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DEALING WITH DARWIN

How Great Companies Innovate

at Every Phase of Their Evolution

By Geoffrey A. Moore

Portfolio; 281pp; $25.95

(Readers'

Reviews below)

Editor's Review

The Good An often down-to-earth look at how companies must innovate continuously.

The Bad Counterintuitive thinking--and use of terms--may confuse some readers.

The Bottom Line Aimed mainly at top executives, this is a valuable volume.

Innovation is such a loaded term: For purists, it is about creating something brand new, usually in science or its commercial extension, technology. Innovation is practiced by brainiacs in academia, in Silicon Valley startups, or in the few remaining research and development labs bank-rolled by industrial giants. But in this postindustrial world, where so much of business is services and the melding together of already existing products, such a definition is too confining. These days business-model innovations are every bit as sexy as technical marvels on slivers of silicon. And innovation isn't just for young companies or very rich ones. It's a survival tool for businesses of all sizes and at all stages of maturity.

That's the conceptual launchpad for Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution. Author Geoffrey A. Moore, a management consultant with TCG Advisors, previously published a string of product-development and marketing books focused mainly on Silicon Valley, including Crossing the Chasm and Inside the Tornado. His new volume, aimed mainly at corporate strategists, cuts across all industries and geographies.

The book's central question is: How can companies innovate continuously? He 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. To innovate forever, in other words, is not an aspiration; it is a design specification. It is not a strategy; it is a requirement."

While the target reader may occupy an office on the 50th floor, Moore's approach in the middle chapters is decidedly down-to-earth. He identifies 15 types of innovation and explains what kind of company at what phase of its development will get the most out of each. He explores four strategies for the growth phase of a product or service category, eight for mature phases, and three for the endgame.

Moore provides plenty of case studies to bring his points to life. As an example of disruptive innovation in growth markets, he cites Boston Scientific Corp. (BSX), whose drug-eluting stents revolutionized the treatment of coronary artery disease. For process innovation in mature markets, there's the example of Dell Inc. (DELL), which torpedoed its much larger PC competitors by selling directly to customers, assembling to order, and outsourcing R&D. Innovation doesn't stop when a market disappears, either. Witness Western Union. When demand for its messaging services went away, it reinvented itself in retail financial services, tapping the Internet.

Moore comes back repeatedly to Cisco Systems Inc. (CSCO), the leader in networking gear. Cisco faces the challenge of innovating in numerous markets -- some of them young and rambunctious, others more mature.

One of Moore's most crucial concepts is the notion that companies need to extract resources aggressively from what he calls "context" and shift them to "core." Moore's definition of core may confuse some readers: It's any part of a company's business -- often a new enterprise -- where it's necessary to make products that are demonstrably superior to those of a competitor. Context is everything else, including well-established products, where costly improvements should be skipped because they offer little payoff. Moore doesn't redefine these terms frivolously. He's trying to get readers to think differently. Cisco's context is its established network-router business and sales to corporations in Europe and the U.S. Its core is selling new technologies, targeting telecom companies, and placing a geographical focus on India, China, and Eastern Europe.

Moore highlights the shift of resources from context to core in Cisco's $4 billion services business. The company has split the organization in two. Advanced Services, the core piece, focuses on face-to-face meetings with clients to help them use new technologies to transform their businesses. Drawing upon those interactions, Cisco creates prototype scenarios that can be used by less sophisticated employees to help other customers take advantage of these advanced technologies. The company then passes routine installation and operations services to its lower-skilled Technology Support Services group, which hands much of the work to partners.

Dealing with Darwin is full of caveats about the difficulties in executing these strategies. It's left to readers to customize them to fit their own situations. So this is less a cookbook than a detailed menu of meals that can be prepared to turn your competitors into dinosaurs. Brontosaurus burger, anyone?

By Steve Hamm


Steve Ballmer, Power Forward
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