Crossing The Chasm Twice — Construction Tech’s Enduring Challenge
If there’s any industry in need of digital process improvement, it’s construction. Even as more than 90 percent of field users have Internet-connected supercomputers in their pockets, a huge deficit in digital maturity remains in the industry — not to mention a ton of software fragmentation across it.
Construction has been a ripe target for digital transformation for years, both for its size and opportunity. As an entrepreneur who’s navigated and studied this landscape for a decade, I’ve both imparted and absorbed a lot of go-to-market advice along the way.
This article is about the earliest stages of go-to-market in construction tech. This is the point where one or two intrepid users have agreed to use a new product and the founders are ecstatic at their good fortune.
Fundamental concepts like business model generation, crafting the ideal customer profile, and achieving product-market fit are frequently cited. For good reason! If you’re a founder, these are all essential early stage concepts.
Yet, there’s one concept that requires reimagining for construction...
“Crossing the Chasm” is a brilliant concept. It’s absolutely worth reading and understanding. It explains both innovation diffusion and how strategic product development works.
However, its framework is incomplete in construction. In this article, we’ll update the concept with insights tailored to construction’s distinct project delivery system and the industry’s unique user demands.
What it means to cross the chasm
If you’re someone who marvels at a new tech product before most people know about it, then you’re likely an innovator or early adopter.
You’re a crucial resource for technology providers. You help them bridge into the mainstream by providing a critical source of product feedback, long before the product is polished and ready to use.
This concept of innovators and early adopters isn’t new. It was formulated by Everett Rogers back in the 1960s as a way to understand how innovation diffusion works. He outlined five broad categories of technology adopters: 1) innovators, 2) early adopters, 3) early majority, 4) late majority, and 5) laggards.
Each category of adopter has its own risk profile, degree of skepticism, sphere of influence on the market, and some amount of resources that they’re willing to spend while adopting.
Geoffrey Moore took this concept to the next level by introducing the idea of ‘The Chasm’. The insight was discovered by examining why so many early technology companies showed early promise before floundering and eventually failing.
Oftentimes, he found, it was because the company didn’t account for strategic differences between the visionaries who shape the early product and the pragmatists who facilitate widespread adoption.
The early adopters are the much needed early customers and are absolutely essential. They supply early revenues to keep the business going and also a ton of advice on how to improve the product’s features.
But they also come with a poison pill — these early customers are not “normal”. They’re willing to look past flaws in a product because they love technology or they’re a company with a long-term strategic plan that your tech addresses. Importantly, they might be more interested in kicking the tires on a new technology rather than focusing on near-term business ROI.
Their motivations compared to mainstream buyers are totally different.
To be successful, early stage tech companies need to play both sides. They need to appease the early adopters while also building product geared towards the mainstream.
This means they need to transition away from early adopters and into the mainstream by adjusting their product roadmap, marketing strategy, and target markets accordingly.
The same concept holds: the construction industry is full of innovators and early adopters. But it’s the distribution of these innovators in the field and the way that construction projects operate as standalone business cases that makes ‘Crossing The Chasm’ different in construction.
It’s a monumental pivot and most early companies miss it. The timing is crucial. But once its nailed — bingo! — the startup has crossed the chasm into the mainstream.
Moore’s ‘Crossing the Chasm’ is undoubtedly a seminal text, offering valuable insights for tech entrepreneurs and innovators across industries. It’s a must-read for anyone yet to explore the challenges of bringing innovative technologies to a mainstream market.
However, my experience leading construction technology companies and consulting for large builders has highlighted a significant oversight in Moore’s framework when applied to the construction sector.
This caveat helps 1) Inform why investors who focus on the small number of logos on a deck are misinforming themselves; 2) Explain how and why construction companies should approach partnerships with early stage startups; and 3) Show why startups in construction often charge a premium.
In the following sections, I will go deeper into this crucial caveat, providing a comprehensive exploration of its implications. Following that, I’ll share 12 actionable pieces of advice designed to help innovative builders and technology providers integrate this new understanding into their daily operations.
Ultimately, as we’ll see, the new playbook provides a roadmap for how the construction industry can streamline and accelerate its digital transformation.
You need to cross the chasm twice in construction
The construction industry, with its distinct project delivery systems and fragmentation, demands a specialized approach to crossing the chasm not once, but twice — internally within a company and then externally to the broader market.
In the context of Moore’s chasm, the innovators on projects are identical to innovative companies across the industry. In both cases, the early majority wants the early adopters to give them strong signals that the product is good to use: positive testimonials, practical benefits, strong support, and ease of use. Only then will they give it a try.
The challenge: As a technology provider, you will need to cross the chasm internally on multiple projects within one construction company before getting the referrals that allow you to cross the chasm externally to a wider market.
What it means in practice: The short duration and isolated nature of projects complicate the ability to establish a strong, company-wide adoption. This scenario often leads startups into a “death by pilot” trap where initial successes don’t translate into a broader acceptance.
Step 1: Crossing The Chasm across projects
Within a construction company, it’s important to understand how technology programs are being run. Unlike other industries, construction companies sit in an unsteady state where decision makers in the back office are trying to make good purchasing decisions for users in the field across multiple distinct projects.
Furthermore, those field users are constantly on the move and shifting from one project to the next. Modern construction companies are addressing this challenge by developing a new operational technology function that is custom-made for construction.
This back office department might be called Innovation or Emerging Technology or Field Applications — the industry hasn’t yet settled on what this function is called. At its core, these teams triage inbound solutions and if they have a solid enterprise strategy in place, they should be offering your startup a path to widespread adoption.
The department should be actively trying to find the right project at the right time for you and then quickly connecting you with Champions and Frontline Influencers on those projects.
Threading this needle can be time-consuming and a rocky road for cash-strapped startups.
Let’s say you find an initial project. When you secure that pilot, it’s usually for that one project only.
After the early adopters on that project move on, you’re left holding the bag and hoping that your impact has been significant enough and their sphere of influence in the organization wide enough, that it allows you to scale to other projects.
As you wait for alignment with the right people on the right next project, you’ll often have limited visibility into this process. In all actuality, finding the “right next project” for you is a bit like waiting for mercury in retrograde. The timing has to be perfect.
The harsh reality is that construction tech startups face a disconnection between their sales cycle and the business cycles of their potential customers. The result is a high failure rate among startups that cannot adapt their go-to-market strategies to the pace and complexities of construction projects.
But assuming you do find other projects within that one company, you’ll likely spend the next year or two crossing the internal chasm into the early majority for that one customer’s user base.
Once you’ve landed those projects, incorporated all of that early customer’s feedback into your product, and made that one customer happy — congrats! — you’ve landed your first “real” customer and successfully crossed the first chasm.
If you’re savvy, you’ll have a nice enterprise agreement waiting for you at the end for all of your hard work.
Step 2: Crossing The Chasm across companies
Now the hard part begins. To continue growing your business, you must expand beyond those initial customers into new construction companies based on the referrals and success from those initial customers.
And here’s what’s unique about construction: those other construction companies will look very different from your first customers.
Construction is an industry of industries. Whether it’s telecommunications or healthcare or infrastructure services, these contractors have built their businesses to cater to specific client needs that might not align with the business processes that your first customer addressed. They likely don’t even use the same kind of software as your first customer.
In other words, you’ll need to find your bearings with this new customer’s project user base, perhaps with additional pilots — and now you’re at risk of starting the “death by pilot” cycle all over again.
It’s a long and grueling process that takes the wind out of a construction startup’s sails. As you divert resources away from your niche early customer and towards the fragmented construction market, you run the risk of reinventing your product for each new customer.
Don’t do this. If you do, you’ll be chasing your tail forever.
This is where Moore’s concept comes into play. If you take any advice, it’s this: you need to strategically position your product early on to address a common pain point that is generalizable enough in construction to adapt once you move beyond your initial early adopters.
This can be hard to do and impossible to specify for every situation. But it’s important to recognize that your initial champions are not “normal” in the traditional sense. They might not even represent the business needs or technical considerations of the wider industry.
They were willing to look past flaws in your early product and now it’s your job to package that up and make it salient in the wider industry.
Practical advice to address these challenges
The traditional product-led growth model, effective in many tech sectors, encounters significant barriers in construction due to the industry’s dependency on established relationships and the approval of multiple stakeholders.
Unlike more linear sectors where products can sell themselves through inherent value and scalability, construction technology companies must navigate a complex ecosystem where relationships and stakeholder buy-ins can be crucial for initial entry and subsequent expansion across projects.
To thrive in this fragmented and project-based industry, startups need a clear and practical go-to-market strategy that accounts for the distinct dynamics of construction projects and companies.
Below, I provide essential day-to-day actions that can help startups not only bridge the gap with early pilot projects but also lay the groundwork for broader market penetration:
- Key Action #1: Plan for long staggered sales cycles. In construction, where projects and multiple stakeholders are involved, you need to plan for extended timelines by managing your resources wisely and maintaining steady engagement with potential clients. Keep connections warm and work with multiple sectors in an early design group if possible — this helps alleviate the risk of over-featuring for one sector only.
- Key Action #2: Start at existing business practices. A fundamental precursor to successfully crossing the first chasm is to ‘meet your customers where they are.’ This means understanding that the builders drive go-to-market strategies, not the technology itself or even the innovation leaders. Attempting to disrupt standard business practices without considering the entrenched processes can lead to significant barriers in technology adoption.
- Key Action #3: Focus on scalable solutions. While customization for early adopters can be tempting, strive to maintain a core set of features that are scalable and adaptable across various projects and customer needs. This approach helps avoid the pitfall of over-customization for each new client, which can be resource-intensive and unsustainable. Invest in a modular or flexible architecture that allows for adjustments without complete overhauls.
- Key Action #4: Invest in industry leadership. Startups should integrate industry experts into their product teams early on to effectively navigate the unique challenges of construction. These industry liaisons, ideally with a strong background in construction and recognized as leaders, will ensure that the product continually addresses the problems and integration challenges prevalent across the industry. This can come with the cost of additional staffing; however, it’s worth the investment for long-term success.
- Key Action #5: Demonstrate clear ROI quickly. Construction companies, particularly at the pilot stage, will be looking for clear indications that your product delivers value. You should be prepared to present these findings in a way that resonates with both field operators and decision makers in the back office. The best indication of ROI at the first ‘Chasm’ (across projects) is often not a straightforward cost saving, but rather a positive testimonial from project managers and superintendents in the field.
- Key Action #6: Don’t do pilots for free. Offering pilot projects for free might seem like a tempting strategy to quickly attract early adopters and gain initial traction. However, it’s a dead-end trap that too many startups fall into. When customers invest financially, even at a reduced rate, it leads to a greater commitment to fully integrate and test the technology. Ultimately, charging for your pilots contributes to a sustainable business model — it supports a revenue stream in the early stages of product rollout and helps offset the long and staggered sales cycles typical in the industry.
- Key Action #7: Rethink product-led growth for construction. While product-led growth may be limited by the industry’s complex stakeholder structures, figuring out how to blend this approach with targeted relationship-driven strategies can create a more effective pathway to adoption and expansion in construction.
Furthermore, here are five essential day-to-day practices that can help innovative construction firms better partner with early stage startups:
- Operational Tactic #1: Understand “internal market fit”. If you’re in a corporate technology role at a large builder, your primary role is not to tell startups what features they should and should not be building. Instead, you should be focused on the process of finding as many innovators and early adopters within your project teams and making connections to those users who can engage with the startup in meaningful ways. This “internal market fit” is especially important in construction, where field users are constantly on the move from project-to-project and often not engaged adopters in the traditional sense.
- Operational Tactic #2: Recognize construction companies are a collection of businesses. Recognize that construction projects are inherently temporary and unique, leading to a cycle where each new project almost acts like a standalone business case. This distorts decision-making and the adoption of new technologies in our industry. Encourage project managers to consider how technologies can be integrated into their projects not just as a one-off trial but as part of a longer-term enterprise strategy that enhances overall project delivery.
- Operational Tactic #3: Incorporate multiple projects in pilots. Construction companies should strive to include more than one project in their pilot program with a startup. This multi-project approach ensures that the startup receives diverse feedback and data, capturing a broader range of experiences and challenges across different types of projects. It also provides a more representative feel for how the technology might scale within your own organization if, and when, you plan to implement it more broadly.
- Operational Tactic #4: Provide financial sustainability for startups. If you expect startups to work for free, you lose and they lose. Compensation helps startups manage their cash flow better, crucial for their survival and continued innovation, especially when navigating long staggered sales cycles in construction. In return, you should negotiate better terms in any eventual enterprise agreement and/or preferred licensing terms when successful. This can all be a win-win in the long term.
- Operational Tactic #5: Leverage key roles to scale. Construction leaders should strategically engage four key roles within their organizations: 1) “Tech Champions” who help drive interest and overcome resistance by endorsing new technologies; 2) “Frontline Influencers” who are respected for their practical insights, demonstrate real-world benefits and encourage peer adoption; 3) “Cross-Functional Connectors” who facilitate organizational buy-in by bridging departmental divides; and 4) “Adoption-Ready Employees”, influenced by their connections and pivotal for achieving widespread adoption.
Tailoring engagement, training, and feedback mechanisms to these key roles within a construction organization enhances the integration and scalability of new technologies across projects. As a technology leader in your company, you should strive to identify these key individuals since they are crucial to crossing that initial chasm, benefiting both you and the startup.
By understanding innovators, early adopters, and early majority, both within construction companies and across the industry, technology providers will be better situated to achieve lasting impact in the industry.
Nate Fuller is a passionate and accomplished construction technology leader with a diverse background in corporate innovation, construction technology, and entrepreneurship.
His proven track record defining strategy and directing change management in construction has helped North America’s largest construction contractors build and scale effective technology programs.
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