play when the AI model and the machine are taking over other fallback systems for the year.
Let’s take the two you pick, so data privacy. You go after the digital advertising people, you go after the cookies, and you have a problem. If you do AI discrimination, you go after real estate or online lending. That’s a bound problem, but if you said the White House Bill of Rights or Gavin Newsome, God bless you, Gavin, but it’s just evaporating. It was way too unbounded.
The lesson and the advice you’re giving for folks pursuing this is to figure out what is that bound problem and how big the problem is.
If you think about trap value, the analogy would be to the oil industry and their exploration production, but they’re looking for oil wells. What they’re looking for is reservoirs of oil that they can drill a well into and tap. Those create huge amounts of oil return. Now, there is a thing called Shale oil. You can go after it, but it’s a lot more work to get the same amount of oil out of the system. If you have a system that can do it, great, but the bound problem is much more like the oil well than the Shale oil.
Those are two great stories that you shared there, Geoffrey. One is around the success story, and the other is a failure story. Anything else that comes to your mind? You have covered so many of the case studies in your research.
I have a motto, which is whenever you get into trouble, I do think going back to that playbook of picking a high-value use case that’s urgent in a single target segment, even if there’s a little bit of a size mismatch. Maybe you are a big company, and it seems like it’s a small market, but just to get back to winning ways and to get back to establish that you’re the go-to person, if you wanted to get the presidential nomination, winning the New Hampshire primary, there are not that many in New Hampshire.
Winning the New Hampshire primary makes a difference for the Iowa caucus. The same thing with business. Being number one anywhere is an important road back to health. If you are a startup, being number one somewhere is how you become a going concern. These accountants have this phrase going concern, which is due to what a reasonable person expects you to be in business a year from that. Until you have your first market segment leadership position, I don’t think you’re going to be concerned.
A critical function in the whole go-to-market where you talk about how you identify the problems big enough or not, I do have a bias toward this function because I see myself as a product marketer first, and that’s been my growth. What advice would you give to the product marketing community in identifying the relevant segments if this is a big market that a company should be focusing on?
I’m going to reframe the problem. There are a bunch of good opportunities for most companies with good technology. The problem is when they go to execute it, they lose focus. We had something we ended up calling target market initiatives. My wish is for every product marketing executive would become a world-class expert and what we call the target marketing checklist. It was eight things. I’ll spin them off for you, but they’ll be very familiar to you.
The idea is you want to align your entire enterprise, the field, factory, support people, customer success, marketing, PR, sales team, sales play, the top of the funnel, and the middle of the funnel around the following factors. The first two are who the target customer is and what’s the compelling reason to buy. In other words, that’s true North.
You want to make sure it’s all the things we’ve been talking about. Is it urgent? Is it impactful? Does it get all that good stuff? It got those two. For the next two, we call the whole product and partners analysis. The idea there was, are you bringing the complete solution to this problem to the table? If you don’t, you’re leaving your future to chance. The reality is probably you can’t alone solve 100% of it. Who are the partners and allies that have to show up and interoperate with you in coordination?
If you don’t orchestrate that relationship, you’re leaving your future to chance. That’s a bad idea. A product marketing manager has to get out of the office. Not only do the customers environment, but into the partner ecosystem and say, “If we’re going to solve this problem, by the way, there’s money here for you as well as for us. We’re all going to make money here because there’s a lot of trap value, but we ought to work together. We have to do this in a coordinated way.” Product marketing people don’t normally think about it that way, but you have to.
The next two are called distribution channel and pricing strategy. The idea here is, if you go to that target customer, where do they want to buy from, and how do they want to buy? I know how you want to sell, but I don’t care how you want to sell. It wasn’t a compelling reason to sell. It’s a compelling reason to buy. What’s the channel that they’re going to want to buy from? I like to call it the price of least astonishment.
It’s not a terribly low price. It’s not a terribly high price. By the way, you have to pay off everybody, but it’s your price. You also have to think about what the whole product costs because the customers get a dish out of the whole product. If you don’t get paid or your partner doesn’t get paid, somebody’s going to be very unhappy. You have to have a pricing strategy. It’s not a discounting strategy. People don’t think about heart surgery where there is a coupon for it. They want the right price, but they don’t want a crazy price.
The last two are competition and positioning. The tendency with competition is to think about, “They’re bad, and we’re good.” Don’t do that because if you want to develop this market, your customer needs to see that there’s more than one company that’s investing in this area. The way you position is it’s a clear positioning for tech companies. There are two companies that these customers are going to look at besides the two classes.
One is their current vendor. Why don’t we see if our current vendor can’t solve this problem? What you’re going to say about them is they know you well. They probably know your business, but they don’t have the technology necessary. That’s why you’ve been struggling. You can keep struggling, but you’re just Band-Aiding. The reason you would pick us rather than them is because we have the magic wand.
Conversely, there are other people who have magic wands. Other people do artificial intelligence. Are they good at it? They’re very good at it. What they don’t do is focus on your problem. Basically, the positioning is we live at the intersection of a tough problem where we’ve made ourselves domain experts. They break through technology, which changes the dynamics of that situation, so we can drill the oil well, and that’s why you would pick us. That’s positioning and competition position.Position yourself to live at the intersection of a tough problem where you've made yourself a domain expert. Click To Tweet
It is amazing the way you broke it down. You probably have a great framework, the target market. I love the way you started with what the problem first is and how big is it. What struck me in the second one is people always think about partner ecosystem as a go-to-market versus the way you help me reframe is you need to bring partners along with you to solve this problem.
As the category of all, once the category gets into what we call Inside the Tornado, once the category takes off, then partners is a distribution strategy because you’re trying to get as much coverage as fast as you can. What we’re talking about prior to that is the market is still forming. One of the things you realize about partners at that stage is that partners will never rescue you. You can never hope that your partner is going to help you.
You have to make a market for the partner. It’s not the partner’s job to make a market for you. Once you’re inside the tornado and the market is made, then the partner will help you extend your distribution capabilities. That will be great, and now you’re copying them for partner-qualified leads and deals, but that’s not what’s going on prior to the tornado.
I completely agree. The a-ha that you brought to me is if I have to turn back in time and go back to the previous roles where I was at, for example, in my previous full-time role where I was hired to bill like a product-led growth go-to-market, the mistakes that we made are becoming even more crystal clear based on what you shared. The emphasis back then to me was, “We made the decision. Figure out any or what way to build a product that grows,” versus understanding who we are targeting. Are they ready for product growth? We’re talking about professional services and home services. Are they the right market for product growth?
No, and that’s one, gamers.
We made the decision to go after this. “Let’s bring partners.”
One of the things you’ll find is if you compensate somebody to recruit partners, you’ll have a lot of partners.
The writing was on the wall. Fast forward 9 or 10 or 12 months, that company couldn’t raise the funds and had to go to a massive round of layoffs.
It’s heartbreaking because, first of all, nobody wakes up in the morning saying, “What stupid decision can I make now?” This is why it’s important to say win or learn. If you do not have a tolerance for losing, then do not be an entrepreneur. You can’t possibly have a perfect record as an entrepreneur. It doesn’t work that way. What you have to be able to do is every time you take one of these hits, they’re painful. This isn’t like, “It’s cool.” This is a real hit. If you ever have to lay somebody off, this is no fun, but don’t lay somebody off and not learn. That’s not okay.
Layoff’s consequences are painful. Not just to that person but even to the family of that person.
Also, leaving customers in the lurch. You certify a partner who invests in your thing, then you leave them in the lurch. There’s a lot of collateral damage in entrepreneurship, and it’s unavoidable. That’s why people don’t like to rush to get on your bandwagon because they’ve seen enough of the carnage to go, “I’d like to see a little more.” This is what creates the chasm. There are a few people who believe in buy-in ahead of the proof points, but most people are saying, “I’ve seen too much carnage. I got to see more success before I play,” which is why this crossing the chasm playbook is a little bit challenging. Also, this playbook has held up for several years. It’s a good playbook.
One final note on this topic is there’s constant pressure, especially coming from the investors and the company, “Keep pushing dolls. Keep pushing your people.” Eventually, the CEO or someone on each team has to say, “I sense your urgency, but we need to pause even if it means like one quarter.” It’s going back to the slowdown to accelerate.
This is a big difference on the way because it’s not just the board now. It’s the financial analyst. It’s everything. Let us talk about the idea. We have a lot of performance metrics for how to evaluate the performance of an enterprise, but we don’t have a lot of good metrics to evaluate the power of an enterprise. What do you mean by power versus performance?
Power is what enables performance. The reason you have success is because you’re more powerful than the competition in the situations that you’re competing in, and you win them. When you win them, and if you win them profitably, you create enough surplus returns. You can invest that performance to fund the next generation of power. People say, “I got it. We have good metrics on the performance side of that wheel. We’ll buy very good metrics.” Did you become more powerful?Power is what enables performance. You succeed because you're more powerful than the competition in the situations that you're competing in. Click To Tweet
I had an interesting conversation at one point, writing Zone to Win. I wrote it with the team at Microsoft and the team at Salesforce. We’re having a conversation with the team at Microsoft. This was Satyan’s direct report. This is the top of the wheelhouse. I said to him, “First of all, Microsoft’s the most powerful company I’ve ever dealt with, but here’s an important thing. You have lost power every single year of this century.” This was in 2014 when I said this.
They went, “He might be right.” You’re still super powerful, but you’re not more powerful. You’re less powerful. They were in the middle of it already, but that was part of the Azure transition, then it became very clear. Amy Hood, a CFO, said, “We can work with this idea in our annual planning. We can incorporate what Geoffrey said and say we’re still going to be held accountable for performance, but we’re also going to hold you accountable for power. We’ll find ways to do that.” The Azure success is a classic example. That’s the most powerful tool in the toolbox now.
How do you apply or track if a company is building power? Performance is easy.
I have a book called Escape Velocity. In that book, there’s a model we call the hierarchy of powers. The idea was, how do you measure power? There are five powers. The one that was most predictive of long-term success was the next and the next. The most predictive one is what categories you are in. Are you in a category that is growing as a category? The rising tide floats all the boat’s problems. At the time, Microsoft’s example was in PCs, which is a flat category. Their category power was flat and maybe even slightly declining, particularly with respect to mobile. Their company power was ginormous. That was the second one.
Within your category, are you the gorilla or are you the monkey? Markets are organized around leaders, so how powerful are you within your category? That’s a market share play. The next one was market power, which was what we’ve been talking about, which is, “I’m not the gorilla, but in my target market segment, I’m a local gorilla. I’m the gorilla in the niche.” That was market power, but again, it’s share within the target market segment of the use case.
It’s shared because what happens is a little ecosystem organizes around you because you are the local leader, and therefore, they can make money with you. The fourth one is offer power, which is when we stack up your products or your services against your direct competition, who wins? Upper power matters, but only after category power, company power, and market power. The final one is execution power. Do you say what you’re going to do? That’s real, too, but it’s the fifth one.
For now, you think about Oracle Corporation, which has been an iconic corporation in my entire career. Category pair, not really. Company power, yes, but not new. They’re not getting new money. Market power, no. Offer power, no. Execution power is amazing. They have amazing execution power, and that alone is keeping that franchise ahead of their direct competitors.
I know we are almost up against time over here. Thank you. You shared so many frameworks. I need to reread this. I’m sure readers also will reread this so many times. A final question to you is what advice would you give to your younger self if you were to start your career on day one of the go-to-market journey? I know it’s way back in time, but day one. You did share about sales and marketing.
I don’t know if I would tell myself something differently. What I would say is to continue to trust your heart because it was falling apart and be true to your values, then listen to the universe and try to respond. The worst time in my life was when I thought I knew better and I pursued paths that were not successful and not appropriate. I got smacked around a bit, and that was good. You learn.
You had the humility to admit.
As they say in Texas, “When you find yourself in a deep hole, stop digging.”When you find yourself in a deep hole, stop digging. Click To Tweet
Thank you so much, Geoffrey.
My pleasure. I enjoyed it.
I wish you the very best of health and everything.
Thank you very much.
- Geoffrey Moore
- Crossing the Chasm
- Zone to Win
- The Infinite Staircase
- Escape Velocity
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