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Inside the Tornado
A review of the book Inside the Tornado by Geoffrey Moorewith additional material from books in the bibliography.
Richard Chambers
MM572 - New Product Introduction
A Model of The Dynamics of Innovation
Rat
e of
Maj
or I
nnov
atio
ns
Fluid Phase TransitionalPhase
SpecificPhase
From Mastering the Dynamics of Innovation - James Utterback
Product From high variety, to dominant design, to incremental innovation onstandardized products.
Process Manufacturing progresses from heavy reliance on skilled labor and general-purpose equipment to specialized equipment tended by low-skilled labor.
Organization From entrepreneurial organic firm to hierarchical mechanistic firm withdefined tasks and procedures and few rewards for radical innovation.
Market From fragmented and unstable with diverse products and rapid feedback tocommodity-like with largely undifferentiated products.
Competition From many small firms with unique products to an oligopoly of firms withsimilar products.
Product From high variety, to dominant design, to incremental innovation onstandardized products.
Process Manufacturing progresses from heavy reliance on skilled labor and general-purpose equipment to specialized equipment tended by low-skilled labor.
Organization From entrepreneurial organic firm to hierarchical mechanistic firm withdefined tasks and procedures and few rewards for radical innovation.
Market From fragmented and unstable with diverse products and rapid feedback tocommodity-like with largely undifferentiated products.
Competition From many small firms with unique products to an oligopoly of firms withsimilar products.
Product Innovation
Process Innovation
The Diffusion of Innovations
Rat
e of
Dif
fusi
on
Time
Rate of diffusion of innovations depends on the adoption of the innovation by individuals.
Relative advantage the degree to which an innovation is perceived as better than the thing it is replacing.
Compatibility the degree to which an innovation is perceived as being consistent with the existingvalues, past experiences, and needs of potential adopters.
Complexity the degree to which an innovation is perceived as difficult to understand or to use.
Trialability the degree to which an innovation can be experimented with on a limited basis and ifnecessary discarded without undue costs.
Observability the degree to which an innovation’s results are visible and measurable.
Rate of diffusion of innovations depends on the adoption of the innovation by individuals.
Relative advantage the degree to which an innovation is perceived as better than the thing it is replacing.
Compatibility the degree to which an innovation is perceived as being consistent with the existingvalues, past experiences, and needs of potential adopters.
Complexity the degree to which an innovation is perceived as difficult to understand or to use.
Trialability the degree to which an innovation can be experimented with on a limited basis and ifnecessary discarded without undue costs.
Observability the degree to which an innovation’s results are visible and measurable.
From Diffusion of Innovations - Everett Rogers
The Technology Adoption Life Cycle
InnovatorsEarly Adopters
Early Majority
Late Majority
Laggards
Innovators = Technology enthusiasts
Early Adopters = Visionaries
Early Majority = Pragmatists
Late Majority = Conservatives
Laggards = Skeptics
Innovators = Technology enthusiasts
Early Adopters = Visionaries
Early Majority = Pragmatists
Late Majority = Conservatives
Laggards = Skeptics
The Six Zones
• The Early Market, a time of great excitement when customers are technologyenthusiasts and visionaries looking to be first to get on board with the newparadigm.
• The Chasm, a time of great despair, when the early-market’s interest wanes butthe mainstream market is still not comfortable with the immaturity of thesolutions available.
• The Bowling Alley, a period of niche-based adoption in advance of the generalmarketplace, driven by compelling customer needs and the willingness ofvendors to craft niche-specific whole products.
• The Tornado, a period of mass-market adoption, when the general marketplaceswitches over to the new infrastructure paradigm.
• The Main Street, a period of aftermarket development, when the baseinfrastructure has been deployed and the goal now is to flesh out its potential.
• End of life, which can come all too soon in high tech because of thesemiconductor engine driving price/performance to unheard of levels, enablingwholly new paradigms to come to market and supplant the leaders whothemselves had only just arrived.
• The Early Market, a time of great excitement when customers are technologyenthusiasts and visionaries looking to be first to get on board with the newparadigm.
• The Chasm, a time of great despair, when the early-market’s interest wanes butthe mainstream market is still not comfortable with the immaturity of thesolutions available.
• The Bowling Alley, a period of niche-based adoption in advance of the generalmarketplace, driven by compelling customer needs and the willingness ofvendors to craft niche-specific whole products.
• The Tornado, a period of mass-market adoption, when the general marketplaceswitches over to the new infrastructure paradigm.
• The Main Street, a period of aftermarket development, when the baseinfrastructure has been deployed and the goal now is to flesh out its potential.
• End of life, which can come all too soon in high tech because of thesemiconductor engine driving price/performance to unheard of levels, enablingwholly new paradigms to come to market and supplant the leaders whothemselves had only just arrived.
From: Inside the Tornado; Geoffrey Moore
The Bowling Alley
PharmaceuticalRegulatory Submissions
PharmaceuticalRegulatory Submissions
Medical Equip.Regulatory Submissions
Medical Equip.Regulatory Submissions
Food ProcessingRegulatory Submissions
Food ProcessingRegulatory Submissions
PharmaceuticalManufacturing
PharmaceuticalManufacturing
Medical Equip.Manufacturing
Medical Equip.Manufacturing
PharmaceuticalR&D
PharmaceuticalR&D
Niche-based strategy, highly customer-centric• Goal is to make your product defacto-standard in as many
niches as possible building market mass.• Focus on the end-user community and target the pragmatic,
economic buyer.
Niche-based strategy, highly customer-centric• Goal is to make your product defacto-standard in as many
niches as possible building market mass.• Focus on the end-user community and target the pragmatic,
economic buyer.
Bowling alley for a documentmanagement software company.Bowling alley for a documentmanagement software company.
From: Inside the Tornado; Geoffrey Moore
The Tornado
From: Inside the Tornado; Geoffrey Moore
The essential principles of Tornado Marketing1. Attack the competition ruthlessly. The tornado is a zero sum
game. The goal is to dominate the market and be the de factostandard.
2. Expand your distribution channel as fast as possible. Shelf spaceand mind share are the key to market domination.
3. Ignore the customer. The product is becoming a commodity andthe goal is to ship a standard product to everyone as fast aspossible.
The essential principles of Tornado Marketing1. Attack the competition ruthlessly. The tornado is a zero sum
game. The goal is to dominate the market and be the de factostandard.
2. Expand your distribution channel as fast as possible. Shelf spaceand mind share are the key to market domination.
3. Ignore the customer. The product is becoming a commodity andthe goal is to ship a standard product to everyone as fast aspossible.
Main Street
From: Inside the Tornado; Geoffrey Moore
The essential principles of Main Street marketing1. Cultivate existing customers emphasizing processes for customer
loyalty. New customers tend to have an existing infrastructure basedon competitor products. If a competitor’s customer is willing to buyyour product, they will be just as willing to buy someone else’s later.
2. Listen to the end-user customer incorporating low cost additions tothe product. Sell differentiation within the commodity market.
3. Canabilize your own products before the competion does it for you.
The essential principles of Main Street marketing1. Cultivate existing customers emphasizing processes for customer
loyalty. New customers tend to have an existing infrastructure basedon competitor products. If a competitor’s customer is willing to buyyour product, they will be just as willing to buy someone else’s later.
2. Listen to the end-user customer incorporating low cost additions tothe product. Sell differentiation within the commodity market.
3. Canabilize your own products before the competion does it for you.
Comparison of the Zones
From: Inside the Tornado; Geoffrey Moore
Bowling AlleyFocus on the economic buyer and theend user; approach the infrastructurebuyer late in the sales cycle.
TornadoIgnore the economic buyer andthe end user; focus exclusively onthe infrastructure buyer.
MainstreetSell to the end user
Emphasize return on investment as thecompelling reason to buy.
Ignore return on investment.Focus on timely deployment ofreliable infrastructure.
Focus on the end user’sexperience of the product, seekingto gratify their individual needs.
Differentiate your whole product for asingle application, position it withinvertical markets.
Commoditize your whole productfor general-purpose use, positionit horizontally as globalinfrastructure.
Differentiate the commoditizedwhole product with +1 campaignstargeted at specific niches,position by end-user preferences.
Partner with a value-added distributionchannel to ensure customized solutiondelivery.
Distribute through low-cost, high-volume channels to ensuremaximum market exposure.Advertise heavily.
Continue to distribute through thesame channels, but now focus onmerchandising to communicate+1 marketing messages.
Use value-based pricing to maximizeprofit margins.
Use competition-based pricing tomaximize market share. Driveprice points ever lower.
Celebrate +1 value proposition togain margins above the low costclone.
Discontinuity and the Life Cycle
From: Inside the Tornado; Geoffrey Moore
Pure Science
End of Life
Prototypes
Early Market
Tornado
Main Street
TechnologyEnthusiasts
Conservatives Pragmatists
Visionaries
Low High
Low
High
ApplicationBreakthrough
ParadigmShock
Bibliography
• Moore, Geoffrey; Inside the Tornado; copyright 1995 by GeoffreyMoore; published by HarperBusiness
• Rogers, Everett; Diffusion of Innovations (fourth edition); copyright1995 by Everett Rogers; published by Free Press
• Utterback, James; Mastering the Dynamics of Innovation; copyright1994 by the President and Fellows of Harvard University; published byHarvard Business School Press