Dealing with Darwin

About the Author

Geoffrey A. Moore is a distinguished author and consultant renowned for his expertise in market dynamics and disruptive innovation. With a portfolio of bestselling books including Crossing the Chasm, Inside the Tornado, The Gorilla Game, and Living on the Fault Line, Moore has significantly influenced the business world. He serves as a managing director with TCG Advisors and a venture partner with Mohr Davidow Ventures, providing strategic guidance to numerous companies. Moore’s profound understanding of how businesses can navigate competitive landscapes and achieve sustainable growth is vividly captured in his book Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution.

Main Idea

In Dealing with Darwin, Moore asserts that innovation is a non-negotiable requirement for business survival in today’s fiercely competitive environment. Globalization, deregulation, and commoditization have raised the stakes, compelling companies to innovate continually or risk obsolescence. Moore articulates that true innovation extends beyond mere product enhancements; it involves strategic differentiation, resource reallocation, and understanding market dynamics. He presents a comprehensive framework for managing innovation across different stages of a company’s evolution, emphasizing the need to overcome organizational inertia and align corporate efforts to achieve breakaway differentiation.

Table of Contents

1. Foundational Models
2. The Economics of Innovation
3. Innovation and Category Maturity
4. Managing Innovation
5. Managing Inertia
6. Extracting Resources from Context
7. Repurposing Resources for Core

Foundational Models

At the heart of Moore’s argument is the economic imperative of innovation. Innovation, he explains, is essential to avoiding commoditization and the ensuing price wars that erode profit margins. By differentiating their offerings, companies can establish pricing power and secure returns above the cost of capital. Moore identifies four primary outcomes of innovation:

• Differentiation: Creating unique products that stand out in the market.
• Neutralization: Catching up to competitors to eliminate their advantages.
• Productivity Improvement: Achieving existing market outcomes at lower costs.
• Waste: Unsuccessful attempts at the other three goals.

“Innovation that leads to differentiation creates attractive economic returns. However, not all innovation yields the same benefits,” Moore notes, emphasizing the varied impacts of innovation strategies on business performance.

The Economics of Innovation

Moore delves deeper into the economic benefits of innovation, highlighting its role in creating competitive advantage. Differentiation allows companies to escape the trap of commoditization and establish a dominant position in their markets. He contrasts this with neutralization, which aims to level the playing field but doesn’t offer the same level of return. Productivity improvements, while crucial for efficiency, primarily serve to free up resources for further innovation. Finally, Moore cautions against wasteful innovation efforts that fail to achieve meaningful market separation.

Neutralization

Neutralization efforts aim to catch up to competitors or meet market standards. For example, Microsoft’s Internet Explorer neutralized Netscape’s initial browser advantage. While important, these efforts generally do not yield as high returns as true differentiation. Neutralization eliminates negative returns but doesn’t create significant positive gains.

Productivity Improvement

Productivity improvements focus on cost reduction and efficiency gains. These efforts can be radical enough to create differentiation, but typically, they aim to streamline existing processes. Such improvements free resources that can be redirected towards more innovative projects. Moore states,

“Productivity improvements are essential to evolutionary adaptation because they free resources that other forms of innovation can use.”