Marketing

I was lucky enough to be Documentum's first employee in Europe in 1993. While there, I worked closely with Geoffrey Moore and got "religion" about understanding not just the so-called "chasm" but the whole marketing model and its implications for strategy, marketing, product, and operational behaviour. I started working with John Newton in the late '80s and we recently discussed marketing models and their relevance to Open Source as well as Geoffrey Moore's new thinking in Darwin and the Demon. This conversation was the root of my thoughts on rules for Open Source marketing - new model, new rules (and some old ones).

Many people are familiar with Moore's Technology Adoption LifeCycle (TALC) where everyone dreams of hitting the "Tornado."

• Early Market - Discontinuous innovation. Attractive to technology enthusiasts and visionaries
• Chasm - A pause in market interest when there is no natural customer group
• Bowling Alley - Adoption by a specific customer segment for a specific problem. Attractive to pragmatists due to specific benefits not available in current technology
• Tornado - Hypergrowth. Remaining pragmatists adopt en masse choosing the market leader as a new infrastructure
• Main Street - Conservative buyers who choose, not for competitive advantage, but not to be left behind

  Almost 10 years later, in Darwin and the Demon Moore described his new ideas as:

• Main Street Mature - Growth flattens, commoditization increases followed by consolidation, with the market leaders focusing on top-line growth through M&A. Customers take the category for granted
• Main Street Declining - Market dominators are unresponsive to customer needs

He then says, "The market is ripe for some form of disruption." In this extended model, disruption is a form of "marketing innovation" and "business model innovation." Open Source is that kind of disruption.

STRATEGY

Rule 1: Know Your Target Customer
Open Source is about mass use by the underserved customer with similarities in other industries. In the airline industry, for every business person that "lived" on a plane, there were thousands of people who flew once every few years. Low-cost airlines were a marketing and business model innovation that targeted not the businessperson, but the massive underserved market. They have now become some of the most profitable airlines in the world. In content management, for every user of an expensive ECM system there are thousands of users of shared drives.

Rule 2: Know Who You're Competing Against
Geoffrey Moore in Crossing the Chasm pointed out that when you start in a new market you compete and compare yourself to the old technical approach. In this new model the competition is the old closed vendors with old marketing and business models. The competition is not other Open Source vendors.

Rule 3: Attack the Weakness in their Strength
Ries and Trout promoted marketing warfare, not just attacking a weakness in the competition (since that can be fixed) but the weakness in its strength (since that is almost impossible to change). The strength of traditional enterprise software companies is their size - their sales force, marketing budget, and customer base. This is also their weakness. It's a very high-cost infrastructure, with a very high cost-of-sale, that needs a high price for software acquisition and maintenance. Just as you can't simply make a big V8 engine fuel-efficient, you can't make this sales process cost-efficient. Second, people tend not to trust big-budget advertising or pushy quota-driven salespeople. Open Source is about trust - being open about what you have and letting people to try it freely. Hence, Open Source marketing is trust-based marketing.

Rule 4: Discontinuity is King
Open Source is about marketing and business model innovation. However, what's also needed is a discontinuity in the infrastructure to deliver Open Source and the tools to support trust-based marketing versus big-budget marketing.

Rule 5: What is the Barrier To Entry?
Geoffrey Moore organized a way to analyse barriers to entry, discussing "compelling reasons to buy," "whole products," and "competitive strength at the point of attack." The question must be asked, why can't closed enterprise software companies become Open Source overnight? In disruptive markets the new specialist players tend to become leaders - minicomputers, PCs, RDBMSes, application servers all bear this out. There's a reason for this: the old leaders want to keep the status quo. Change is the last thing they want, since it disturbs their happy lifestyle. However, they'll follow a familiar pattern when they start to compete against Open Source. They will:

1. Ignore the technology;
2. Dismiss it as technically inferior;
3. Start to get fewer requests for information and find out about deals after they've already lost them;
4. Try to compete and not understand why they're losing; and
5. Finally, the superpowers change.

I remember a Digital salesman telling me VMS was superior to Unix and that every Ultrix (Digital's Unix) deal was taking money out of his pocket! On the other side of the coin, I remember in the 1980s relational databases being dismissed as toys. Then the complaint was they can't do transaction processing. The rest is history!

In Open Source the old closed vendors will struggle to move to Open Source for many reasons. Their strength is their weakness and they can't move overnight to change their business model - like downsize/remove their salesforce, which is equivalent to turning a V8 engine into a fuel-efficient engine. They can't effectively use new Open Source technology - and rip apart their proprietary unpluggable code and architecture. They often don't understand the model and think that making their code Open Source or free is the solution. Free and old is not attractive or interesting for a community to form around. This is not unique to software. In the airline industry many airlines tried to have a low-cost brand. The problem was that their brand couldn't be high-cost and low-cost and their infrastructure couldn't be high-cost one minute and low-cost the next minute.