In 1995 Geoffrey Moore brought us ground-breaking information in his book entitled, Inside the Tornado. This book was required reading for many technology manufacturers, including HP, a strategic partner of my employer at the time. Using a standard marketing normal distribution curve, Moore showed us how market adoption changes when you start talking about technology. It takes years for, what he refers to as discontinuous innovation, to catch on when talking about cars, phones, or air travel. But when speaking of today’s hot technology innovations, suddenly adoption is taking place in months. Why is that important?
Well, to the technology manufacturers, Moore showed how products met the first inflection point of that model where early-adopters transitioned to early majority, a new audience of buyers. He explains in his book that this audience is a bit more conservative than the first, and unwilling to work with technology that is bleeding edge! This group represents people who might be risk adverse or, like many information technology professionals, goaled and paid on up-time, not innovation. The first group however, representing those who will take a risk on new technology, is likely in the camp of profit center managers, looking for technology that puts them out in front of the competition. This is further explained in Bosworth’s book, Customer Centric Selling, as he applies the model in a slightly different way to various kinds of buyers.
Manufacturers studied these models with profit and adoption in mind. Moore’s point was that, manufacturers needed a way to enter the larger markets of early majority and late majority (possibly representing 33% and 33% of the possible market for each) if they were to enter the larger majority markets with their products. The first one there would be given the greatest opportunity to become the market’s defacto standard. Once there, the channel was established to meet the accelerating demand for their products, which Moore termed, The Tornado, thus the title, Inside the Tornado. This is where the manufacturer views the channel, but this is not necessarily where the profits are for the channel partner. The problem is, most resellers (VARs) are positioned exactly in the middle of Moore’s Model; perhaps the most unprofitable position possible for a reseller, which in turn, hurts both the reseller and the manufacturer – the company depending on their partners to bring in more and more of their business. This is a problem.
(You’re probably wondering what this has to do with the red hydrant…nothing, it’s just a fun picture I took while photo shooting with my daughter).
© 2011, David Stelzl