November 6th, 2002
Applying the Chasm Group Model to Product Management
Speaker: Paul Wiefels, Partner, Chasm Group

Download Presentation

Paul Wiefels, Co-founder and Partner of the Chasm Group, spoke to a crowd of over 100 product management and marketing professionals at the November 6th meeting of the SVPMA at the Wyndham Hotel in Sunnyvale. Paul presented on Applying the Chasm Group Model to Product Management, which is one of the topics covered in his recently published how-to book The Chasm Companion.

Paul opened with a reality check on the current high-tech malaise by covering what’s in and what’s out. Some of the highlights were:

OUT	IN
First Mover Advantage	First Prover Advantage
Revolutionary	Evolutionary
Horizontal	Vertical
Geographic Coverage	Domain Expertise
Strategic Partners	Value Chain
Catching the next wave	Fixing the leaky pipe
Vendor Centric Messaging	Customer Centric Messaging
Early Markets and Tornadoes	Bowling Alleys and Main Street

What’s also out is your application category having its own line item in the budget. All the areas are now lumped in with the IT department budget. Since 40%-50% of a company’s IT budget is already committed to maintenance, the total addressable market has already been cut in half.

But the news was not all bad, as Paul then reviewed the Chasm Model and launched into strategies to survive and even thrive in this current downturn. He offered five questions to evaluate one’s current position:

• How vulnerable are we to fundamental marketplace change?
• How powerful is our category?
• Is the power of our category rising or falling?
• How important are we in the category? (also realizing that we can’t be more powerful than our category)
• Do we have the right strategy to advance or survive?
• Does our organization understand what it takes to compete?
• Can we execute or are we playing to yesterday’s rules?

Paul then stated that Product Managers must define themselves and take responsibility for much more than the product. They should really view themselves as Value Chain Managers because this is what is necessary to be successful. The product manager must manage the ROI of their solution; of which the investment includes the entire solution, for example systems integration, and not just the application. Further, the product manager must correctly address the needs of the technology buyer, end user, and economic buyer on the customer side. Linking these parts together completes the value chain. The way in which these links are managed will change throughout the Technology Adoption Life Cycle (TALC).

Companies must also focus on selling to pragmatists, as the visionaries who drive early adoption are in hiding after enjoying more than a decade in the limelight. The problem with pragmatists is that they see the risk before they see what the solution does. They believe their business is different and do not reference visionaries. Pragmatists buy a 100% solution. Therefore, the conventional approach of building to 80% of the common enhance requests will fail. To succeed in the bowling alley and in this market, you must focus on a single customer segment and build the whole product for that segment. You can then leverage that experience and product to move into a similar segment.

In conclusion, a company must change its strategy during the course of the TALC, sometimes acting in the opposite way. With this in mind and an honest assessment of your company’s category and position, you can create winning strategies in this difficult market.