5 Best Practices for Launching New Products in Tough Economic Times with Michael Eckhardt

Taking an innovative product across the commercialization chasm is an immense challenge at the best of times. During a crisis, or in the days following one, it often becomes even harder. Yet with the proper focus, chaos can even thrust some products across the chasm faster than they could manage in “normal” times. 

The Chasm Institute is a Silicon Valley consultancy founded by Geoffrey Moore, author of the product marketing classic “Crossing the Chasm.” The book, which introduced the chasm concept and popularized terms like “Early Adopters,” has sold over 3 million copies and built a cult following since it was first published in 1991.  (For a summary, listen to Product: Knowledge episode 5.)

In this episode, Graphos Product founder and CEO Laurier Mandin talks to Michael Eckhardt, Managing Director of the Chasm Institute. The Institute works with industry leaders including Spotify, Adobe, HP and Nest through workshops, tools, consulting and training to achieve product launch success. 

Michael shares his 5 Best Practices for Launching New Products in Tough Economic Times—and leaves Product: Knowledge listeners with a special free offer. It’s an inspiring discussion you won’t want to miss, packed with insights and practical advice to help you achieve focus and results. 

Download the Slide Deck  

For your free chapters of the “Crossing the Chasm 3.0,” please contact the Chasm Institute and mention this episode.

Episode transcript:

Laurier: Hey “Crossing the Chasm” fans and product people. You’re especially going to love this episode.

Laurier: Welcome to Product: Knowledge, the podcast about branding and marketing products that improve people’s lives. I’m Laurier Mandin, founder and CEO of Graphos Product. Back in Episode Five, we talked about Geoffrey Moore’s famous product marketing book titled ” Crossing the Chasm.”

Remarkably the concepts it introduced in 1991 are still used effectively by product marketers today. In 2014, the third edition of “Crossing the Chasm” was published by the Chasm Institute, an organization created by Geoffrey Moore to provide tech executives with consulting and training based on the practices and theories in the book.

But how can you help apply those theories during a serious crisis, like the one we’re going through now in 2020? I wanted to find out. So today on Product: Knowledge, I’m delighted to speak with Michael Eckhardt via Zoom. He’s the Chasm Institute’s Managing Director and helped Geoffrey Moore co-write the third edition, what he calls “Crossing the Chasm” three-dot-oh. Michael and the Chasm team are located in Silicon Valley and their clients include a lot of big software companies, such as Spotify and Adobe.

They also work with tangible product like HP printers, Phillips medical devices and Google Nest. So I started off by asking Michael, what is different when the product being launched is a physical one.

Michael: Yeah, that’s a great question. No product launches are easy and every one of them has their own inherent risks. But it turns out  there’s more pressure on the physical product launch than the digital or the software launch and for a fairly basic reason, which is software can be through the cloud, improved, changed, modified , and turbocharged in relatively short order with product where we work with med device companies, we’ve worked with Nest, like you said, on the thermostats and some of the security devices with HP on the, now 400 million printers  they’ve put out.

There, once the product’s out there , it’s not quite the same easy standard to make improvements. So we’ve got to get it right the first time.

Laurier: Yeah, you can do a version 1.1 pretty quickly of a digital product, but not quite the same when you’ve got a physical product in boxes in warehouses.   So, Michael, what has changed in the challenges you’re seeing and the advice you’re giving to clients in the COVID and post COVID era.

Michael: Well, obviously nothing has changed at all. Just a normal days of course for everybody. Maybe that’s not the answer you’re looking for Laurier. No, of course everything’s changed and part of what we’ve seen, and this is such a serious issue regarding obviously first on COVID and pandemic the health issues and medical ones secondarily, but on business and on product launches, the world’s been turned a bit upside down on this.

And so one thing we’ve seen, Laurier, that really is a fundamental shift. We’ve always encouraged people to focus and do a much better job of taking target markets and target segments, and really being disciplined about who they’re going after with a product, as opposed to what I’ll call the “spray and pray” tendency, which is anybody with either $50 or $50,000 or $500,000, depending on the price point of your product. “Any of them with a pulse is a customer,” is not a great way to go to market. What that means, and this is really leading into your question is in the COVID era now and also post-COVID.

There is no time to waste, no money to waste, no mistakes to make. Now in this era, if you were thinking about doing three things and targeting three segments, you’re going to be successful with one of those, not three, much more limitations and reduced risk as a result of that.

Laurier: Excellent. you’ve documented five best practices for launching new products in tough economic times like these. Can we run through those?

Michael: Yeah, it turns out that for a lot of the people listening on the podcast here, some of them are in consumer, so B to C or B2B, or other kinds of related activities. Everything we’ve done at Chasm Institute the last 15 or more years, and if you’ve heard us from our books, the “Crossing the Chasm” book and some of the other books we publish , they all focus on one central theme.

And that really is: how do you make sure when you go to market, you minimize it mistakes and not make what we call repetitive errors. And that’s both from a physical product launch as well as a software product launch standpoint. And it turns out that many people will think, “Oh, there’s no way we’re going to fail with this product launch.”

That’s a pretty naive view. And other people think, there’s hundreds of ways to screw it up, to mess it up. And from our analytics of having worked now with 225 companies in the last 15 years as clients of ours, we can definitively tell you there are nine ways to mess it up. And you’re going to hear about those in a few minutes during the podcast, that’ll be one of the areas when we talk about the five best practices, one of those best practices is really around how do you actually corral and build and define a nine-point strategy.

So I’m throwing some numbers at you. One is the five best practices. And the second one’s going to be the nine best points to actually go to market with. But to answer the question specifically on how do we actually know how we need to behave, think and act when it comes to the five best practices. The overall theme for this Laurier is the idea that in times of crisis or in times of tough economic conditions, like the last 90 days, and probably the next one to two years, this is not going to be a quick recovery for anybody.

Whether in Canada, the US, western Europe, et cetera. And basically, these are not “nice to do” or “good ideas.” These are based on our experience of three market downturns: the tech bubble burst in 2000, the financial collapse in the 2007-2009 timeframe.

And now with COVID, we’ve seen a pattern of what works for companies as they launch products. And there’s really five best practice around that. And they all are central to the theme that in these tough times, what it demands is greater market focus, not less market focus, so more discipline, more precision, more direct understanding of who you’re targeting and who you want to have by your product.

Laurier: Michael, do you find that crises, like the one we’re going through right now help some products to cross the chasm faster?

Michael: Well, yeah. “Crossing the Chasm” is really, how do you take a product from what we call it early adopters, the non-typical customer to the mainstream market, where it can really scale.

And the short answer to your question is yes. And the longer answer is yeah, in times of crisis and pressure, people will start to do things and buy things that they would not have before. Think of your own behaviors in the last three to four months, Zoom or other ways of doing web-based meetings.

The cameras that are now being improved and the lighting, food service delivery, things that people wouldn’t have thought of:   “what, I’m going to order my food from a local retailer and not even go shop for myself, but have them pick it out for me?” Guess what, in times of crisis, behaviors and mindsets change, and that really is what drives things across the chasm more quickly.

So in some odd way, a crisis can be either a friend or the enemy to us, but in many cases it’s a friend, because it causes customers to have new pains, and new problems that cause a change in behavior and a change in buying motion.

Laurier: Absolutely it does, and at Graphos Product some of our clients have gone absolutely into hibernation or just they’ve recognized that now is not the time for their product. If they’re doing something related to hospitality and they’ve got a very fixed service model, they’re definitely not doing very much, but other products we’re working on, some of them have absolutely boomed.

We’ve got one client that has a seed potato product. And that client has never been so busy, because people have had more time for gardening and had been wanting to produce their own food, et cetera, and we’ve got a number of clients that have made changes that have transformed not just the way they deliver the product, but the way the product itself is perceived, in order to take advantage of those new needs that they’re seeing in the market. So I think that if you’re able to be flexible with the product, now is an opportune time to be creative and to stand out.

 

Michael: You’ve seen it on the Graphos side, Laurier, and I think we’ve seen it in spades similarly in Silicon Valley. And we work in, Boston and we work in Chicago and the Europe and Asia. And the common theme we’re seeing in this crisis is it’s a repurposing of a product.

Or a reconstruction of how customers actually solve problems with your product, zoom, the fact that their stock prices quintupled in the last five months, has been not because they changed the product, although they had to fix some security flaws on it, for sure. And, this is even true on food products. We work in electronics, we work in cloud and we work in physical products, like I said, but even the things that people consume, one of our colleagues that we know well is the founder of Oatley.

Oatley is a oat milk substitute for traditional milk. And even there that’s an innovation in food science where, because it lowers the carbon footprint. It’s better nutrition. In some cases it’s better for people with allergies and so forth and lactose intolerance. Even there in food, the preemptive effort on focusing on your target, and being much clearer on why and how, drive a lot of adoption during crises.

And so why don’t we walk through those five best practices? And what I’m going to do is throw a little bit of buzzword at you, but not too many. I promise we’re going to be talking about a few things that , if anybody who’s a listener on this podcast would like to learn more. What we’re happy to do is just so you can get a head, start on it, is our “Crossing, the Chasm” book, which has sold about 3 million copies in the last 15 plus years: have your listeners send me an email or my office, an email, and we’ll send you an electronic version of the first four chapters. That’ll give people a head start and understand the terminology and what it really takes to innovate and focus and not just use those as buzz words, but really clear analytical thinking around targeting focus, solving problems, and getting customers to actually resonate with what you’re offering.

Laurier: That’s an excellent offer, very generous, Michael. And I’ll put the information in the show notes so that people can reach out to you get that.

Michael: So the five key best practices, the first one is really to target specific what we call customer use cases, really key segments that are both urgent and painful for customers. We call that a high, compelling reason to buy and by urgent and painful, the offer you make – whether it’s a food product, whether it’s a physical, other product, whether it’s a software product – has to be one in this crisis where people don’t say that is a fantastic idea. I love the product. Come back in two years and I’ll talk to you about it then. That doesn’t sound urgent or painful.

You need to find out right away on who and why and how today in the near term, the sales cycle can close. So that’s one, is target a specific use case. And by use case, we talk about a segment of customers, a group. It’s almost a tribe of customers who all think the same, have the same problem and are willing to now move in the same direction to solve that problem.

That’s best practice number one, which is to have that specified. And if you, as a team at launch cannot actually define either the job title and the type of industry you’re trying to sell into if it’s B2B or the type of persona that you’re trying to sell into, then you don’t have a strategy. You have a hope; you have a fantasy. You have a vision, but not a real-world launch strategy. So that would be one, Laurier sound commonsensical in some ways, but also sometimes not very clearly done by most companies.

Laurier: Absolutely. I love it. Yeah. It’s it’s so, you know, it’s so crazy, plain obvious, and yet it’s something most companies either fail to do properly or just whiz through wanting to get onto other things they perceive as being either more important or more fun or whatever. But those shortcuts are the ones that end in failure.

Michael: Right

Laurier:  It’s a practice that my team and I take really seriously though. We’re working right now on a launch where we’re targeting the vertical of real estate agents, because they’re a perfect fit with the early adopter profile. So that’s a fantastic first point.

Michael. Let’s take a short break here and come right back with the other four best practices for launching a product in challenging times.

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Welcome back to Product: Knowledge with special guest Michael Eckhardt of the Chasm Institute. So, Michael, what is the second of our five best practices for launching a product in chaotic times?

Michael: The second one is highly related to the first one: be decisive about who you are not going to serve. In other words, cross out target segments and markets that you would not have crossed out six months ago.  Six months ago, before COVID there was a luxury and we saw this with one of our clients in solar.

They sell a piece of solar equipment to make it more efficient on the rooftops. And they said, we’re going after industrial. That’s including manufacturing. We’re going after commercial, which is office buildings. We’re going after residential, which is home and in home, they’re really talking to well, new construction and retrofitting and so forth.

They had the grand strategy around many, many areas already, quite honestly, too many at that time, even in 2019. Now with COVID, what our suggestion is – and they’re doing this now – is saying you can’t go after three or four; pick one. Pick one where they believe is gonna drive that demand in a crisis of those four, the industrial, the commercial, the residential, and the residential new construction on luxury homes.

They pick one of those as their focal area. And the reason they picked it is not because they like it or it’s cool. Or they met a lot of customers last week in Zoom calls with it. They actually used our analytics. We have a series of scores that help you score and rate and rank. You’ll see a little bit more about it in the book as well, rate and rank how you actually are perceived by the market and where you can win.

And where are you going to fail, based on the nine key factors that I mentioned earlier. And so we advocate, and Laurier, a lot of companies don’t do this, but we advocate to do, is not only in launch describe, in 50 words or less who you’re targeting, but also have a short list of who is NOT a target market for you at this launch time.

And that’s not meaning you’re leaving money on the table. That means you’re being more disciplined and later you can go after the others, but not immediately. That’s the second Best Practice.

Laurier: Yeah. And that again is really tough for businesses to make, because I think that leaving money on the table fear when they feel they need every dollar they can get is such a hard one to defeat.

Michael: Yeah, it’s a hard one. And the irony is if you think of your retirement plan and the idea about diversification, Great idea. When you’re talking about your pension or your retirement plans, diversify your stock portfolio that reduces risk. The irony, and the odd part of going to market, is the broader and more diverse your market focus is, meaning broad and horizontal, the higher the risk that you don’t get any real traction. So it’s the opposite of stock market investing. It’s the narrowing down, but then that means you better pick the right segment. Otherwise you will be unsuccessful. And what we’ve seen is with the tools we have, I wish with our nine factors and the scoring and the rating and the ranking for the right target segments that are described in a bit of the book that you read, if you choose the, get the electronic chapters from us, as you read that through what you’re going to realize is that very quickly, which is that around the choice point, you’ve got to make the right choice. And if you don’t and by, “right,” it’s not where you want to go. It’s which customers are ready to buy. And if you can’t identify them by geography or by metropolitan area or by demographics or by job title, then you don’t have a well-defined target segment.

That’s the second Best Practice. The third one is what we call Avoid the Segment of the Month Club Disease. And the segment of the month basically means every 30 days, every month we change: we change our strategy, we pivot.

And what that does to your organization, whether you’re three people or 30 or 50 or a hundred or a hundred thousand, is they at some point start ignoring who you tell them your target market is because you don’t stick with it. Well, we talked to the customers and we really need to go into the radiology area in medical device.

Well, it turns out that we talked to the customers last week and now it’s neurology we’ll call it a very weak attempt at having a strategy. So, this, if you’re old enough to remember the book of the month club, maybe that was a good idea for a while, but segment of the month is just absolutely.

There’s no time to waste. Or time to spend on segments you’re going to shift out of, so pick the right one to start with and then go with it, put the right wood behind the right arrow and have a decisiveness about who you’re going to target. That’s the third best practice they’re all related Cross out the ones or postpone the ones that do not seem to have a high level of pain today and avoid jumping back, back and forth and kind of a back and forth a delusional thought on who you’re targeting.

Laurier: Though, these things sound really easy to do, but, in practice when you’re there trying to sell and your team is trying to sell a product, thinking day and night about what they should be doing.

And so, people are telling them who they should be going after, and ideas are coming through their minds. deciding upfront that you’re going to avoid the segment of the month disease and, stay focused is so important because it’s going to come up. It’s, going to infect you in your sleep. And as you’re talking to other people, they’re going to be recommending, you should be thinking about this area and this segment and, you realize, we’re not getting traction with where we are. So, pretty quickly, and this is happening usually throughout the team people are thinking, “okay, we know we said we were going to focus on this segment, but John said he’s been seeing a lot more movement in this other one over there.” So you commit to it, but then, it’s a constant battle to stay focused. So that’s really important, not just to say, this is what we think we’re going to do.

Let’s, try and stay focused on this. You have to commit to it.

Michael: Right. Well, and your comment on that is a really good one. This is a podcast, so it’s all audio. But some of this is actually pictorial or graphically viewed as well. So if you want to look at the slide later as a follow-up to this podcast, the one slide you’ll see is there’s actually a set of nine variables that score and rate and rank as I was hinting at earlier.

And each one of those variables has a different weight, a different level of importance. The first one is, who’s the target customer; do they have money to spend? And can you reach them? Do you have access to them? That’s the first one, the second one is Compelling Reason to Buy, which means not to buy your product, but are they motivated to switch?

Do they have a big enough pain point? And in that analytic, that second one, if you have to explain to the customer what the problem is that they have, then you found the wrong customer. You might have to explain what your solution is, but if they say, I don’t think I have that problem, then guess what?

You’re barking up the wrong tree. That’s the first two, is Target Customer and Compelling Reason. The third one, which we’re going to get to in a minute, as a third best practice, is around product, which is how do we deliver the solution, not just the core product, but the presales, the support, the installation, the training, perhaps needed the packaging, the naming of the product .

That’s all part of the product. And what you’ll see in one of our graphics in our slides is what we call, and this is the fourth best practice. And this is really around that focus is not enough. That’s the first step. The second step is to commit to minimum viable whole product.

And you’ll see the wheel that says most companies fail because they focus on product. We encourage, we actually will plead with you to focus on whole product, which includes the core product, but everything around it, your messaging, your pricing, your packaging, your references, your presales, your buying motion, everything around that.

So, for Nest, as an example, some of you are familiar with Nest. They were bought by Google a few years ago for about $3 billion, but they were a startup before that. With home thermostats, using your smartphone to control them, reduce your energy waste, turn on the AC or the heat minutes before you get home and not all day long or a freezing home you get to in the winter time, you can relate to that in Edmonton and elsewhere,  I’m sure.  The reality is that Nest had the right whole product for the early market. And we talk about minimum viable product, depending on where you are and what we call the target market model. If you’re in the early market, these are the non-typical customers, the early adopters, they may be willing to buy for different reasons.

So, Nest put these beautiful devices, these thermostats into a box with a screwdriver, with screws, with everything required, including the brackets. And they sold a lot. Hundreds of thousands of those devices in the U S Canada and elsewhere. That was the early market. But when we say focus is not enough as the best practice, and now we’ve got to understand the minimum viable product.

When they went to the main marketplace, it turns out that the normal customer, the typical customer does not want to self-install. The early adopter took it on as a project and said this Saturday, I’m going to do this. It turns out it’s not quite as easy as you think to put that thermostat on the wall.

And by the way, part of the problem is it might become a painting project too. If your spouse or your roommate says, you know what? I really liked that thermostat. Could you move it over four feet? And now you’re spackling and painting because you put the brackets in the wrong place, the first place. So, we can laugh about this.

But it turns out that what Nest did not have as a whole product element they had to work on and build was installation services. Somebody in a van driving up to the house with a leather toolbelt who could install the Nest device for you and not have to do it themselves. That’s the kind of whole product we’re talking about.

And that’s the fourth best practice.

Yeah, that’s excellent. I love that example and I think it really does a great job of helping the audience to understand what a whole product is because Nest looks whole, it seems to do everything it should, you know, it’s got everything you need. As you mentioned, even a screwdriver in the box Yet, if you’re not ready to do the installation, it’s not in your wall it’s not really a whole product.

And as you described that, it’s not, Oh, I get it. The customers are lazy. They don’t want to do it. No. These people actually have a life, a life outside of technology, and they like to spend Saturday with their friends or their family, or play some golf or go out and play tennis or something.

And to them a good day is not installing a thermostat. And so, the irony is, and this is part of the subtlety of understanding customers that we’ve seen now over the couple hundred. You know, clients who’ve worked with is that the needs change depending on how mature the category is. And then the early market like Nest people open the box the early and said, oh my gosh, Nest of thought has thought of everything.

Look at thermostat instructions, the screws, the brackets, screwdriver. They’ve thought of everything. Great. Now they go to the main marketplace and that’s same. We’ll call them a type of customer, but no longer the early adopter, the normal pragmatist looks at box. And gets a slightly sick feeling in their going, oh my God, this is going to be a project, not a product.

There’s was a screwdriver in here. That means I have to do something beyond just opening the box. Could somebody do this for me,

please?

Laurier: And for busy people, it goes on their to do list. Maybe if they don’t return it to the store and gets installed three months later or something like that. And, we’ve all been there with these products that turn into projects and, you’ve bitten off more than you hoped to chew.

Michael: Exactly. The fifth best practice – and this wraps up above and beyond the other four, it’s is what we call build a realistic and tightly focused nine-point plan. And this can be as simple as a one-page summary.  We’ll have a template that people can look at as part of the slide deck as follow-on to the podcast, but it’s the nine points that you measure your segment on for goodness and for relevance and for the ability to win it’s those same nines backers now turned into either a one page summary document, which is okay, but not great, or a few additional pages that give you more detail.

And that says, who are we targeting? What’s the problem we’re trying to solve? What’s our whole product going to be, who are our partners we’re going to need to employ and use and really ally with; what is our pricing strategy? Who’s going to sell this product for us? What’s our positioning message? Who’s our competition?

And how do we move on to new segments, those elements and I wrapped them up pretty quickly there, if you cannot document those nine areas in a very, what we call winning and realistic plan. Then again, you have a hope. You have a delusion, you have a dream, but you don’t have a strategy. And I should say in closing on this, Laurier, that when I say realistic and winning nine-point plan, I see a lot of realistic plans that are not winning.

And I see a lot of winning plans that are not realistic. We need both.  We need this to be implementable executable. And actually, get you to win in the nearer term, despite the crisis, despite the economic pressures, despite the change in customer adoption processes as we go forward. So, what I hope is that these five best practices and how we’ve woven these together in the conversation can give both strength and commitment to the listeners on this podcast that it’s not impossible to be successful in tough times. It just takes a more focused, more diligent, more systematic thinking process.

Laurier: I wanted to ask you a little bit more about the Chasm Institute and who is a good client for you. You mentioned the nine-point go-to-market plan, and those points are all included in the Go-to-Market Roadmaps that we do at Graphos Product and pretty much anybody who’s got a product, whether it’s a startup or a billion dollar brand, we’ve worked with, you know, that full spectrum, can come to Graphos Product, and for starting at $10,000, get a Go-to-Market Roadmap. And, and from there we can do the implementation for them.  Who can be a client of the Chasm Institute? How big does a brand have to be before they can work with you?

Michael: Yeah, great. We have different scales of what we do for customers depending on the size and so forth. Oftentimes what we do is we do, for smaller companies that can’t afford one to one consulting, we do workshops that actually have different companies. It’s a one and a half day Zoom workshop, but it’s broken into three-hour modules over a two-week period.

And in that one, we call that basically accelerating market growth. And it really says how to really tune your product launch for success. And in that we typically have 10 companies, noncompeting companies with each other, each going through the workshop and we have a fee structure and so forth for it, but we try to make it affordable for the smaller companies.

For a midsize or larger company, we do more tailored to them programs. So whether it’s Adobe or Spotify or HP or others, where they have the economic wallet to pay and have either actually bigger risks as well. And some of their launches, cause they’re betting millions of dollars on their launches.

By the way Intel will sometimes put up a $3 billion fab to build a new semiconductor, a new processor and that’s got to work and be solved and be launched properly because that’s in the billions of dollars of risk. But if you’re an entrepreneur and you want to learn more and you can’t really engage with us because of price point or economic pressures, the first thing you can do is read some of the chapters in our book.

The second is to go to my LinkedIn page. I’m always welcoming people to connect. There are some videos on there. And I think between what we do and Graphos, and what you focus on Laurier, I think people can get a really good head start on raising the probability of success in their launches and have it really be something that’s much more systematic and predictable.

Laurier: Well, that’s it for this episode of Product: Knowledge and my conversation with Michael Eckhardt, Managing Director of the Chasm Institute,

You can find out more about Michael’s work and where to get those free sample chapters of crossing the chasm in the show notes or@chasminstitute.com; that’s C-H-A-S-M institute.com. Be sure to visit GraphosProduct.com, where you can find out more about our services, get insights from our blog and download slides on the page for this episode.

Reach out to us on Twitter @graphosproduct, or email us through the form on Graphosproduct.com. Thanks for listening. I’m Laurier Mandin.