I had the opportunity recently to interview Geoffrey A Moore, the best-selling author of such popular books as Crossing the Chasm, Inside the Tornado, The Gorilla Game and Dealing with Darwin. He has a new book out called Escape Velocity: Free Your Company’s Future from the Pull of the Past and having had some of his books on the Innovation Excellence Reading List for a while I thought it made sense to sit down and pose him some questions to get some of his latest perspectives, thoughts and insights on innovation.
Here is the text from the interview:
1. When it comes to innovation, what is the biggest challenge that you see organizations facing?
The biggest challenge is understanding that they are three types of return on innovation which are largely incompatible with one another, and the importance therefore of declaring which type of return you are seeking. The first type is differentiation innovation, and that’s one everyone understands. But the key there is to be “beyond compare” so that you capture your returns in bargaining power. The second type is neutralization innovation, where the focus is on meeting all the performance standards of your category, to make sure you do not get eliminated from consideration or lose your customers to churn because of some dissatisfiers in your offer set. And the third type is productivity innovation, where the return comes from eliminating waste, ideally to repurpose resources for one of the other two types of innovation. Most people associate innovation only with the first type, which unfortunately is relatively hard to achieve. The other two types represent lots of low hanging fruit that people neglect.
2. In ‘Dealing with Darwin’ you identified 13 different types of innovation. Which is the most difficult for companies? Which presents the most opportunity?
Each type of innovation has its strengths and weaknesses, so choosing a focus is a lot about where your category is in its life cycle and what kind of crown jewels you can bring to the table. In the age of the Internet, marketing innovation has been a real challenge, as the old models of marketing do not apply very well and the new ones are still being developed. On the other hand, also because of the Internet, business model innovation has never been easier.
3. What is the biggest obstacle to generating future growth within an established enterprise?
Established enterprises struggle whenever they are required to reallocate resources away from established lines of business in order to fund the growth of new lines of business. The period of greatest pain is when the new business is big enough to demand a material amount of resource but not yet big enough to create a material return. Management teams are continually under pressure to raise the performance bar every quarter, and this makes it increasingly painful for them to invest in the future. But eventually this policy leads to a future state where the cupboard is bare and the company is in real trouble.
4. Tell us about the importance of reallocating resources across an enterprise in deliberately asymmetrical ways
One of the ways enterprises waste their innovation resources is by “peanut-buttering” them across way to many initiatives in way too many areas of the business. It is much more effective to concentrate on a few must-win bets, even when that means some areas get no additional funding whatsoever. This is not a popular decision, which is why peanut-buttering is so common. Unfortunately, however, it is a sure path to a slow death.
5. Why is it important to be swift to neutralize competitors’ innovations and to be laser-focused on driving in-house innovations?
Neutralization innovation ensures you keep up with your industry’s changing norms. The key here is to be “good enough, quick enough,” conserving both on the level investment (don’t go any further than the norm requires) nor taking a second longer (every second you are out of compliance with the norm gives your competitors a license to poach on your turf). The laser-focus is all about spending just the right amount of resources here, as opposed to with differentiation innovation, where the rule is to spend whatever it takes. Needless to say, you cannot do a lot of differentiation innovation, so laser focus there includes keeping discipline as to what projects get this tag.
6. What do you feel is the most important takeaway from your new book ‘Escape Velocity’?
Contemporary management protocols and practices overweight a focus on performance and underweight a focus on power. The primary purpose of this book is to rectify the balance by creating a vocabulary and a context for addressing the current and future state of power of your enterprise, and driving innovation initiatives to ensure that power is replenished instead of exhausted. Too often the latter occurs, which ends with the demise of the enterprise.
7. What skills do you believe that managers need to acquire to succeed in an innovation-led organization?
We make a big distinction between leadership and management because success depends both on making the bets needed to create future power (leadership) and converting those positions of power into economic returns to reward the current bet’s investment and to fund the next series of bets (management). Contemporary financial markets are very pro-management and anti-leader because they have disconnected themselves from long-term returns. This creates a fundamental imbalance in the politics of governance which is driving established enterprises to marginalize themselves along a path of quiet self-liquidation. It is critical that boards of directors retake the reins here and reassert a more healthy balance between long and short term, which in turns involves taking strong leadership positions.
8. If you were to change one thing about our educational system to better prepare students to contribute in the innovation workforce of tomorrow, what would it be?
Compared to the rest of the world we have a great educational system—really, better than any other—for the elite. That’s because our system really does encourage students to take risk, explore views, etc. in ways that no other system does. Our huge challenge is that this system does not scale to the entirety of our population, and all attempts to scale it have actually made overall results worse, not better. So we have a real conundrum here. Our crown jewels are not aligned with our social values, and the most probable outcome of that is that we will try to destroy our crown jewels. Needless to say, we need to find a better path forward than that.
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