In his latest business management strategy book, Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution, Geoff Moore exhorts: “Extract resources from context to repurpose for core.” Of course, he goes on to explain what core and context are, their mutual relationship, and strategies for extract-repurpose work depending on your market type and differentiation strategy.
As an EMC | Documentum employee, I’ve been exposed to Geoff Moore’s writing and management style since I first joined Documentum almost eight years ago when it was still a separate private company and he served on its board. New hires were given hardback copies of Crossing the Chasm (eventually this became Inside the Tornado: Strategies for Developing, Leveraging, and Surviving Hypergrowth Markets (Collins Business Essentials)). So, I wasn’t surprised to see Documentum and EMC referenced in Dealing with Darwin. In fact, I learned something from his references (e.g. how the author sees our markets and our need to innovate). But back to the book itself…
Four words echo from its pages: core, context, innovation and inertia. Here are some of the highlights I took away from the author’s definitions and explanations in their regard:
- Core is that which differentiates your company to create sustainable competitive advantage, and context is everything else you do–even things that you may think generate revenue, create value, etc. Core is innovation in the service of competitive advantage; it is innovation that creates differentiation. Core competencies may not be core! Risk aversion concerning core increases the probability that innovation will go to waste. The worse form of wasted innovation is when differentiation costs are spent only to yield neutralization benefits.
- Context is tracking to norms and herd mentality/activity; it plays host to the forces of inertia. “Overfunding context breeds more context, accelerating the decline into inertia stasis.”
- “Innovation and inertia are so deeply intertwined that both must be engaged concurrently for any progress to occur.” Innovation yields differentiation, neutralization, productivity or waste. “To innovate forever…is not an aspiration; it is a design specification. It is not a strategy; it is a requirement.” Innovation should be pursued with purpose and should achieve economic advantage; it should not be sought after in a vacuum nor should it be wasteful.
- Inertia is work whose results are neutral or bad. Inertia is protective, controlling and deadening; it is impedance on the core circuit. Inertia is the legacy of the last innovation. It’s not the enemy of innovation, but it does resist it at the point of change.
The author states that the first order of business is to declare your strategy for differentiation (i.e. total alignment end-to-end around a single defining value proposition) as this act will establish core and consequently define context for your business. He discusses the role of outsourcing to realize “radical productivity”–how one group’s context can become another group’s core. Lastly he recommends a series of steps to execute–first a core/context analysis, second a resource-allocation analysis, and so on.
In closing, here are a few additional quotes/paraphrases that resonated with me:
- “There are penalties for failing to execute context properly but no reward for performing it brilliantly.”
- “Markets spontaneously organize to defend themselves against proprietary platform plans by promoting wherever possible open platforms.”
- “It is easy to be in the platform business as long as you give up all claims to an economic return.”
- Monetize a position of ubiquity only after it has been achieved (i.e. not, for example, while it’s merely assumed)–when switching costs are in your favor.
- “If you are innovating in a growth market, you must focus on one, and only one, innovation type.”
- I strongly recommend subscribing to Geoff Moore’s blog. It’s already provided extension to Dealing with Darwin.
- As noted by the author, the seed for this book was the Harvard Business Review article, “Darwin and the Demon.” It appears that this article influenced another presentation by Geoff Moore here, which contains a number of figures reused in Dealing with Darwin as well as this Software 2005 presentation by Philip Lay. Actually, I simply recommend downloading the book’s figures here.
- My “future reading” list has now grown to two entries authored by Clayton Christensen: The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change Series)–a classic must-read by all accounts–and The Innovator’s Solution: Creating and Sustaining Successful Growth.