Building new businesses is always hard work and requires clarity of vision and purpose, coupled with rapid execution and tenacity. The biggest challenge in building technology businesses is to understand the linkage between the technology and potential markets. The most succesful companies are good at packaging their technologies into products & services, finding the best business models to drive revenues, and harnessing the right distribution channels.
Creating and growing innovative new businesses is inherently a diffusion process, which means that management challenges change significantly as the company grows. Cartezia has been building technology businesses since 1997 and we have identified the need to cross 3 distinct chasms as businesses grow, because the types of customers change as the number of customers grow.
The 3 chasms defined by Cartezia's Triple Chasm Model cover the transition from concept to demonstrator, demonstrator to early product, and early products to volume products. In our experience, most market failures do not occur because of problems with technology, management or funding, but arise from the failure of companies to recognise where they are in this development cycle and understanding the different skills and resources required to cross each chasm.
Crossing Chasm II is about turning the proven concept into a product or service with a viable business model. Historically, this was an area that Venture Capital was supposed to concentrate on, consistent with its mantra of high risk-high return. Unfortunately, since the collapse of the first dot-com bubble in 2001 and the continuing problems in investment banking, VCs have been increasingly reluctant to invest in crossing this Chasm II, instead focusing on what they call growth stage. In reality, their focus is now on scaling up proven propositions, by crossing Chasm III, the Chasm originally highlighted by Michael Moore, in his book on high-tech marketing.