There are many signs in recent months that the Australian Web 2.0 sector (and related parts of the much broader Australian information and communications technology sector) are crossing the chasm. 

The chasm is a well-known phenomenon seen in commercialisation, product development, technology adoption and diffusion, and company life cycles.

Here's a working definition. Read it as you look at the accompanying chasm graphic. Quoting Geoffrey A. Moore, the concept's author: "The idea of the chasm is a simple one. It says that whenever truly innovative high-tech products are first brought to market, they will initially enjoy a warm welcome in an early market made up of technology enthusiasts and visionaries...". 

A new product, technology or enterprise crosses the chasm when it broadens its appeal beyond "enthusiasts" and "visionaries". 

This post discusses this simple concept of the chasm and provides two cautionary principles relevant to Australian Web businesses as Web 2.0 crosses the chasm in Australia and New Zealand.

As usual the market in the United States is ahead of Australia, New Zealand and Europe.

The chasm concept begins by recognising that "enthusiasts" and "visionaries" are early adopters of new products, technologies and businesses. They are pioneers or "drillers".

So what is a pioneer? Answer: a pioneer is someone in the middle of the prairie with an arrow in the back. There's a lot of truth in that joke.

It is rare for "enthusiasts" and "visionaries" to help cross the chasm to profit from growth. 

Without these victims and early adopters "pragmatists" (the early majority) and "conservatives" (the late majority) would not follow. Civilisation would not be repositioned around new technologies, businesses and metropoles.

On the supply side, many programmers, multimedia developers and Web developers resemble the early market pioneers. On the demand side, so do many businesses which pioneer adoption of the latest and greatest in IT for their niche sector.

The above graphic, titled "The chasm", is reproduced from a US commercialisation textbook referenced below.  Its author, Geoffrey A. Moore, also wrote a 1991 book on the subject. As illustrated, "pragmatists" and "conservatives" follow and higher levels of growth are then achieved. That's when the "West is won". Quoting Moore again, pragmatists "... make the bulk of all technology infrastructure purchases. ... they believe in evolution not revolution...". About conservatives he writes: "They are very price-sensitive, highly skeptical, and very demanding. ... They key to winning their business and profiting is to simplify and commoditize systems to the point where they just work."

A new product or technology then becomes "mainstream". It passes the tipping point. Perhaps we are seeing this now in Australia as statistics are issued weekly reporting of exponentially rising levels of Google advertising, use of VoIP, LinkedIn and Facebook registrations and so forth. If so, civilisation has caught up, it would mean that the Web 2.0 Wild West era in Australia lasted two years - from about mid-2005 to mid-2007.

Continuing with the US 19th century history analogy, now is the time to beware of Web 2.0 carpetbaggers.

Given the maturing local market, what principles are relevant for supply-side and demand-side Web businesses crossing the chasm in Australia and New Zealand? Two principles come to mind.

PRINCIPLE 1: Growth brings its own set of challenges and dangers.

This principle is illustrated in the:

• Web industry by developments in the period from 1995 to the tech wreck in March 2000;
• software industry by the waves of software publishers who rose and fell from 1975 to 1995, some shooting stars fell within a few years;
• television industry by "jump the shark", a concept that reminds us to beware of growth and popularity - misjudgments can cause a precipitous decline; and
• IT hardware industry where nobody has put it clearer than Andy Grove (co-founder of Intel) by titling his book "Only the paranoid survive". Innovators beware, or you'll get an arrow in your back. 

When business is growing really well, or apparently so, it is an excellent time to check risk management exposures. In the boom and bust cycle, the morning after a boom is when litigation spikes. When the Sun no longer shines, lawyers and their clients find the time and resources to hunt down and hold responsible others for failures in legal compliance.  

PRINCIPLE 2: It is harder to communicate above a din. 

Signs of growth, and the marketplace feeding frenzy which follows, can make it difficult to distinguish reality from noise.

This was clearly evident to multimedia pioneers in Australian who in the late 1990s saw an entirely new crowd enter the market and create the boom-bust dot bomb era - most were carpetbaggers. I wrote on that in Dot Bomb Dud Deals in June 2000, a few months after the March 2000 dot-com bubble burst, first in the US then everywhere.

The prediction, in now mid-July 2007, is that soon it will become harder for Australian Web 2.0 pioneers and newcomers to:

• reach prospects and customers;
• find, hire and keep talented employees;
• maintain stable and long-term relations with partners and collaborators; and
• highlight points of distinction or benefits about their products.

As evidence of the din, confusion reigns in Australia as regards "broadband". Both major political parties now regularly claim their "broadband" is bigger than the others. The parties avoid defining terms to create spin.

As more evidence of the din, observers of who is popular among social networking sites have observed a hit industry typology in play. For example they have noted this as Facebook races towards (past?) MySpace and LinkedIn, even as the later two continue to grow locally.

All this is playing out in the greatest economic boom ever or so says a Fortune magazine writer supported by considerable graphics. 

To refine our firm's frameworks and keep our advice up-to-date, this week I will attend Future of Media 2007, a one day conference with presenters and audiences video-linked between Sydney and Silicon Valley. Worthy of a quick scan are the event blog, the Future of the Media Report 2007 and Future of Media Report 2006.  

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Reference:

"Crossing the Chasm - and Beyond" chapter by Geoffrey A. Moore. This chapter and the above graphic appear in Robert A. Burgelman, Modesto A. Maidique and Steven C. Wheelwright, Strategic Management of Technology and Innovation (McGraw-Hill Irwin, Boston, 3rd Edition,  2000), pp 265-272.