Monday, October 22, 2007

Book Review: Dealing with Darwin

Dealing with Darwin: How great companies innovate at every phase of their evolution. Geoffrey A. Moore. Portfolio Press, 2005. List $25.95, 288 pages.

Geoffrey Moore is well known from his two previous books, Crossing the Chasm and Inside the Tornado. Those presented models of innovation that explained the challenges of moving from a new idea to a new product in the market. In his new book, Dealing with Darwin, Moore moves beyond the challenges of getting into the market and discusses the types of innovation that are used by companies throughout the lifecycle of a product or service. The book is targeted at established companies, with established products, in established markets. Like Clayton Christensen and other innovation authors, he explores solutions that help established companies remain in their market dominating positions.

Globalization is moving many businesses and jobs to emerging countries like China and India. Moore claims that this is a major migration in the economy similar to others that have occurred over the centuries. Economic power has moved its focus from Italy to The Netherlands. From The Netherlands to France, Germany, and England and finally across the Atlantic to the United States. He claims that it is now jumping the Pacific to reach China, India, and other parts of Asia. Corporate innovation is one key activity that is required to retain business in America in the face of this global shift.

Moore’s innovation mantra for the book is, “extract resources from context and repurpose for core.” He differentiates the core value of a product or service from the context in which it exists. A company must invest its resources in the core, not in the context. Too many companies invest widely and at cross purposes, negating the effects of many of their investments. The result is less productivity and less leverage in the global market. He offers the golfing business of Tiger Woods as an example. Woods derives 90% of his income from licensing agreements with sponsors and only 10% from winning golf tournaments. Based on this distribution of income, some would argue that Tiger Woods should spend 90% of his time and efforts managing his licensing deals and 10% perfecting his golf game. However, Moore points out that Woods’ proficiency at playing golf is the core of the revenue machine. It is the quality of his game that makes it possible to earn the other 90% of his income. Therefore, he should focus his energy and time on his core, the game of golf, and allow others to worry about the licensing deals, which represent context revenue.

Applying this example to companies, Moore suggests that each company must identify its core. Once that is done, they can determine which type of innovation is appropriate to maximize their effectiveness in the market. Moore suggests that companies fall into four major “Innovation Zones” and that there are fifteen different flavors of innovation, each of which plays a different role based on the placement of the company within the major innovation zones. The zones are labeled: Product Leadership, Customer Intimacy, Operational Excellence, and Category Renewal. In the Product Leadership zone, new products and services are being created and face the challenges presented in Moore’s two previous books. In this zone, innovation should focus on making better products and identifying the sweet spot of the customers’ needs. In the Customer Intimacy zone, products and services are established and the competition is focused on customization that will draw market-share from competitors. The Operational Excellence zone also deals with established products, but focuses on the supply side of producing and delivering the product. It calls for innovation in processes, integration, and cost reduction. Finally, in the Category Renewal zone, companies must gracefully exit from products that are at the end of their life. Companies should look for ways to loop back into the Product Leadership zone with replacements for mature and declining products.

Moore provides fifteen flavors of innovation, each aligned with one of the four innovation zones and illustrated with short vignettes from companies that have successfully implemented it. In Moore’s opinion, there is a flavor of innovation that is appropriate and effective for any product in any phase of its lifecycle. The book brings together a number of management strategies and re-labels them as innovations. It does a good job of demonstrating that opportunities for innovation exist in all markets and for all products.

Dealing with Darwin is a natural extension of Moore’s two previous books and provides an interesting model of innovation opportunities for products and services at all phases of their lifecycle.

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