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Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Return on Innovation Neutralization Waste Differentiation Productivity.

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Presentation on theme: "Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Return on Innovation Neutralization Waste Differentiation Productivity."— Presentation transcript:

1 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Return on Innovation Neutralization Waste Differentiation Productivity

2 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Innovation Strategy Remember Your Vector Math! =0 Multiple innovation initiatives Bubble-up management

3 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Core & Context ContextCore

4 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Underlying Drivers in Growth Markets Technology Adoption Strategies Techies: Just try it! Pragmatists: Stick with the herd! Conservatives: Stick with what’s proven! Skeptics: Just say No! Visionaries: Get ahead of the herd!

5 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Technology Adoption Life Cycle Chasm Early Market Bowling Alley Tornado Main Street

6 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Time Market Growth Technology Adoption Life Cycle Growth Market Mature Market Declining Market Indefinitely elastic middle period End of Life A Fault Line! E D C B The Category Maturity Life Cycle

7 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” A E D C B Cisco Systems and The Category Maturity Life Cycle Non-Internet Protocol Support SNA ATM Frame Relay Novell Netware Etc. Internet Routers Core Edge Access Internet Switches Modular Stackable Advanced Technologies VOIP Security Wireless SAN switches Home Networking Wireless networks VOIP adapters Sector Futures Data Center Virtualization Service Provider Triple Play The Networked Home Problem Children Optical network equipment Service Provider access

8 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Complex Systems vs. Volume Operations Complex Systems Volume Operations Sweet Spot Sweet Spot Complexity Volume Effectiveness Small Business Societal Projects Societal Entitlements EnterpriseConsumer

9 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Legacy System Integration Platform Consulting & Integration Services Solution Sales Target Customers Solution Architecture Element #1 Element #2 Element #3 3 rd party element 3 rd party element Technology Architecture Complex Systems Model

10 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Volume Operations Model Consumers Distribution Channel Shared Infrastructure Offer Technology Brand Advertising Promotions

11 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Simple Value Chain SOURCEMAKEMARKETSELLSERVICEDESIGNRESEARCH

12 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Category Evolution Volume Operations Complex Systems Time MainframesMinisWorkstationsPCsLaptopsPDAs

13 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Business Model Innovation at Category Transitions 2 Volume Operations Rule 1 Complex Systems Rule 3 Next-Gen Complex Systems Emerge A B C

14 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Cyclicality & Strategy C1C1 V1V1 Volume operations commoditize categories created by complex systems Complex Systems Volume Operations Complex systems respond by creating the next level of complexity C2C2 C3C3 V2V2 V3V3

15 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Disruptive Innovation Application Innovation Product Innovation Platform Innovation Enhancement Innovation Integration Innovation Experiential Innovation Process Innovation Marketing Innovation A Broad Universe of Innovation Types Value Migration Innovation Line Extension Innovation Value Engineering Innovation Harvest & Exit Renewal Innovation Organic Renewal Acquisition Renewal

16 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Four Innovation Zones Disruptive Innovation Application Innovation Product Innovation Platform Innovation Enhancement Innovation Integration Innovation Experiential Innovation Process Innovation Marketing Innovation Business Model Innovation Line Extension Innovation Value Engineering Innovation Harvest & Exit Renewal Innovation Product Leadership Zone Operational Excellence Zone Customer Intimacy Zone Category Renewal Zone

17 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Disruptive Innovation Application Innovation Product Innovation Platform Innovation Innovation Types for Growth Markets The Product Leadership Zone

18 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Innovation Types for Growth Markets Product NewExisting Market New Existing Disruptive Innovation Product Innovation Application Innovation Platform Innovation

19 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Fractalization in Mature Markets PC

20 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Fractal Markets: The n th Device The Example of Telephones Security System PDA Kitchen Phone Office Phone Bedroom Phone Car Phone Cordless Phone Broadband Line Cell Phone Intercom Baby cam Device Game Phone Speaker Phone Fax Emergency Phone WiFi Phone VOIP Phone Video Phone

21 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Innovation Types for Fractal Markets PC Integration Innovation Process Innovation Marketing Innovation Experiential Innovation Line Extension Innovation Customer intimacy adds value at the surface Operational excellence extracts resources from the substrate Value Engineering Innovation Enhancement Innovation Value Migration Innovation

22 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Experiential Innovation Marketing Innovation Innovation Types for Mature Markets The Customer Intimacy Zone Customer Intimacy Zone Enhancement Innovation Line Extension Innovation

23 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Innovation Types for Mature Markets The Operational Excellence Zone Integration Innovation Process Innovation Value Migration Innovation Value Engineering Innovation Operational Excellence Zone

24 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Innovation Types for Declining Markets Leveraging Category Renewal Harvest & Exit Category Renewal OrganicAcquisition

25 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Core Becomes Context Over Time The End of Core is Commoditization Subsidized cell phones SMS messaging Fashionable accessories Color screens Camera functionality Core Longer battery life Video games & downloads Context Cellular Telephony Example

26 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Context Core Context Build-up Core Context Start-up Established Enterprise

27 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Two Birds, One Stone Extract resources from context to repurpose for core

28 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Core/Context Analysis Framework Core Process creates differentiation that wins customers Context All other processes Mission Critical Process shortfall creates serious and immediate risk Non-Mission-Critical All other processes Differentiation Risk

29 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” The Cycle of Innovation Deploy Invent Offload CoreContext Mission Critical Non-Mission-Critical Manage Mission-critical Processes At Scale Extract Resources To Repurpose For Core Invent Differentiated Offering Deploy Differentiation At Scale Fund next innovation IV IIIII I

30 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Mission Critical Non-Mission-Critical Clinging to Context How Resources Get Stuck Resources get stuck here Resources are added here for support Resources still get invested here But lack of resources here results in failure to deploy! Mission - critical risk CoreContext IV IIIII I

31 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” CoreContext The Five Levers Model Extracting Resources from Mission-Critical Context 1.Centralize. Bring operations under a single authority to reduce overhead costs and create a single decision-making authority to manage risk 2.Standardize. Reduce the variety and variability of processes delivering similar outputs to further reduce costs and minimize risks. 3.Modularize. Deconstruct the system into its component subsystems and standardize interfaces for future cost reductions. 4.Optimize. Eliminate redundant steps, automate standard sequences, streamline remaining operations, substitute lower-cost resources, and instrument the process for monitoring and control. 5.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 Requires specialized support

32 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Cisco’s Markets Geographic Focus Mission- Critical Non-Mission- Critical CoreContext Middle East Africa Latin America Eastern Europe India China Brazil Russia Southeast Asia Western Europe U.S. Canada Japan ANZ IV IIIII I

33 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Cisco’s Markets Customer Segment Focus Mission- Critical Service Providers Consumer Enterprise Small to Medium Business Small Office Data Center Virtualization Networked Home CoreContext Non-Mission- Critical IV IIIII I

34 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Cisco’s Markets Product Category Focus Mission- Critical Legacy Protocols SAN Switches CoreContext Security VOIP Wireless Routers Switches Optical Non-Mission- Critical IV IIIII I Application Oriented Networks

35 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” The Problem with Outsourcing What Happens to the Work Force? Resources Available Here Resources Wanted Here CoreContext Mission Critical Enabling People being released lack the skills to fill the positions being opened IV IIIII I

36 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Resource Recycling A C B Work circulates clockwise People recycle counter-clockwise IV IIIII I

37 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Resource-Recycling Zones IV IIIII I Invention Zone Deployment Zone Optimization Zone Handoff # 1 Handoff # 2 Entrepreneurs Think outside the box to create new core Program managers Think inside the box to deploy processes at scale Process optimizers Think inside and outside the box to extract resources

38 Copyright © Geoffrey A. Moore, 2005, from the book “DEALING WITH DARWIN” Resource Recycling Meets Outsourcing Zone rotations drive perpetual innovation IV IIIII I


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