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Darwinian notions of corporate innovation

Dealing With Darwin: How Great Companies Innovate at Every Phase of Their Evolution
by Geoffrey A. Moore
Portfolio, 288 pages, $25.95

Strategy and business transformation specialist Geoffrey A. Moore is far from the first writer to draw an analogy between natural selection and the struggle among businesses for competitive advantage.

But in his new book, ''Dealing With Darwin," Moore has injected new and useful insights into that comparison. Moore's theme is innovation, which he sees as being as necessary to the survival of businesses as a plant or animal adapting to changes in habitat.

''How can we innovate forever? Because that is precisely what natural selection forces us to do," Moore writes. ''Evolution requires us to continually refresh our competitive advantage, sometimes in dribs and drabs, sometimes in major cataclysms, but always with some part of our business portfolio at risk and in play."

Moore goes on to make the case that innovation for the sake of innovation can be fruitless and counterproductive.

A business, he maintains, must pursue the right kind of innovation. He explores different types of innovation and suggests how and when they should be pursued.

Innovation, in Moore's view, cannot be pursued in isolation from its antithesis: inertia. To oversimplify, Moore is saying that a company must innovate with new products or services even as it continues to produce what is still yielding significant profits. The latter, Moore says, is called context. Innovation done to achieve competitive advantage is called core.

Risk reduction is the right strategy for managing context, but is the wrong approach for addressing core, he says. To succeed with core -- i.e., to achieve differentiation -- the value proposition must be elevated to such an extreme that competitors cannot match it or will not attempt to.

Moore asks what advice one might give Tiger Woods if Woods asked how to divide his time between context and core.

''If you are like most people, you would say, 'Spend all your time on core and hire other people to worry about the context.' But then he says, 'You know, 90 percent of my revenue comes from context, not core. Are you sure I should not be spending more time there?' 'No!' we say back confidently. 'Use the revenue from context to buy more time to focus on your core! That's what will pay off in the end,' " Moore writes.

In addition to differentiation, innovation becomes necessary to neutralize a competitor that has achieved separation with a pull-away product or service.

''When sport utility vehicles first came out, Ford and a few others achieved differentiation with their entries," he writes. ''When other companies came out with one, the goal was neutralization. Netscape achieved differentiation with the Internet browser; then Microsoft achieved neutralization. Citibank achieved differentiation with ATM machines in the 1970s, then all other banks achieved neutralization."

The third goal of innovation is productivity improvement, Moore writes. It is focused on reengineering existing processes to free up financial and other resources for other forms of innovation.

All in all, Moore has delivered an innovative and instructive treatise on innovation.

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