Crossing the People Chasm Within Your Organization

In Geoffrey Moore’s book “Crossing the Chasm,” he argues there is a chasm between the early adopters of a product (the technology enthusiasts and visionaries) and the early majority (the pragmatists). He illustrates well the differences in each of their self-interests and their very differing needs for security verses willing to take on risk.

People’s talents, attitudes, and skills similarly must cross the rapid growth chasm within your organization if your company is to remain viable and competitive.

As AKF Partners assess fast-growing companies in technical due diligence engagements, we often observe Moore’s chasm principle in play with an organization’s people and the ability for legacy employees to make the jump to the “next big thing” and keep up with explosive growth. Or conversely, we have also seen the “why change” attitude greatly hinder and blindside the scalability of a fledgling company.

The Chasm From Startup to Established Company

Young, well-funded startups have a lot of flare that Millenials and corporate escapees love – free food, eccentric workplaces, schedule flexibility, and very little bureaucracy, policy, or procedure. This works very well for small, talented teams during a very scrappy period of rapid growth where the common goals of the organization are well-known and lived and breathed on a daily basis and personal and group conversations with the CEO and CTO occur regularly, sometimes daily. Often there is minimal rigor around Agile rituals – and during periods of startup and rapid growth, their likely is very little time to formalize processes and the outcomes - 100-200% customer acquisition and profits - can be mistaken as a “full steam ahead” desire to not make any changes.

Recently we worked with a company that was a decade old and was fairly large compared to many startups we see in our technical due diligences for investors. The founders has seen the need to bring in experienced and open-minded senior leadership and it was inspiring to see the the vigor, enthusiasm, growth, and speed of a young fledgling company, but with defined metrics and compliance to set ground rules.

There was not an observed bureaucracy. There was clear direction.

As unfortunately this is more of an outlier than it should be, I was impressed and wanted to know what set them apart from other more mature companies I have worked with or worked for and I found several differentiators.

My observations of companies who bridge the organizational chasm of growth:

Successful companies do not confine themselves to one segment of the market - they are thoughtful and disciplined when taking on new segments. They follow Moore’s observations well and saturate one small subset of a new market with marketing, sales, customer service and provide steep discounts to get a foothold. Once established, they expand horizontally within the subset and rinse and repeat until they are the market leader. This allows them to fail forward fast through constant innovation and iterations. This requires the people in their organizations to have an Agile mindset and not rest on their laurels.

Successful companies have teams with a good diversity of opinions, but are unified in how they execute on their plan. The senior leadership are very successful in constantly communicating the vision of the company through desired outcomes and allow teams the autonomy to get there however they can. Because the focus is on the outcome rather than the process, there is very little bureaucratic red tape, trust is very high, and teams are not afraid to fail fast, learn, and reiterate more successfully.

Successful companies keep things simple and team members are onboard with the company philosophy and understand how their role fits into the larger scheme of things. Google pioneered OKRs - “Objectives and Key Results” - as how they measure success within their organization. OKRs allow for nested outcomes to be defined, aligning teams with the broader company goal and successful companies have the common thread of how success is defined through outcomes from the top to the bottom of the org chart.

While some of the companies highlighted in Moore’s 1999 version of the book eventually could not cross the chasm with newer products (Blackberry, 3Comm/Palm Pilot), the principles he outlined are common to companies who are enduring today (Apple desktop to MP3 player to mobile phone/tablet to watch to … [insert Apple’s next category DOMINATOR here]).

When looking at products, according to Moore, the marketer should focus on one group of customers at a time, using each group as a base for marketing to the next group to create a bandwagon effect with momentum that spreads to others in the next marketing segment. The focus on each segment is intense and an “all hands on deck” blitz approach to include marketing, software engineering, product, customer service, sales, and others.

Similarly when it comes to what is going on inside of organizations, it is important to ensure your people cross the chasm of change required for your products to remain viable and enduring. Successful companies know that either their people have to make the transition to new skill sets/mindsets or they will need to be transitioned out of the company. Either way it's important to inject new people with the experience needed into the organization. At AKF, we refer to this as Seed, Feed, and Weed.

What we see in successful companies is an early focus on standardization but with freedom for exploration. Allowing each team to use their own communication devices (Slack, Hive, Spark) and Agile methods is something that does not scale well. But seeking input from team members and having each team follow a standard software development cycle with similar Agile methodology does scale well and allows teams to interoperate without administrative and communicative friction.

Conclusions

Successful companies endure because individuals are allowed autonomy to reach shared outcomes. Tools are provided to help individuals succeed, fail forward fast, learn and share their learning, automate mundane tasks, and are not a bureaucratic bottleneck. To remain successful, companies must constantly focus on how to take their team members with them through the chasms of growth into new and emerging markets by continually upgrading their skills and contribution to the company desired outcomes.

Measuring success is not just in the stock price (many failing companies - i.e. Palm Pilot - had a good stock price while the internal decay had been going on for several quarters), it must be a thorough measurement of all aspects of the company’s technical abilities - architecture, process, organization, and security.

Crossing the People Chasm Within Your Organization