Only The Fit Survive


How Great Companies Innovate at

Every Phase of Their Evolution

By Geoffrey A. Moore

Portfolio; $25.95

Geoffrey A. Moore wants to remind you that it's a jungle out there. In Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution, Moore, managing director at consultant TDG Advisors and a partner at Mohr Davidow Ventures, both in Silicon Valley, says that in our global economy, it's either innovate or die. Even companies with dominant market share and steadily performing businesses are vulnerable. "Over time," Moore writes, "successful companies must evolve their competence or become marginalized."

To help in the struggle, Moore presents a clear analysis of the life cycle of products and companies, instruction on how to create competitive advantage in a world where innovation quickly becomes a commodity, and a practical guide for managing both innovation and inertia. If you're willing to master the jargon -- and there's enough to defeat a casual reader -- you enter a world in which the struggle for survival appears winnable.

Moore writes about large companies, but small business owners should take heed. The Darwinian battle may be more visible at the top, but the dynamics are the same for all. As Moore puts it: "Competition for the scarce resources of customer purchases creates hunger that stimulates innovation. Customer preferences for one innovation over another create a form of natural selection that leads to survival-of-the-fittest outcomes. Each new generation restarts the competition from a higher standard of competence than the prior generation."

Moore says that knowing the difference between "core" and "context" will help you exploit your company's strength. Core differentiates you from your competition -- it's why consumers choose your product or service over another company's. Context is everything else, including support and administrative functions. Innovation happens at the core, so over time, resources need to be shifted from the context to the core. That may mean retraining some context employees to perform core jobs, although Moore admits it could also mean firings and layoffs. He offers advice on transferring resources, including how to determine which functions should be outsourced.

Next, Moore suggests performing a competitive analysis to determine where your company and its core products are in their life cycles. Are they in growing, mature, or declining markets? Moore describes more than a dozen innovation strategies, in such areas as product leadership, customer intimacy, and process improvement, and describes how to use them at each market stage. In a growth market, for example, Apple Computer Inc. (AAPL ) reasserted its leadership by refocusing its Mac on desktop publishing in media and advertising.

Moore provides an exhaustive compilation of such scenarios and options. Small businesses in particular, he notes, might target innovation in the area of new applications, perhaps by redirecting existing resources to explore niches neglected by larger companies. Ignore such possibilities, Moore suggests, and your company will go the way of T. rex.

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