Last updated on September 28th, 2020 at 10:19 am
By: Per Pettersen, Chief Strategy Officer & Co-Founder, Impact
Introduction – “The Chasm”
Many new businesses are created to fill a need or service that the market is not providing. For a long time, industry giants provided services or products dominated, which kept the market rigid and slow to evolve. But today’s technology enables startups to take on these industry giants, disrupting the status quo to find new business opportunities in markets that are undiscovered or underserved.
If you’re not familiar with Geoffrey Moore’s concept of “crossing the chasm,” it is a theory that identifies sustainable growth between early tech adopters to the early majority. The chasm concept is parallel to a challenge every startup faces, their transition from “go” (disruption) to “grow” (sustained growth).
Here, I’ll discuss the three key stages of growth to help businesses advance over the chasm and help transition from early adopters to the early majority. These pillars are people, product and process.
First stage of growth: People
A successful business is built on people, not ideas. There are two key factors when identifying the right people: commitment and resilience. Recognizing the people who show commitment to a vision and demonstrate resilience is the foundation to help the transition to sustainable growth, enabling a business to scale.
Your people should not only be experts but also have a diverse skill set. It is vital to have people that have experience in various verticals, provide unique contacts and understand industry dynamics.
This diverse skill set comes into play as the company grows. You’re no longer solving the problem of starting to grow – rather you’re addressing how to sustain growth. Your team will need to quickly adapt and harness management and leadership skills to solve this new obstacle. Build a business with the entrepreneurs who will be tomorrow’s managers.
Second stage of growth: Product
Products are a catalyst for scalable growth. If they’re not fueling growth, it’s time to pivot. Entrepreneurs should expect and embrace product iterations and the course correction that comes with them. Obsess over the customer experience and adopt a customer-driven innovation model. Providing the product to customers during the early adoption cycle can drive product iterations and identify new opportunities, while also creating advocates.
The product iterations build momentum for the overall company, so keep each iteration pointed toward the company’s true north. It is equally as important to have dynamic price packages that can evolve with design iterations and appeal to a wide audience with diverse needs. No matter what, a product must have an accessible price point for the entire client portfolio, and a plan B must always be considered in case a product’s journey must shift due to the consumer’s appetite.
Every product should be customer-centric, driven by patterns across client requests. This will, however, take balance, as it can be a slippery slope to over-servicing a customer or agreeing to every request. Your client may request design iterations, but it is vital not to fulfill every customer request. Rather, use those requests to inform decisions that can benefit the client, the company and future customers as a whole.
The third, and final, stage of growth: Process
You can have the best product and people running your business, but without the right processes, startups may find themselves falling into the chasm. There should be a process in place across every channel from sales, marketing, even customers and employees.
Entrepreneurs need to focus on deploying the right process through a minimal viable requirement. You need to cut any expense that does not directly contribute to growth. So it should come as no surprise that the single most important asset necessary to cross the chasm is funding. The process of securing funding and raising money also raises expectations for client adoption and growth. Thankfully, when securing funding, new client acquisition is a natural next step. But remember, even when generating over $50M in SaaS revenue, the expectation is that you continue to grow 50 percent year over year.
Even the sales processes have evolved. Traditional sales tactics become less and less of a competitive advantage as new companies emerge with diverse sales processes. To put it bluntly: traditional sales are table stakes. You need to go above and beyond. Every touchpoint with a customer and potential customer must be relevant to their experience and oriented around your company’s belief in the product and what challenges it solves.
Businesses are built on great people, followed by ideas that evolve and change as the business matures. As industries shift, businesses need to be dynamic enough to meet these new needs. These changes are an opportunity for new businesses and ideas.
And this is the benefit only startups have over the industry giants. Startups are flexible, can course correct and pivot as needed, especially when they have the right people, products and processes involved. But the goal should always be to traverse the chasm, looking beyond early funding and toward the ultimate prize: sustained growth.