Force, Acceleration, Velocity, Mass: Isaac Newton’s Guide to High-Tech Market Development

As readers of this blog well know, I have spent the past three decades promoting the Technology Adoption Life Cycle as the preeminent market development model for disruptive innovations.?It calls out four stages in the evolution of such markets, per the illustration below:

Whether you are a start-up going through this for the first time, or an incumbent enterprise dealing with a disruption in your category, it is critical that you adjust your management model to where your marketplace stands in its adoption journey.?

The key to making these adjustments is to use the right metrics at the right time (and to avoid using them at the wrong times).?Here, with a little help from Isaac Newton, are the formulas to use:

Early Market: Focus on Force

You are in stealth mode, and your enterprise is not moving yet, so neither acceleration nor velocity nor distance mean anything.?But force does mean something.?Specifically, it refers to the trapped value that your disruptive innovation has the potential of releasing.?Sometimes the trapped value is so ubiquitous and so familiar that most people cannot even see it.?Who knew there was so much trapped value in the back seats of our cars until Uber showed up??Who knew that spare bedrooms were trapped value until Airbnb showed up??Other times, the trapped value is glaring—time wasted in airports instead of spent productively on Zoom, time spent on hold instead of doing the transaction over the Web, ad spend squandered at random instead of targeted at people with a high propensity to buy.?The point is, if you are pitching for funding, trapped value is the force your investors will be measuring, and you need to tell a story that makes it come clear for them.

Bowling Alley: Focus on Acceleration

When you cross the chasm, you enter a bowling alley where the goal is to leverage niche marketing, going all in on a specific use case in a specific vertical market to race to segment dominance.?In other words, your goal is to accelerate to scale as fast as possible.?From an annual revenue point of view, you are not moving fast yet in absolute terms—you are still working with the law of small numbers—but you are gaining traction rapidly. ?Customers and partners in your target segment now see you as the winning ticket—that’s what’s accelerates sales cycles and improves win rate.?You earn the pole position by getting five or more of the top twenty customers in your target segment before your closest competitor gets two, and then ten or more of the top thirty, before anyone else has three.?That’s the sort of track record that seals the deal.

Tornado: Focus on Velocity

Inside the tornado the goal is to grab as much market share across as many segments as you can as fast as possible.?Now we really are talking about velocity, as measured by bookings and revenue in absolute terms.?Market share gains here will drive lifetime value for the long term, so profits can and should be sacrificed in order to drive this part of the race at maximum speed.?At the outset, partners engage with all the credible entrants in the race, but as the leader emerges, the ecosystem organizes around that company, with a secondary play around its closest rival.?After that, it’s a dog fight, which is why Jack Welch used to say, “Be number 1 or number 2, or don’t play”.

Main Street: Focus on Mass

On Main Street, category hypergrowth has subsided, the market share battles have been fought, and your enterprise has whatever market share it was able to secure.?Now the goal is to increase share of wallet.?This equates to focusing on mass.?Remember your Newtonian physics.?Impact is a function of momentum.?Momentum equals mass times velocity.?If velocity cannot be increased, you can still increase your impact by massing up.?Cost of sales inside your installed base is a fraction of what it costs to gain a new customer.?Don’t stop with the latter, but for goodness sake, capitalize on the former.?That entails a stronger focus on Customer Success, ultimately leading to that function leading Sales rather than the other way around.

That’s what I think.?What do you think?

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