Marketing technology products

I recently read Crossing the Chasm, and am currently reading The Innovator’s Dilemma. The conclusion that both books drive to is that marketing is the most important thing in building a technology company. Since I’m currently in the middle of The Innovator’s Dilemma, I will focus on it for now. The basic premise of The Innovator’s Dilemma is that there are two types of innovation, disruptive innovation and sustaining innovation. The primary difference between the two types of innovations is that sustaining innovations are the ones that the highest value, most profitable customers want. These innovations also address the largest market. Disruptive innovations, on the other hand, are explicitly not wanted by a firm’s existing customers. They often go after a lower margin end of the market (such as steel minimills, which started out by making low-margin rebar), or an entirely new market, such as 1.8 inch harddrives, that got their start in pacemakers. In either case, the market starts off so small and unprofitable that the large players are not interested in it — and, more importantly, can’t be interested in it, because their customers actively don’t want them to be involved in it. The rub comes because technology advances faster than customers’ needs, so the low margin disruptive technology is able to rapidly move up market, gathering a larger and higher margin share of the business as it grows. Incumbents also move up market, garnering higher margins, but continuing to cede downmarket positions. Eventually, the disruptive technology has advanced far enough to meet the needs of the mainstream, and the incumbents only own a high end niche of the market. The conclusion then, for those of us wanting to take advantage of disruptive technology, is to focus at first on the lower margin, small, new or untapped market, and then growv into the larger space. The rewards for doing so are large, in the disk drive industry: “firms that sought growth by entering small, emerging markets logged 20 times the revenue of firms pursuing growth in larger markets.”