Geoffrey Moore Examines Management Keys for Business Innovation In Gartner Fellows Interview
STAMFORD, Conn., October 7, 2005 - Focused entrepreneurial leadership is essential to build sufficient revenues and prospects for further growth in a new product, according to business consultant Geoffrey Moore.
Both conditions for success - sufficient revenues and prospects for further growth - must apply in most cases before a large division in many companies will commit resources needed to propel a new product into a major hit with customers, Mr. Moore said in a Gartner Fellows Interview posted this month on gartner.com.
Most innovation projects fall short of minimal revenue targets because the hand-off from development labs to business units is premature. Entrepreneurial leadership is absent. Moreover, too many innovation projects are allowed to soak up resources simultaneously in one company. Hedging bets in development labs reduces chances for bold innovation.
"Don't dabble. Pick one and go," said Mr. Moore, author of Crossing The Chasm and Living on the Fault Line, both best-selling business marketing books. "The idea is to take something and push the envelope far enough that your competitors look at it and say it's not worth it for them to chase you. If you over-deliver intensely on a given type of innovation, it becomes much harder for the herd to follow."
Corporate division managers typically apply financial standards to screen the business potential of new products because the managers' role is to return acceptable levels of profit to the corporation. New products should exceed $10 million in revenue before development teams hand them off to division managers. Managers look for major revenue opportunities, often $100 million or more, before agreeing to support a new product with staff and budget.
Mr. Moore is chairman, founder and managing partner of TCG Advisors in San Mateo, Calif., and a venture partner with Mohr, Davidow Ventures, in Menlo Park., Calif. For additional information on Mr. Moore, please contact Katey Stewart at 312-455-1180 or by e-mail at firstname.lastname@example.org.
The interview was conducted by David Mitchell Smith, a research vice president and Gartner Fellow, and Gene Phifer, vice president and distinguished research analyst. Mr. Smith specializes in catalytic technologies such as the Internet, Web services, open source and consumer technologies. He is scheduled to speak on several aspects of the increasing impact of consumer markets on business-related information technology at Gartner Symposium/ITxpo October 16-21 in Orlando, Fla. Mr. Phifer covers a wide range of Internet and e-business topics, including intranets, extranets, e-business infrastructures, e-business transformation and portals, as well as emerging trends. He is scheduled to speak on e-business infrastructure and portals at Gartner Symposium/ITxpo in Orlando.
In his work with clients, Mr. Moore divides IT investments into "core" and "context" activities. The purpose of core activities is to separate, or differentiate, your company from competitors in the eyes of customers by such a wide margin that customers prefer not to buy any competitor's offering. The purpose of context activities is to sharpen productivity of business processes. In many enterprises, IT activity becomes process-oriented as product categories become more mature.
"The first justification of a context project is cost-reduction," he said. "The more strategic justification.is liberating time or talent or management attention from context to spend it on core." Highly innovative companies excel at continually shifting resources from context to core projects. Mr. Moore defines this middle step between context and core as deployment. Experts in deployment often are tied up in mission-critical context projects. They need to be freed up at appropriate times to oversee innovative products that are identified for rapid growth as these products are elevated from development labs into business units, he said.
"Taking risk with mission-critical context (productivity projects) sounds like an illogical thing to do," he said. "But in fact, it is the critical success factor in IT. You just have to be very thoughtful about how you take that risk because it is mission-critical. There's a high degree of failure if you do it badly."
The single greatest resource trap in corporations is mission-critical work that is not core. "There's a tendency for mission-critical work to accumulate lots of resources because people don't want to get punished," Mr. Moore said. "But those are the same resources that you need to deploy the next generation of innovation to get upside."
Separation from competitors creates pricing power and, in turn, profitability. Apple Computer Inc.'s iPod and, more recently, iPod nano are examples of innovation that separated Apple by a wide margin from its competitors in MP3 players, Mr. Moore said. "When your kid says, 'I want an iPod' and you show up with a Zen, you are a bad dad. So Apple got separation," he said.
The Gartner Fellows Interview with Mr. Moore is available on Gartner's Web site at http://www.gartner.com/research/fellows/asset_135671_1176.jsp.
The Gartner Fellows Interview features Gartner analysts each month in discussion with leaders in technology, business and government on significant industry issues. The Gartner Fellows are 15 Gartner research analysts, distinguished by their reputations as innovators and thought leaders. They collaborate with more than 600 Gartner research analysts worldwide to identify and examine emerging trends and technologies.
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