Thursday, November 30, 2006

Nokia World: Geoffrey Moore on "Dealing with Darwin"

Famous innovation thinker Geoffrey "Crossing the Chasm" Moore gave a lightspeed presentation about some of his more recent innovation ideas, which he has put in his book - Dealing with Darwin. Here are my raw notes:

In today's market: innovation is the key to differentiation. Dialogue around innovation has not been very articulate. Signal to noise ratio is often high with unfocused innovation.

Four new ideas about innovation:
Return on Innovation
Innovation Strategy
Funding Innovaiton
Perpetuating Innovation

Return on Innovation
Innovate to achieve competitive separation from the market.Choice is innovate or get marginalized. Vector of innovation that will set the organization is on track to be separated from the competitors, is CORE. Every other form of innovation is context. Rule for CORE is to be beyond good.

Core competence is different - it is what you are definitely good at. But that is often also what other people to. It's not core business either. It's going to have small revenues to start with.

Return on innovaion results from:
Positive returns: Differentiation (CORE), Neutralization (catching up the leader), Productivity (efficiency)
Negative returns: Failed attempts; Waste (projects that even if they succeed fail to create sustainable competitive advantage). Customers love "waste" - they get genuine innovation for free.
1. Identify a vector of differentiaton
2. Define all other work as context
3. Commit to beyond class outcomes

Innovation strategy
We should not just throw things at the wall. A key to this will be to decide where is the market that you are in in terms of its Maturity Life Cycle. Innovation is different in different parts.
Product Leadership > Customer Intimacy & Operational Excellence Zones > Category Renewal.

Innovating in Growth markets:
1. Disruptive innovation (new category)
2. Application innovation (applying applications in new markets)
3. Product innovation (outperforms competitors)
4. Platform innovation (Google, APIs etc) - this has been the most economically powerful

Innovating in Mature markets: (customer intimacy)
1. Line extension innovation (P&G)
2. Enhancement innovation (Apple)
3. Marketing innovation (Nike iD)
4. Experiential innovation (Cirque du Soeil)

Innovating in Mature markets: (op excellence)
1. Value engineering (Ryanair)
2. Integration (SAP)
3. Process innovation (Dell)
4. Value migration (IBM - products to services)

All of these different innovations require different people.

- Pick a small number of innovation vectors for core - ideally one
- Drive performance beyond category norms
- Declare all other forms of innovation context

The kind of person who they hire at Dell is someone who likes process, and Apple they would like design, even if they work in HR or finance.

Funding Innovation
Nowadays people don't want to give you money to innovate. They want you to cut costs. The key to finding the money is to look to the context. Resources get trapped in Context issues, such as voice and not into the new core (e.g. social networking). "Coins in the couch" extract resources from context to repurpose for Core. Sometimes painful to get this cash but it is important.

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Four phases: invent, deploy, manager, ofload

The problem is that there is nobody in place to deploy the graduating core issues that move from non-mission critical to mission critical. How to solve the problem with the resources getting stuck (top right) box? Six Levers:
1. Centralize: single authority to reduce costs and create single decision making authority. New individual will make everybody angy. Profile of this person: Neofascist.
2. Standardize
3. Modularize: Deceonsruct
4. Optimize: Eliminate redundant steps
5 .Instrument: Quality control, SLA
6. Outsource

Problem is that people leaving the context issues do not have the right skills to go back to the innovaiton. The answer - work is moving clockwise, and people move counter clockwise.

People's profile roles:
- Optimizers (quadrant 3&4):
- Deployers (quadrant 2&3): these people do mission critical things for a living
- Innovators (quadrant 1&2):

Executives role is to manage the handoffs between the different types of people.

Summary of growing human capital:
- Focus on bulding role expertise
- Avoid overvaluing task expertise
- Be cautious about asking people to change roles.

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