What do you do when your own disruptive new ideas bump into The Innovator’s Dilemma in the large organisation that you work in? Geoffrey ‘Crossing The Chasm’ Moore thinks that this is not necessarily ‘game over’ after all
Cynics will be saying: “sorry, but this is one dilemma that even that Geoffrey Moore can’t fix, disruption will come from new entrants and no disruption response strategy can assure the survival of the established players”. Who’s right? Time alone will tell, but you’ll definitely want to watch the video to get to grips with Moore’s disruption response strategy ideas for larger enterprises
Here’s my own personal reading of Moore’s new ‘laws of disruptive innovation’
His magic formula for large startups to innovate their way out of ‘death by being disrupted’ is to identify three ‘innovation categories’.
He then proceeds to tell us that the secret of success in innovation is to recognise that failure is guaranteed by staking your survival on innovation projects which attempt to combine any of these distinct categories.
My ‘going into detail’ below is purely a mixture of what he said in the video, plus my own extrapolation.
Innovation projects that aim so far ahead that a successful outcome would redefine the market, like the iPhone: unleash you most ambitious innovators, let them reach for the stars.
The key vulnerabilities of these differentiation projects stem (as I see it) from internal inhibition caused by such ‘responses to innovation initiatives’ as:
- suppression (prior to initiation, often ‘research prevention/dismissal’)
- rejection (after successful piloting)
- delay (before, or after successful piloting)
These responses are due to the following institutional characteristics:
- resistance to change
- aversion to risk
- short-sightedness/lack of vision
- ‘not invented here’ syndrome
- failure to invest in/pursue internal/customer/supplier/public support
As if these were not enough, there are also the usual risks of any genuinely innovative project:
- ‘being too far ahead of the market’ (being out of touch with customer sentiment or needs)
- ‘being too far ahead of the existing technology’ (to make the product reliable or affordable)
However, you should still initiate (or buy your way into) such projects and find ways and means of taking risks with rolling differentiator projects out, because if you don’t, remember startups will: they have less to lose than a large organisation and it will probably cost them less to test the market.
- essentially ‘catching up with your competitor’s disruptive innovation’
- responding to disruption by recognising that you have fallen behind and need to make up lost ground, the paradigmatic example was Internet Explorer as a response to Netscape Navigator
- Moore’s guidance on neutralisation is to start quickly, be relatively unambitious, do not confuse it with differentiation, do not take long to develop, roll out as quickly as possible
- do not aim to ‘just beat the competition’, leave that job for ‘post neutralisation’.
- catch-up projects should be restricted to catching up
- ‘regaining a lead’ is by contrast a differentiation project requirement.
- aiming at marginal or temporary lead regains (rather than the massive leads that differentiators aim at) are too expensive, too vulnerable.
- neutralise first, then differentiate after, one project that attempts to do both is doomed by having conflicting goals.
- this advice (to separate neutralisation projects from differentiation projects) may sound odd, because we imaging that differentiation also successfully achieves neutralisation
- Moore implies that this perception (that separating neutralisation projects from differentiation projects is unreasonable) can be responsible for such things as (my term) ‘delayed neutralisation’ (which may be too late to work) or (my term again) ‘temporary regains’ (which just leave you back where you started before you responded to the disruption).
- this is where to deploy innovation within mature markets, technologies, processes, products and services.
- this is where efficiency, productivity, performance and costs are the grounds for innovation.
- tools like Business Process Re-engineering belong here, leanness, elimination of waste, duplication, and delay.
- this is where benchmarking and best practice belong They don’t really belong in differentiation (you probably want to exceed best practice by an order of magnitude) and neutralisation should only ‘turn into’ optimisation after you have ‘caught up’.
The event in the video was a talk given by Geoffrey Moore in his roles as author and venture partner and Mohr Davidow Ventures, called Reach your Escape Velocity, held on May the 4th, 2011 as part of the Stanford Technology Ventures Program
As he mentions in the video, he’s got a new book out (for all I know, my interpretation and extrapolation of what he says in his talk in the above may diverge from what’s in the book, I haven’t read it yet, commenters please let me know).
Here is the official introduction to the book:
From the world’s leading high-tech strategist comes the definitive road map to help established companies create next-generation growth.
Geoffrey Moore’s now-classic Crossing the Chasm became a must-read book by presenting an innovative framework to address the make-or-break obstacle facing all high-tech companies: how to gain market share from early adopters and from mainstream consumers.
Based on twenty years’ experience advising the top leaders of many of the world’s most successful enterprises, Moore’s Escape Velocity offers a pragmatic plan to engage the most critical challenge that established enterprises face in the twenty-first-century economy: how to move beyond past success and drive next-generation growth from new lines of business.
As he worked with senior management teams, Moore repeatedly found that executives were trapped by short-term performance-based compensation schemes. The result was critical decision-makers overweighting their legacy commitments, an embarrassingly low success rate in new-product launches, and a widespread failure to sustain any kind of next-generation business at scale.
In Escape Velocity, Moore presents a cogent strategy for generating future growth within an established enterprise. Organized around a hierarchy of powers—category power, company power, market power, offer power, and execution power—this insightful work shows how each level of power can be orchestrated to achieve overall success. Moore explains
- how to use mergers and acquisitions as well as organic innovation to systematically migrate an enterprise’s portfolio out of lower-growth and into higher-growth categories;
- how to reallocate resources across an enterprise in deliberately asymmetrical ways to create a powerful and sustainable foundation for a long-term competitive advantage;
- how to leverage target-market initiatives as accelerants to growth and as stepping-stones to broad overall category success;
- how to create unmatchable offerings by being swift to neutralize competitors’ innovations and laser-focused on driving in-house innovations to make a business impervious to competitors;
- how to fundamentally change the execution cadence of an organization, pushing change from innovation to broad deployment, creating an irreversible tipping point along the way.
Drawing from thousands of hours spent face-to-face with CEOs and their teams, Moore presents case examples and best practices. While his experience is deeply rooted in the high-tech sector, his models and techniques apply well beyond this arena, including to the public sector.
At a time when the world is looking to established enterprises for growth and stability, Moore’s analysis is penetrating and his prescriptions are right on the mark. Escape Velocity gives executives and their teams a practical way forward to take advantage of the opportunities amid industry and economic disruptions.