May 14, 2012
Table of contents:
Continuing with our Geoffrey Moore business and technology book reviews, Dealing with Darwin looks at how companies deal with innovation and evolution and how they overcome innertia at different stages of the technology life-cycle. It is this evolution that seperates the good companies from the great, as disruptive innovation can literally make or break the future prosperity of an industry and the companies within it. Moore makes the association with Darwin because like evolution, businesses need to innovate forever in order to survive.
Dealing with Darwin looks at two main areas of the evolution of companies, innovation and innertia. In order to evolve and remain competitive, a company must constantly innovate in order to differentiate itself from the market. Inertia is part of the natural bureaucracy that forms when a company becomes a large incumbent.
The majority of Dealing with Darwin concerns technology based companies, in particular Cisco, as Moore’s background is firmly based in this industry. However just about every aspect can be applied to companies from a wide array of industries. Cisco is a prime example of the need to innovate, as after enjoying many years of incredible success, they now find themselves in a position where they need to continue to innovate in order to stay ahead. Cisco also has a number of products at the different stages of The Technology Life Cycle (as outlined in Crossing The Chasm) and so it makes for an interesting case study on the requirment to innovate at every stage of evolution.
Once a product or technology has become established it natually becomes commoditised. During The Tornado, the market leader establishes it’s de facto standards for the industry. But once the product reaches Main Street, and these standards have been set, other companies can eat into the market leader by incorporating the same standards. For the consumer, there isn’t the need to pick the market leader any more to ensure the product follows these same standards and so the product becomes comodotised and lower prices become increasingly important.
The Tornado phase of the technology life-cycle is categorised by huge numbers of customer acquisition. However, once a company reaches Main Street, emphasis must be placed on harvesting the resources of the current install base, rather than chasing new customers. Innovation during Main Street is important because the company needs to remain competitive until the next Tornado. However innovation is not just concerned with Main Street, it is increadibly important for every stage of the technology life cycle.
Innovation therefore, is critical to the future success of the company.
Moore goes to great lengths to highlight the different methods of innovation (Neutralisation, Productivity, Differentiation) and how they apply to different types of companies (Complex systems vs Volume based). Within each section of the Technology Life Cycle, there are many different options for innovation that are best suited to the various variables of a company’s given situation. The wide array of innovation strategies allows companies within the same industry or same type of company to approach innovation in different ways.
Intrinsic to successful innovation is increasing productivity and fighting inertia. Inertia is the natural tendancy to want to maintain the current technology and products because it is the safe option. Today’s inertia was formed from yesterdays innovation, and tomorrows inertia will be due to today’s innovation.
In order to innovate, a company must trim the fat of commoditised areas of it’s company in order to reinvest those resources into developing new innovations and to take them across the chasm. If a company neglects to reallocate resources to the next wave, they are essentially liquidising their company for the short term success.
Moore outlines a clear and conscise framework for extracting and repurposing a company’s resources in order to fuel innovation and to manage inertia.
Once again Moore explores a fascinating area of technology lead business that follows on from Crossing the chasm and Inside the Tornado. Whilst these two previous books are not essential reading, they do offer a much deeping understanding of the Technology Life Cycle and the challanges that technology based businesses face. Moore has a way of describing and explaining complex business strategy and motives in a clear and conscise way. He does this by giving you an overview of the chapter, explaining the topic, then giving you clear real life examples of companies that have used that technique or strategy so you can fully understand the consequences of the action. Dealing with Darwin in particular makes good usage of real life examples with the Cisco case study at the end of each chapter.
If you are at interested in the business side of large technology based companies, the role innovation plays in market dynamics and the future of the industry, I would highly recommend reading Dealing with Darwin. I would also advise that you read Crossing the Chasm, then Inside the Tornado first.
Buy Dealing with Darwin on Amazon (affiliate link).