By Geoffrey A. MooreHarperBusiness, published May 2000278 pp. plus index; hardcoverISBN: 0-88730-888-0Price: $18.90 at fatbrain.com.
The fault line, according to Geoffrey Moore, is an unstable seam in the new economy. Moore’s latest book is a survival guide for executives experiencing the quakes that shake up companies and shake out markets.
The book is primarily written for the top brass at large, traditional, public corporations that are facing competition from dot coms. Managers at many different types of companies, however, will benefit from Moore’s thought-provoking analysis of current business dynamics. As he points out, “We are all living on the fault line now.”
A new role for IT
Moore wrote the best-selling Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers for project managers, venture capitalists, and marketers who need to take entrepreneurial ventures from initial success to leadership positions in mainstream markets. In the sequel, Inside the Tornado: Marketing Strategies from Silicon Valley's Cutting Edge, Moore explored how the Technology Adoption Life Cycle affects every facet of a business.
In Living on the Fault Line: Managing for Shareholder Value in the Age of the Internet, he offers strategies companies can use to create and sustain a competitive advantage throughout the technology adoption cycle. The first chapter, “The Age of the Internet,” explains how the new economy has developed. Moore explains the following:
- Information now has more value than assets.
- Virtual integration is more important than vertical integration.
- Market capitalization means more than P&L statements.
Moore also notes how, in the ’90s, IT evolved away from “essentially a staff function, a resource that provided information about the business, toward that of a line function, something that defines the very nature of the business.” Now, he says, “IT must become a true line function and the CIO must...become the CTO.”
He adds that the problem facing today’s IT organization is that it is “enmeshed in a large web of tasks and responsibilities that are not core to the business. In this, it reflects the corporation as a whole.”
Development of a new market
Moore describes the developmental stages of a technology-enabled market:
- Early Market: “A time when early adopters (technology enthusiasts and visionaries) take up the innovation while the pragmatic majority holds back.”
- Chasm: “A period of no adoption...the pragmatist majority is still holding back.”
- Bowling Alley: “Specific niches of pragmatic customers adopt the new technology.”
- Tornado: “A 'killer app’ transforms niche adoption into mass adoption, creating an enormous demand for the new technology across a wide range of sectors.”
- Main Street: “The new technology has been broadly deployed and...now settles down to a (hopefully) long engagement as the incumbent technology.”
Moore goes on to explain the best strategies to use in each stage of development.
The book describes how new technologies can lead to the failure of a traditional company if it is slow to embrace the IT changes in the marketplace. To combat this hesitation, Moore offers senior management a set of prescriptions that are “focused on temporarily deconstructing the resistance to innovation sufficiently to allow the company to get on the next technology wave.”
A key take-away from Living on the Fault Line is that companies should not hesitate to “embrace and extend” new markets. “When high tech is played at its best,” Moore says, “the start-ups innovate, the best incumbents co-opt the innovation, and both succeed. At its worst, on the other hand, the management teams at heretofore blue-chip corporations vacillate, research, study, plan, discuss, propose, pilot, review, analyze, consult, critique, and when all else fails, hire consultants and hold focus groups—all in preparation for just plain losing.”
Have you ever found a competitive advantage by waiting to adopt a new technology? Did you learn from the mistakes of your competitors and early adopters? Post a comment below or send us an e-mail.