Visionaries are from Mars, Pragmatists are from Venus

One story of visionary buying behavior that I think still sums up the difference between how visionaries behave when responding to disruptive innovations is the tale of how Dell Computer changed the competitive dynamics in the ultra-competitive PC market in the mid-90s (*), and more specifically how Dell’s competitors failed to adapt or emulate their move despite all rational evidence that it was the only way to stay competitive.

Not only did this move – the adoption of one of the first full-blown business-to-business e-commerce sites, often referred to as Dell On-Line – consolidate Dell as a household name but it provided the company with a gorilla-strength moat against Compaq, Packard-Bell, IBM (the three largest makers at the time, plus Gateway, Acer and other PC makers in what was virtually a “moat-less” marketplace as far as the essential laptop and desktop product capabilities were concerned. The dramatic business outcomes for Dell from this major process re-engineering initiative – multiples of the profitability at a fraction of the inventory handling cost in a generally low-margin business, and a surge up the charts into the top 3 alongside Compaq and HP – set every competitor on its heels for at least a decade and the story became a celebrated business-school case.

Behind this astoundingly gutsy and creative custom project, involving a major alliance with Fedex to help streamline distribution and delivery, was an empowered visionary executive, in this case founder and CEO, Michael Dell. Lesson I: In the early market when selling to visionaries (while pragmatists are still not adopting), always target an empowered visionary CEO/COO or line-of-business executive. It’s obviously great if that happens to be a founder and/or CEO, but that is not always the case.

More to the point that I would like to highlight here, none of Dell’s closest competitors – not Lew Platt and his team at HP nor Sam Palmisano and his team at IBM, nor any of the other CEOs of PC makers – was willing or able to respond by emulating their strategy, despite ample published literature on this feat, or by inventing their own industry-leaping strategy. What Dell had undertaken was to combine its then industry leading build-to-order processes and systems with a full-on investment in an end-to-end e-commerce system providing for every step in the customer journey – configuration, personalization, pricing, selection, order management, payments, delivery tracking, technical support, warranty, and customer service for returns management, and so on – at a time when no other vendor (except for I guess Amazon, when it established its bookselling business) had made such an ambitious investment.

With multiple billions in revenue and market leadership at stake, what rational argument can one make for competitors to not react sufficiently to negate Dell’s advantage? Of course, Gateway and Compaq upped the ante in their online e-commerce systems and IBM and HP increased their investment in design or customer service, but none of them took Dell on full-bore. The first reason is that no other CEO or executive in the other PC makers – not Lew Platt at HP nor Sam Palmisano at IBM, nor any of the other heads of major PC companies – had the gumption or the imagination to undertake such an enormous and risky initiative. In terms of technology adoption behavior, they were either pragmatists (“Interesting what Dell is attempting – we’ll do this when a few others done it”) or conservatives (“Oh dear, we’d better do this to try to catch up”).

Lesson II of technology adoption: Buying behavior is far more about emotion than about reason, especially when discontinuity or disruption is involved. The adventurous mindset of visionaries is almost 180 degrees opposed to that of their more prosaic pragmatist brethren. One is attracted to the risks represented by the unproven innovation, while the other is repelled by those same risks.

What this Means for Startups, Scaleups, and Even Larger Companies

This leads me to make the case that, whether your company is a startup, a scaleup or a more mature company that is introducing new, disruptive products or services, telling the difference between visionary and pragmatist buying behavior can make a crucial difference to your success. Whether it’s the shape and size of deals, the time it takes to close them, the different expectations surrounding the promised solution – any one of these factors can seriously undermine your ability to get your offer widely adopted.

I’ve frequently seen executives and sales teams qualify an opportunity as a multi-million dollar ground-breaking project that the CEO was sure would close in a matter of three or four months eventually get downsized to a “pilot” or POC priced at less than $100k when it finally closed two or three quarters later. In cases like this, the drawn-out agony and disappointment is typically a direct result of misidentifying the customer’s real buying motivations — in other words, dealing with a pragmatist customer whom the CEO thought for sure was a visionary.

I’ve also seen the opposite happen — a bona-fide visionary prospect lose patience with the vendor’s sales and executive teams that pretended to understand their demanding requirements, unquestioningly promising to deliver the solution in the stipulated time-frame without fully understanding the technical or operational implications of what was being asked of them. Almost invariably, visionary customers will request functionality enhancements or special services that have not yet been contemplated by the vendor, or haven’t yet been built. When visionaries, impatient as they are to achieve their ambitious objectives, sense that the vendor’s people are not understanding what they want and need, they are likely to scale down the project and marginalize the vendor in favor of competitors who demonstrate a more sophisticated appreciation of the requirements.

In each case, what has been lost is a combination of time, revenue, and almost certainly credibility. Taken together, two or three situations like this can sink a startup or severely hamper a scaleup, causing investors to lose patience with the leadership team, withdraw their financial and moral support, and even change out the CEO as well as possibly other key players.

This is what falling into the chasm means, and it happens to many if not most young companies as they try to migrate from serving visionary customers to working increasingly with pragmatist customers. It also happens to more mature companies when they try to launch a new product or service.

Falling in the chasm is no shame; in the grand scheme of things it’s quite a common misfortune, but not a crime. But staying in the chasm and failing to do what’s needed to get out of it, is a kind of business crime — as in, “it was criminal how that company fell in the chasm and never understood what they needed to do to get out.”

Early Adopters — Techies and Visionaries

The very first type of “buyer” a company comes into contact with is the technology enthusiast, who are easy to spot because they often seek you out first, and they enthuse about everything tech. Beware of these individuals, because although they have an infectious enthusiasm for whatever is new and cool (think AI or block-chain in recent times), they are not really a customer because they aren’t usually entrusted with expansive budgets for IT products and services, nor are they typically accountable for solving critical business problems using technology. On occasion, however, techies who are higher up in their organization will have buying authority, so it’s worth watching for these situations; at other times, developer-techies do have (unofficial) authorization to develop applications using a new technology, which happened with AWS cloud services and Github open source tools in the recent past.

In general then, techies do play an important role, which is to check out new technology, make sure that it (almost) works, and then relay the message to visionaries in their organization. Although they invariably try to enlist pragmatists, conservatives, and skeptics as well, none of these types responds positively because they are mostly hostile to adopting new technology unless and until their peers have done so.

Given that prospective customers are not accustomed to walking around with name-tags announcing their buying motivations and adoption preferences, how is a busy, flustered CEO, marketing manager, or salesperson to know whether they are dealing with a visionary-in-a-hurry vs. a methodical pragmatist? The conundrum is further complicated by the fact that pragmatists will often pose as visionaries — a phenomenon that is explained further below.

Below is a characterization or profile of each of these two personas designed to make it easier to know which one you’re dealing with, as early as possible in your contact with them, so that minimize the risk of wasting time and resources on an audience that isn’t yet ready to buy.

How to recognize a Visionary buyer

Visionaries are consumed by a desire to get ahead of their competitors, and measurably so. They are risk-oriented like moths to a flame, excited by the unproven-ness of a new technology (because they’re sure that this will deter their pragmatists competitors from investing), and they are determined to move ahead of the herd – they think pragmatists are boring and just don’t get it.

Their expectation is that they will be the main beneficiary of a ground-breaking custom project, and they expect to have to genuinely partner with the chosen vendor to complete the project, including allocating significant people and other resources besides the license and services fees that they will need to pay to the vendor.

In a nutshell, visionaries are strongly attracted to a high-risk, high-reward proposition that they can believe is feasible even if at a stretch. Where they are risk-averse is when the success of their dream project is jeopardized by the failure of others around them, including your company, to fulfill their commitments.

When you are prospecting, try to prioritize visionary line-of-business executives from the CEO to other C level executives or, in a larger organization, their direct reports. You want an empowered visionary rather than a lower-placed one who has insufficient decision influence or authority, as this latter situation can lead to considerable frustration for all concerned. By far the majority of startup and scaleup exec teams and sales teams lack the confidence or know-how to gain access to senior-level visionaries.

On the downside, there aren’t ever enough visionary buyers to go around; on the upside, they are quite good at finding likely vendors — maybe your company — because they have their antenna up, on the lookout for a technology that can enable their dream project. Overall, this is not a trivial task, but it’s worth remembering that you don’t need to engage successfully with more than three to five such buyers with whom you will partner to deliver a custom project designed to enable the achievement of their competitive leap. This another key difference between visionaries and pragmatist — they expect to contract for a largely bespoke project, and will definitely marginalize you if you are unable to align with their vision.

The main stage of adoption where you will encounter interested visionaries is the Early Market, while you are still attempting to validate your product/market fit. During this period, visionaries – if you can find them – are your ideal customer/partner.

Quick Test: A quick way to validate this profile against your customer set is to run down your list of active prospects from newly qualified opportunities to deals that you are forecasting to close imminently, and check to see if any of them manifest the behavior patterns of a visionary as you’ve understood it here.

How to recognize a Pragmatist buyer

In stark contrast with their visionary neighbors, although pragmatists may well profess to being motivated by the opportunity to achieve competitive advantage from adopting the unproven technology, they are almost never sufficiently motivated to invest in the new technology early on because they worry about the potential downside risks. I’ve codified these risks as the Nasty Nine Adoption Risks and the list includes such questions as “Do you really have a finished product?”, “What does it really do (and not do)?”, “Who else has adopted this technology?”, “How long have you been around?”, “How do we know that you’ll be around to support us in a year’s time?”, and so on.

Thus the core adoption motivation of pragmatist buyers, in their concerns about technology-related risks, is almost entirely to keep up with the herd they care about — i.e., their closest competitors. In further contrast, the basic motivation of conservative buyers (the next group in the technology adoption life cycle) is to catch up with the herd once they’ve seen that they’re falling too far behind.

When pragmatists survey the market the proof they are looking for is evidence that the technology is in production at a number of peer organizations and they tend to discount all other references that the vendor throws up. Keep in mind that they think visionaries are dangerous, and they can always cite cases where visionaries got it wrong or invested too early. Their core motivation is to move when the herd moves and not a moment before.

Instead of pursuing any groundbreaking business objective, pragmatic buyers will act only to fix a painful broken business process that is jeopardizing their competitiveness or their very existence. They are strictly a customer awaiting delivery of the promised proven solution, so they do not expect to invest more than the agreed sum of money in the contract.

In a nutshell, pragmatists are strongly repelled by high-risk, high-reward propositions, no matter what they might say to the contrary. And unless they believe that the problem being addressed is both urgent and threatening, they will tend to second-guess the need to take action. This is all the more essential because during the early market and initial chasm-crossing stages there is typically no budget yet allocated to the new new thing, so funds either have to be “stolen” from other approved funding or created to fund the new project.

This is why when selling to pragmatists early on in the life of a disruptive offering it is critical to have strong justification for the Three Whys: Why act?, Why you? and Why now?

In terms of target sponsor, the best is a line-of-business executive, or senior manager, this time with a pragmatic mindset rather than the more adventurous thought process. Be careful not to remain trapped in low to mid-management levels where your pragmatist prospect just cannot get the attention of higher-ups to sponsor their project.

Quick Test: As with the first quick test for visionaries, you might want to validate this profile by running down your active prospect list again, from newly qualified opportunities to deals that you are forecasting to close imminently, to check if any of the sponsors you are dealing with manifest the behavior patterns of a pragmatist as you’ve understood it here. Check also what their job title is and ask if they are the individual who is accountable for solving the problem that you believe your product and services help to address.

The Pragmatist in Drag

Now we come to a fun part of the adoption game. What happens when you are at a conference and everyone seems to be talking about strategic competitive advantage, how they intend to keep their company’s nose ahead of all competitors, and so on? Knowing that there is only ever a small minority of bona-fide visionary customers in any one gathering, how can you tell which ones are truly from Mars rather than Venus, to stretch our little planetary analogy?

To complicate matters, pragmatists have an annoying habit of posing as visionaries, of showing up in drag so to speak. After all, no one likes to sound boringly pragmatic, more often than not preferring to sound suitably forward-looking.

The telltale signs are invariable and easy to spot. First, although they will spout platitudes about pursuing competitive advantage, if you ask them what project they have in mind they never have a good answer — whereas visionaries always have a real project in mind before we even show up in their lives.

The second sure sign that they are merely posing is that they will always ask “So, who else is doing this?” to which they dread hearing “well, we have this leading player in your industry (the visionary) that has recently implemented a ground-breaking bla-bla-bla.” To which they usually respond with some kind of put-down against their more forward-looking competitor, saying words to the effect of “well, they always do crazy things; we don’t do that kind of stuff because we weigh up the pros and cons, and we do our due diligence, bla-bla-bla.” But at this point you have sniffed them out because visionaries will generally be delighted that no one else is doing this yet, “so we have a greenfield opportunity”.

Marketing to visionaries vs. pragmatists

When marketing to visionaries, it’s important to stress how your technology, when delivered inside a bespoke project, can help them to achieve real competitive advantage, whether significantly increasing market share or profitability, or disrupting their competition. Always have two or three war stories to illustrate your point.

In contrast, when you market to pragmatists, it’s crucial to draw attention to how your solution helps them to solve a broken process that is jeopardizing their entire business. While visionaries expect to be partners in a custom project, pragmatists detest getting stuck in a protracted and complex engagement with their vendors, much preferring to receive a solution that they can believe the vendor has successfully delivered to other customers like them.

Neither one of the above two audiences should be treated as a mass market; instead you should tailor your stories to fit either the segment consisting of like-minded visionaries whom you would want to invest in your technology, or the vertical segment(s) that your pragmatist customers inhabit. It’s key to note that visionaries segment by their appetite for high-risk, high-reward investments across verticals rather than within their vertical market. For example, early investors in autonomous vehicles range from Tesla to Uber to Google to Scania to Volkswagen, each of whom are in different industry verticals.

Once autonomous vehicles cross the chasm as a category you will increasingly see companies within verticals competing against each other, for example: BMW against VW against Mercedes, and so on; and you’ll see Scania competing against Daimler, Volvo Trucks, Tata and Iveco.

Summary

Here are a few things to keep in mind about the first three personas in the technology adoption life cycle.

The first group of adopters consists of technology enthusiasts — techies — who have their feelers in online communities and their own personal networks that help them to find out about new technologies before most of us do. Techies are useful because of their enthusiasm — they love the very thought of engaging with the new stuff before words get out to the masses. But they don’t usually have a budget or access to funds, so while they might influence visionaries they are not usually a customer on their own account.

Visionary adopters are few and far-between and have ambitious plans to use technology as a lever to change the competitive dynamics in their industry. As such, they are preternaturally risk-oriented with a high degree of urgency to achieve their goals. Often their behavior is as closely related to their own gratification as to the success of their organization.

In contrast, pragmatists are risk-averse about adopting unproven technology and thus hard to engage early on. While they compose the early majority of 33% or so of any market (in contrast with visionaries who generally represent 10% or less of potential buyers), their strong natural inclination to gather in a herd and wait for someone else to go first means that vendors have to find legitimate ways of creating a sense of urgency while taking tangible steps to mitigate their acute sense of risk.

Back to the Dell Computer story: it’s crucial to find your Michael Dell. While there aren’t many visionaries in any given segment, they are usually quite visible in the marketplace. They always leave a definite trace behind them, because they’ve almost certainly made big bets in the past; moreover, they regularly appear in business and trade journals as well as speaking at industry conferences. Do not kid yourself, though, when you hear one smart executive or other talking a good game about being in pursuit of competitive advantage. You still need to find out if they have a real project in mind to change the competitive dynamics in their sector rather than a vague aspiration to keep up with the joneses before assuming that they are a target visionary that you should cultivate now. Then it’s your job to figure out whether you can play a catalytic role in helping them to achieve their goals.

When a year or more has passed and you’ve run out of visionary buyers to deal with, you should by now have some sense of acute problems that different type of customer are struggling with, and which vertical segments have greatest need of your technology and services. Then it’s time to engage with pragmatist executives and managers in their respective segment; at this point you need to go deep – deep in terms of really understanding how one or other broken processes are impacting their business, and how your company can help to fix the breakage. This is what encourages the first pragmatists, risk-averse as they are and reluctant as they are to be first to commit, to take the plunge. Not everyone will respond like Michael Dell – far from it.

* “Dell Computer Corporation: A Zero-Time Organization”, by Dr Keri Pearlson and Dr. Raymond Yeh of the University of Texas at Austin, Graduate School of Business (03/03/99).