|Book Review: Dealing with Darwin|
Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution
Written by: Geoffrey A. Moore. New York: Portfoli , 2005. 281+xxii pages.
If you liked previous books by Geoffrey Moore, in particular Crossing the Chasm (1991) or Living on the Fault Line (2002), you will enjoy this one. In Dealing with Darwin, Moore lays out a kind of genome for innovation management. He takes the powerful technology life-cycle concept that was at the heart of Crossing the Chasm and extends it to the category life cycle—providing valuable insight about managing innovation in mature markets. He also takes the core/context concept that he developed in Living on the Fault Line and transforms it into a mechanism for repurposing resources and funding innovation. Adding to these, he brings to bear the notion of two fundamentally different business architectures, complex systems and volume operations, and shows how they influence innovation strategy, combined with the constant evolutionary forces that drive category maturity and renewal.
This is an important book for senior new product development professionals because of its focus on innovation strategy. For those who see innovation as the fuzzy front end of development this book goes a long way toward demystifying it. It defines and explores 12 types of innovation: four types of new category innovation, four types of mature market customer experience innovation, and four types of mature market operational innovation. This broad focus makes it valuable for anyone involved in portfolio management, providing a useful framework for prioritizing innovation investment.
Dealing with Darwin is decidedly a strategy book and is aimed at senior executives who set the innovation agenda for their businesses. In fact, its biggest contribution could be providing a compelling case and framework for the chief executive officer to set a highly focused and strategic course for innovation.
The book is organized into three sections: “Foundational Models,”“Managing Innovation,” and “Managing Inertia.” The first sets up the generally invisible forces that make innovation management so difficult—that is, until one understands they are there and how to deal with them. The second establishes definitions for 12 types of innovation along the full-category life cycle, which is critical for setting an innovation strategy since this involves selecting which type of innovation will become the core vector for a given category. The final section provides a profound basis for managing an organization's people resources, including how to use outsourcing and repurposing to fuel innovation to, as Moore writes, “innovate forever” (p. 255). For each section, I outline the key concepts, the themes I found most valuable, and some of the areas I found more difficult.
In “Foundational Models,” the author first lays out the economics of innovation, asserting that innovation is valuable only if it helps achieve differentiation that leads to economic advantage and that breakaway innovation comes from a relentless focus on a singular innovation vector. Once selected, this innovation vector becomes the definition of core, whereas context is defined as everything else. The concept of core and context is a powerful one and is used heavily in the final section. This chapter is also the source of the book's advice on portfolio management: fund activities that (1) support the core differentiation, (2) neutralize competitor differentiation, or (3) drive productivity that funds either of these two and then manage the mix of these three while deprioritizing everything else—context.
With this key principle in place, the next two chapters define category life cycles and business architectures, which are critical situational aspects a company must take into account in selecting the prime innovation vector. Although most readers will find the category life cycle to be a familiar concept, Moore has a way of reminding us that it is a powerful evolutionary force that must be reckoned with head on. I had difficulty reconciling the earlier Moore technology life-cycle definitions with the new category life-cycle definitions. In particular, the distinction between the “Tornado” and “Main Street” phases in the former with the “Growth” and “Maturity” phases in the latter. The author did not dwell on this but simply laid them one on top of the other—an approach that ultimately did not detract from the arguments that were made.
The business architecture chapter introduces a new concept: the fundamental difference between complex systems, organized around the customer, and volume operations, organized around the product and production. These are critical inasmuch as the author shows how the two are incompatible; innovation practices that work in one will not necessarily work in the other. I especially liked the way the author wove business architectures and category life cycles together, showing how volume operations commoditize categories created by complex systems and how complex systems respond by creating the next level of complexity. Readers will note that this same cycle was described in Christensen's (2003) Innovator's Solution and Fine's (1998) Clockspeed. For me, the big take-away was how to set innovation strategy to address this dynamic.
“Managing Innovation” makes up the bulk of the book. An overview chapter is a great quick reference guide to the 12 innovation types laid out by Moore. One of the biggest contributions of this book is the chapter on mature markets, especially the juxtaposition of the four customer-intimacy-oriented innovation types and the four operational-excellence-oriented innovation types. For readers familiar with Hammer's (2004) article “Deep Change: How Operational Innovation Can Transform Your Company,” this chapter enhances how to apply that concept. What is key here is the insight that a company's operations can be a source of breakout innovation in mature markets and that these can be, and often are, paired with customer experience innovation types.
Moore (2002) introduced many of the concepts described in this section. I found them more complete and tractable here, especially the guidance on how to use them to drive innovation strategy. Especially useful is the way each innovation type is described from two perspectives: a complex system company and a volume operations company.
My biggest difficulty with this section was in the mini case examples. The applicability of each case to each innovation type is not always clear. A second issue I had with this section was the definitions of some terms. The way Moore describes line-extension innovation might be construed as new products to some, and the way he describes enhancement innovation might be the way some would think of line extensions. Luckily there are simple summary definitions and a handy glossary to help remind the reader of the definitions being used—important because subtle differences can have a big impact when committing the company to a singular innovation vector in a major product category.
The final section, “Managing Inertia,” is a real gift. Its three chapters describe how to use the concept of core and context for moving resources from context to core to repurpose them. Moore describes the inexorable Darwinian progression in a product category where competitors turn core into context and innovation creates new core. Then he introduces a key part of the core-context notion, mission criticality, which can be used to sort work into four categories: mission critical core, nonmission critical core, mission critical context, and nonmission critical context. I was particularly struck with how such a simple framework explains so much about the pitfalls of managing innovation. For example, Moore shows how the majority of a company's revenue is usually in mission critical context because the company has successfully established itself as a market leader but the market has now been saturated and growth has slowed. Since the general rule is to allocate sales and marketing resources in proportion to revenue, these companies tend to overinvest on innovation that is not core. Instead, they should invest in productivity improvements that free up resources to build new core. This is essentially the topic of the final chapter: how to deal with the dilemma of repurposing resources that are tuned to managing nonmission critical context back into generating core. Moore also shows how outsourcing should be used as a kind of exhaust vent for work that no longer needs attention once it has been centralized, standardized, modularized, and optimized.
Dealing with Darwin should be required reading for anyone responsible for business or product innovation or strategy. Its concepts are deceivingly simple yet worth spending the time to grapple with at a deeper level.