By Geoffrey Moore
Published by Capstone
Whenever the author and thinker Geoffrey Moore produces a new book, a frisson of interest, even excitement, passes through a good number of IT industry people. Moore is the ‘guru’ who defined the rules of the competitive game that young technology companies play. He is, to the IT industry, what Peter Drucker is to management theory or Ed Deming is to quality. His peculiarly metaphorical vocabulary – ‘Crossing the chasm’, ‘Inside the tornado’, ‘Gorillas and chimps’ – has shaped the way that IT people talk about their status, their competitors and their business journey.
His latest book continues in the same colourful, ambitious, but thoughtful, vein, and it is a mark of his status that the CEOs of Cisco, Motorola and SAP are among those who praise the book on its dust jacket.
Dealing with Darwin – How great companies innovate at every phase of their evolution is Moore’s first full book for six years, and deals with an issue that is of relevance to a much wider group than his traditional constituency of IT industry insiders and investors: how do mature companies successfully innovate, and then go on to exploit and reap the rewards of that innovation.
This theme has preoccupied Moore for more than a decade, dating back to when he first began to puzzle over why big companies such as IBM and Xerox were so often outmanoeuvred by young start up companies with a fraction of their resources.
In 1997, a Harvard professor, Clayton Christensen – who also lauds Moore’s book on its cover – wrote the highly influential The Innovator’s Dilemma that identified many of the issues involved here. Big companies carried so much baggage and are so naturally drawn to enhance their big ticket offerings for their biggest customers. That makes them structurally incapable of investing in, and bringing on, new and cheaper products – leaving it to disruptive innovators to enter the market and take the spoils.
In presentations shortly after the publication of The Innovator’s Dilemma and in his book Living on the Fault Line, Moore praised Christensen’s work, but admitted he didn’t have a clear solution for that dilemma other than to suggest setting up ‘skunk-works’ innovation teams, using corporate venturing and generally separating the new from the old. Christensen wrote The Innovator’s Solution to provide guidance on how that might be achieved but did not present an entirely convincing methodology.
In Dealing with Darwin, Moore thinks he has now got most of way there.
The book starts with the predicate that, in a globally, competitive world, “there is a Darwinian mandate to innovate to succeed, or else we have to accept some kind of erosion [in our economic position and lifestyle].” It is therefore vital that companies have a mechanism to foster and exploit innovation.
Moore argues that companies need to understand where they can innovate to make a difference. Investing to keep abreast of rivals, for example, is important, but won’t have the impact of innovations that create real differentiation. Investing heavily just to be “best in class” is “a sucker’s game”, he says.
Businesses, he says, need to understand core and context. Core is any aspect of a company’s operations that “creates differentiation leading to customer preference during a purchasing decision”; context is “everything else”. The formula is simple: extract resources from context and allocate them to the core.
The theory is, Moore says, “uncomplicated, logical, rewarding”. The problem comes in identifying what is core and what is not, and in reallocating resources towards the core. It is, he says, “more than a little challenging to execute”. This is possibly an understatement: How many managers will argue that their product, and not someone else’s, is core.
Moore’s particular innovation in this book is that he strongly pursues the argument that resources must be reallocated and recycled back to the beginning of the innovation process. Context operations must then be centralised, standardised, modularised, optimised, instrumented…and outsourced. For anyone running non-core IT operations, it all sounds very familiar.
A second big idea is that people must be treated as having roles in a perpetual, renewable cycle, creating new core products; they have roles, not tasks. When something is outsourced from the company, the “people don’t leave, they counter cycle”. In other words, they do their old job with a new product or services.
This model works well, Moore believes, in any industry, but it is the technology industry that provides his best examples, and none more so than Cisco. Cisco’s CEO John Chambers invited Moore to sit in, observe and, to a degree, participate as the company attempted to renew itself over a two year period. The results – which can be seen in Cisco’s quarterly statements – present some evidence that Moore, whether prescribing or just describing is onto something. It remains to be seen if the ideas will prove more durable than this, but however they play out in practice, Dealing with Darwin is provocative and credible enough to be worthy of Moore’s famous predecessors.