Dealing With Darwin: How great companies innovate at every phase of their evolution

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Geoffrey A Moore Capstone 2006 1841127175 Alistair Schofield, Managing Director, Extensor Limited

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Geoffrey Moore acquired a reputation as a marketing guru in the early 1990’s following the publication of his first book “Crossing the Chasm”.  In that book he focused on the way in which young technology businesses were able to outmanoeuver the big companies such as IBM and Xerox and establish themselves in the market.  In Dealing with Darwin, Moore is taking the opposite perspective, by looking at what established companies should be doing to continue their growth and protect themselves from new market entrants.

Although all of Moor’s books focus on the IT sector, his analysis and conclusions are relevant to organisations in other lines of business.  Indeed, in many ways, the IT industry provides an ideal example for illustrating many of Moore’s points as the process of innovation has been so rapid over the last 20 years, and the competition so fierce.

For people who have not read Moore’s previous books, Dealing with Darwin provides a helpful summary in the early chapters to bring new readers up to speed.

I suspect that part of the inspiration for Dealing with Darwin came from Harvard’s Professor of Business Administration, Clayton Christensen, who wrote a book entitled The Innovator’s Dilemma in 1997.  In that book Christensen suggested that the baggage that large companies carry makes them structurally incapable of investing in and developing new and cheaper products – leaving it to smaller companies to innovate and take the spoils.

In his book Living on the Fault Line, Moore praised Christensen’s work, but admitted he didn’t have a clear solution for the dilemma other than to suggest setting up ‘skunk-works’ innovation teams, using corporate venturing and generally separating the new from the old.  In Dealing with Darwin, Moore thinks he has found the answer.

Moor argues that free-market economies operate in much the same way as organic systems in nature and that successful companies must therefore evolve their competence or become marginalised.  However, the dilemma for most established companies is that, the more successful their past innovations have been, the stronger their resistance to subsequent innovations tend to be.  A fundamental premise of the book is therefore that “innovation and inertia are so deeply intertwined that both must be engaged concurrently for any progress to occur.”

At the heart of the challenge is the distinction between what Moore calls “Core” and “Context”.  Core is any aspect of a company’s operations that “creates differentiation leading to customer preference during a purchasing decision”; context is “everything else”.   Moore believes that the reason why established businesses tend to lose out to newer and smaller rivals is that their resources gradually drift from Core to Context over time – yesterday’s innovative differentiator becomes today’s basic requirement.

To guard against this, the book proposes that employees of an organisation should be regarded as being part of a perpetual and renewable cycle.  Thus, as products and services move from being core to context, the associated people should be re-deployed to work on new core products and services.  It sounds obvious, but Moore explains that this rarely happens because organisations fail to actively manage their people resources effectively.

Although the book is not an easy read, I believe it makes a valuable contribution to the debate about how larger organisations should remain innovative and competitive.  I regard the book as a “must read” book for any Chief Executive and as a valuable book for marketing people and senior HR professionals.

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