Inside the Tornado – Geoffrey A. Moore

Inside the Tornado is subtitled with “Strategies for Developing, Leveraging, and Surviving Hypergrowth Markets“.

Though I’m not working in Marketing, or maybe just because of that, I really enjoyed reading “Inside the Tornado”. There is a lot of valuable information in this book; unfortunately much more then I can keep in mind longterm. Therefore here some key concepts I thought are worth remembering even if you are, like me, not working in the Marketing or Sales department of your company.

The foundation of the whole book is the Technology Adoption Life Cycle.

This is pretty much the life cycle every tech product goes through during its lifetime. Each phase has it’s own dynamics and groups which are important to address and communicate with. Each phase needs its own strategies. As main customers of each phase, Moore defines below groups:

• Innovators = Technology enthusiasts.
• Early Adopters = Visionaries.
• Early Majority = Pragmatists.
• Late Majority = Conservatives.
• Laggards = Skeptics.

The Chasm

The chasm is the phase of the technology adoption life cycle which needs to be crossed by the product in order to enter the mainstream market. Refining above diagram, we are getting this:

Add this point I’d like to quote from the book two paragraphs which, in my opinion, contain the central message ragarding “crossing the chasm”:

The fundamental strategy for making a successful “crossing” is based on a single observation: the main difference between the visionaries of the early market and the pragmatists in the mainstream is that the former are willing to bet “on the come” whereas the latter want to see solutions “in producion” before they buy. That is, when a visionary sees that you have 80 percent of the solution to her problem, she says, “Great, let’s get started right away on building the other 20 percent together.” A pragmatist, on the other hand, says, “Wait a minuate – aren’t you supposed to be the one improving my productivity? I’ll buy this thing when it’s done not before.” Specifically, what pragmatists want, more than anything else, is a 100 percent solution to their problem – what we came to call the whole product.
[...]
the key to a winning strategy is to identify a single beachhead of pragmatist customers in a mainstream market segment and to accelerate the formation of 100 percent of their whole product. The goal is to win a nice foothold in the mainstream as quickly as possible – that is what is meant by crossing the chasm.

In order to come to the main topic of the book we need one more refinement of the life cycle and introduce the Bowling Alley and, finally, the tornado.

And more quotes directly from the book:

• The Bowling Alley: A period of niche-based adoption in advance of the general marketplace, driven by compelling customer needs and the willingness of vendors to craft niche-specific whole products.
• The Tornado: A period of mass-market adoption, when the general marketplace switches over to the new infrastructure paradigm.

Bowling Alley Market Development

So what this diagram wants to say is that from the one niche market you already dominate you have to spread out to other niche markets, ideally such markets which are close to the initial market. Thus you can use knowledge and and possible connections you gained by building and selling a whole product for the first market segment you entered. A lot more interesting stuff about market development during the Bowling Alley phase you will find on page 39 of “Inside the Tornado”.

Moore advices, that the Tornado is the market phase in which you need to become the “gorilla”. What that means in terms of market share and profit show these diagrams:

This is the time when it’s more important than anything else to just ship your product. The profits of the gorilla are so high, even compared to its market share by revenue, because the gorilla in the market is the one who sets the price bar. All competitors must discount below that price in order to successfully compete! There are quite a few advantages of being the gorilla and the tornado is the only phase of the market to gain these.

Main Street

Unlike during crossing the chasm and in the Bowling Alley where you try to create whole products for each market niche, on Main Street, you extent your product in order to serve niche markets which could use your product if only you added very little functionality to it.

So….

This is just a very rough summary of approximately the first half of the book. There are plenty of details which are interesting and I totally recommend reading “Inside the Tornado”! I believe that having at least some background in marketing (like e.g. the stuff I talk about above) helps to understand certain dynamics which are observable in every tech company. And understanding something is the first step to make you even better in your job ;-)

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