“There is an old adage that a pessimist complains about winds, an optimist hopes they will improve, and a realist adjusts the sails.”
Cerent became known as a “Market Disruptor” with the technology it leveraged in its first product, the Cerent 454.
Disruptive technologies bring to a market a very different value proposition than had been available previously. They often underperform established products in mainstream markets. But disruptive technologies have other features that a few fringe (and generally new) customers value more than sticking with established solutions. Such early adopters know that products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use . . . Transistors were disruptive technologies relative to vacuum tubes. Smart phones and their associated “Apps” have become disruptive technologies relative to personal computer hardware and software.
And in a nutshell, this is the Cerent story; its initial product, from the service provider perspective, was simple, fast, and easy to use and delivered users a significant cost advantage over established alternatives.
Cerent created a new market for SONET in optical transport, where compactness was valued – in the CLEC service provider space, in particular. But the Cerent 454 was so disruptive it migrated from the so-called fringe users to mainstream telecom adoption around the globe in less than two years.
Cerent’s solution was more than just a technology disrupter; the company’s Cerent 454 propelled a significant market disruption too. Cerent offered its marketing and sales team a unique marketing challenge.
This challenge resonated with Carl Russo’s view of ensuring a good product-market fit and my (Rob Koslowsky) assertion that Cerent’s features accrued benefits that could not be ignored by service providers routinely deploying Lucent nor Nortel gear as the 1990s came to a close. My belief was that after ten years of the “same old same old” legacy SONET offerings, service providers were ripe for overbuilding legacy SONET with next generation SONET.
Our marketing team found a way to compete with the established SONET providers in the parts of the optical network that “favored the disruptive attributes” of the Cerent 454 – compactness, multi-service, and manageability.
Clayton M. Christensen, well known for writing The Innovator’s Dilemma, in 1997, just as Cerent’s forerunner, Fiberlane, was formed, wrote: “Historically, disruptive technologies involve no new technologies; rather, they consist of components built around proven technologies and put together in a novel product architecture that offers the customer a set of attributes never before available.”
This describes the Fiberlane-became-Cerent offering to a tee.
Disruptive technologies bring to a market a very different value proposition than had been available previously. They often underperform established products in mainstream markets. But disruptive technologies have other features that a few fringe (and generally new) customers value more than sticking with established solutions. Such early adopters know that products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use . . . Transistors were disruptive technologies relative to vacuum tubes. Smart phones and their associated “Apps” have become disruptive technologies relative to personal computer hardware and software.
And in a nutshell, this is the Cerent story; its initial product, from the service provider perspective, was simple, fast, and easy to use and delivered users a significant cost advantage over established alternatives.
Cerent created a new market for SONET in optical transport, where compactness was valued – in the CLEC service provider space, in particular. But the Cerent 454 was so disruptive it migrated from the so-called fringe users to mainstream telecom adoption around the globe in less than two years.
Cerent’s solution was more than just a technology disrupter; the company’s Cerent 454 propelled a significant market disruption too. Cerent offered its marketing and sales team a unique marketing challenge.
This challenge resonated with Carl Russo’s view of ensuring a good product-market fit and my (Rob Koslowsky) assertion that Cerent’s features accrued benefits that could not be ignored by service providers routinely deploying Lucent nor Nortel gear as the 1990s came to a close. My belief was that after ten years of the “same old same old” legacy SONET offerings, service providers were ripe for overbuilding legacy SONET with next generation SONET.
Our marketing team found a way to compete with the established SONET providers in the parts of the optical network that “favored the disruptive attributes” of the Cerent 454 – compactness, multi-service, and manageability.
Clayton M. Christensen, well known for writing The Innovator’s Dilemma, in 1997, just as Cerent’s forerunner, Fiberlane, was formed, wrote: “Historically, disruptive technologies involve no new technologies; rather, they consist of components built around proven technologies and put together in a novel product architecture that offers the customer a set of attributes never before available.”
This describes the Fiberlane-became-Cerent offering to a tee.
Mike Hatfield, Terry Brown, and Don Green knew to target the small telcos to gain sales traction even before Christensen wrote these more generalized words, “In a small, independent organization, I will more likely be able to create an appropriate attitude toward failure. Our initial stab into the market is not likely to be successful. We will, therefore, need the flexibility to fail, but to fail on a small scale, so that we can try again without having destroyed our credibility.”
And the Cerent team learned as it went. The majority of the team had already learned from earlier career failures and subsequently applied those experiences as Cerent rolled out the Cerent 454 to the market. The product’s cost-effectiveness saw many customers give the product a try without requiring management approval or sharing their attitude with Terry Brown’s sales team, “Even if it doesn’t work, we can throw it out.” Indeed, for less than $40K per box, there was almost no risk; some test equipment gear cost more than the Cerent 454.
And the Cerent team learned as it went. The majority of the team had already learned from earlier career failures and subsequently applied those experiences as Cerent rolled out the Cerent 454 to the market. The product’s cost-effectiveness saw many customers give the product a try without requiring management approval or sharing their attitude with Terry Brown’s sales team, “Even if it doesn’t work, we can throw it out.” Indeed, for less than $40K per box, there was almost no risk; some test equipment gear cost more than the Cerent 454.
And even during the telecom bust of 2001–2002, the Cerent 454, rebranded as the Cisco ONS 15454, found market traction in the next generation optical transport or Multi-services Provisioning Platform (MSPP) segment. McKinsey & Company reported in 2002 that although the overall market for optical networking equipment went from $28.5 billion in 2000 to $19.7 billion in 2001, the market for next-generation optical equipment actually increased from $3.5 billion to $4.9 billion in the same time frame . . . and this was the market segment that the ‘454’ addressed. McKinsey & Company noted, “It clearly shows where the growth will come once the general market snaps out of its slump: next-generation equipment that has an aggressive payback profile.”
And all startups can take heart. Ensure your product disrupts the market, both in terms of the technology being leveraged and the approach to marketing that disruptive technology.
And all startups can take heart. Ensure your product disrupts the market, both in terms of the technology being leveraged and the approach to marketing that disruptive technology.
“Disruptive technology should be framed as a marketing challenge, not a technological one.”
– Clayton M. Christensen, The Innovator’s Dilemma, 1997, p.209
– Clayton M. Christensen, The Innovator’s Dilemma, 1997, p.209