The Four Gears
Crossing the Chasm was first published in 1990 and has enjoyed continued relevance ever since. That said, some time after the Y2K meltdown, a whole new raft of companies began to dominate the tech landscape, none of whom appeared to have crossed any chasms. Welcome to the world of Google, Facebook, YouTube, Amazon, and Skype.
These companies passed through an adoption process—that’s how they left their legions of competitors behind—but they did not cross a chasm to do so. Instead their journey looks more like that of a new consumer packaged good, where trial and test markets are followed by product launches and mas-market promotions. But even here, digital is different, because it can test as it goes, altering its offer as often as it needs to until it catches the wave just right.
Catching the wave involves four fundamental activities that need to unfold in a characteristic sequence, one that folds back on itself to reinforce adoption:
- Acquire traffic to come trial your offer
- Engage users in the offer itself
- Convert users to participate in your business model
- Enlist the faithful to evangelize on your behalf
We call this model The Four Gears, each of which makes a fundamental contribution to driving a digital enterprise to scale. That said, the process is anything but a linear progression from Gear 1 to Gear 4. Here’s what happens instead.
Engagement first. Can you create a digital (or digitally mediated) experience that is sufficiently compelling and differentiated that end users will want to repeat it, hopefully many times over? This is what Google was able to do in Search, Facebook in Media, and Zynga in gaming. Until you get this gear spinning fast, you need not worry about the other three.
Acquisition next. Once the engagement gear begins to spin, then it is time to introduce the acquisition gear. These two interact with each other, each modifying the other, as you seek to answer the second big challenge facing your fledgling enterprise: Can your compelling experience scale? Just because it floats your boat, an maybe that of your best friends, doesn’t mean it is destined to become the Next Big Thing. Just ask Jeeves.
Then Enlist. If you have something deeply engaging, and it does resonate with newly acquired traffic, then your next task is to lower the Cost of Acquiring a Customer (CAC). The best way to do this is to inspire your existing customers to reach out to their networks and invite their friends to participate. This means going viral. It is not something you can buy, but it is something you can encourage. Some products want to go viral because they gain value through network effects—Facebook, Skype, Yammer, Whatsapp. Other products go viral because they are so cool users just want to share them, and others because they do good in ways that are sufficiently compelling to motivate people to spread the word. One way or another, you must solve for this challenge, because buying your way to scale is not an option in a consumer market.
Convert to your business model. All this leads us to the fourth and final gear, monetization. Whereas crossing the chasm is definitely a pay-as-you-go model, the four gears represent a “URL” approach (Not Uniform Record Locater, but rather “Ubiquity now, Revenue Later”). Most of the great consumer Internet successes in the first decade of this century followed this approach, introducing the monetization gear very late in the game, in some cases not until after they had sold themselves to a monetization engine—YouTube to Google, Instagram to Facebook, and Tumblr to Yahoo!.
The key idea here is that monetization in any for at any time will slow down the other three gears. If you invoke too early or too swiftly, it is like popping the clutch on a manual transmission—you stall the engine. The art instead is to feather in the monetization gear in such a way as to minimize and absorb its retarding effects, bringing the engine back up to full speed over time. In that context, the underlying goal is to determine the optimal pricing for both present and future returns, a never-ending set of experiments that must continually adapt as competition and innovation restructure the landscape.
Implementing the model. The best thing about the Four Gears model is that it is easy to implement. In any given quarter sit down with your management team (or by yourself, if you are a company of one), and ask the question: which gear is slowing us down this quarter? Work through the gears in the sequence above—Engagement first, then Acquisition, Enlistment, and Conversion. Whatever gear is spinning the most slowly, commit to speed it up in the current quarter to the point where it is no longer the slowest gear. Once you succeed, repeat the process to attack the then-slowest gear, and so on. You still have to keep the other gears spinning, but what this model keeps you from doing is overinvesting in a gear that is not the one that matters right now.
image credit: geoffreyamoore.com
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Geoffrey Moore is an author, speaker and business advisor to many of the leading companies in the high-tech sector, including Cisco, Cognizant, Compuware, HP, Microsoft, SAP, and Yahoo! His latest book is Escape Velocity: Free Your Company’s Future from the Pull of the Past is Moore’s sixth book for business leaders in the high-tech sector. His first book, Crossing the Chasm addresses the challenges of gaining initial adoption for disruptive innovations.