Dealing with Darwin by Geoffrey Moore http://www.dealingwithdarwin.com/ http://www.youtube.com/watch?v=vh8dwbi6yRM

Innovation Strategy Remember Your Vector Math! = Multiple innovation initiatives Bubble-up management

Core & Context Core Context

Underlying Drivers in Growth Markets Technology Adoption Strategies Pragmatists: Stick with the herd! Conservatives: Stick with what’s proven! Visionaries: Skeptics: Just say No! Get ahead of the herd! Techies: Just try it!

Technology Adoption Life Cycle Main Street Tornado Early Market Bowling Alley Chasm

The Category Maturity Life Cycle Indefinitely elastic middle period C Growth Market D Market Growth Mature Market Fault Line! E B Declining Market A End of Life Technology Adoption Life Cycle Time

Cisco Systems and The Category Maturity Life Cycle Internet Routers Core Edge Access Internet Switches Modular Stackable Advanced Technologies VOIP Security Wireless SAN switches Home Networking Wireless networks VOIP adapters Non-Internet Protocol Support SNA ATM Frame Relay Novell Netware Etc. A E D C B Sector Futures Data Center Virtualization Service Provider Triple Play The Networked Home Problem Children Optical network equipment Service Provider access

Volume Operations Model Consumers Distribution Channel Shared Infrastructure Offer Technology Brand Advertising Promotions

Cyclicality & Strategy Volume operations commoditize categories created by complex systems Complex Systems Volume Operations C1 V1 C2 V2 C3 V3 Complex systems respond by creating the next level of complexity

A Broad Universe of Innovation Types Line Extension Innovation Enhancement Innovation Marketing Innovation Experiential Innovation Platform Innovation Organic Renewal Acquisition Renewal Product Innovation Renewal Innovation Harvest & Exit Disruptive Innovation Application Innovation Value Engineering Innovation Integration Innovation Process Innovation Value Migration Innovation

Four Innovation Zones Customer Intimacy Zone Product Leadership Zone Disruptive Innovation Application Product Platform Enhancement Integration Experiential Process Marketing Business Model Line Extension Value Engineering Harvest & Exit Renewal Innovation Customer Intimacy Zone Product Leadership Zone Category Renewal Zone Operational Excellence Zone

Innovation Types for Growth Markets The Product Leadership Zone Platform Innovation Product Innovation Disruptive Innovation Application Innovation

Innovation Types for Growth Markets Product New Existing Disruptive Innovation Application Innovation New Market Product Innovation Platform Innovation Existing

Innovation Types for Mature Markets The Customer Intimacy Zone Line Extension Innovation Enhancement Innovation Marketing Innovation Experiential Innovation Customer Intimacy Zone

Innovation Types for Mature Markets The Operational Excellence Zone Value Engineering Innovation Integration Innovation Process Innovation Value Migration Innovation

Innovation Types for Declining Markets Leveraging Category Renewal Organic Acquisition Category Renewal Harvest & Exit

Core Becomes Context Over Time The End of Core is Commoditization Video games & downloads Camera functionality Context SMS messaging Color screens Fashionable accessories Longer battery life Subsidized cell phones Cellular Telephony Example

Context Build-up Context Core Core Context Established Enterprise Start-up

Extract resources from context to repurpose for core Two Birds, One Stone Extract resources from context to repurpose for core

Core/Context Analysis Framework Process creates differentiation that wins customers Context All other processes Risk Mission Critical Process shortfall creates serious and immediate risk Non-Mission-Critical All other processes Differentiation

The Cycle of Innovation Deploy Differentiation At Scale Manage Mission-critical Processes At Scale Core Context Deploy Manage Mission Critical II III Extract Resources To Repurpose For Core Invent I IV Offload Non-Mission-Critical Invent Differentiated Offering Fund next innovation

Clinging to Context How Resources Get Stuck But lack of resources here results in failure to deploy! Resources get stuck here Core Context Mission- critical risk Mission Critical Non-Mission-Critical II III I IV Resources are added here for support Resources still get invested here

The Five Levers Model Extracting Resources from Mission-Critical Context Centralize. Bring operations under a single authority to reduce overhead costs and create a single decision-making authority to manage risk Standardize. Reduce the variety and variability of processes delivering similar outputs to further reduce costs and minimize risks. Modularize. Deconstruct the system into its component subsystems and standardize interfaces for future cost reductions. Optimize. Eliminate redundant steps, automate standard sequences, streamline remaining operations, substitute lower-cost resources, and instrument the process for monitoring and control. Outsource. Drive processes out of the enterprise entirely to further reduce overhead, variabilize costs, and minimize future investment. Incorporate monitoring systems into Service Level Agreement Core Context Requires specialized support

The Problem with Outsourcing What Happens to the Work Force? Core Context Mission Critical II III I IV Enabling Resources Wanted Here Resources Available Here People being released lack the skills to fill the positions being opened

Work circulates clockwise People recycle counter-clockwise Resource Recycling B A C II III I IV Work circulates clockwise People recycle counter-clockwise

Resource-Recycling Zones Program managers Think inside the box to deploy processes at scale Handoff # 1 Handoff # 2 Deployment Zone Invention Zone Optimization Zone II III I IV Entrepreneurs Think outside the box to create new core Process optimizers Think inside and outside the box to extract resources

Resource Recycling Meets Outsourcing 2 4 6 5 1 7 II III I IV 3 Zone rotations drive perpetual innovation