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Friday, February 10, 2006

Geoffrey Moore On Innovation

In Dealing With Darwin, Geoffrey Moore brought forth the point,"companies can escape the marginless hell of commodity and price competition only through innovations that differentiate their products from their competitors' in the minds of consumers". He laid bare a taxonomy of 15 "innovation types," from "disruptive" breakthrough technologies like Apple's iTunes to more mundane marketing innovations like hiring a sports superstar to endorse athletic shoes. Moore doesn't believe that innovation need not be pursued for its own sake, but ought to be tied to concrete business goals. In this sandhill op-ed piece he debunks myths about innovation and lists top ten of such myths. The list goes like this:

10. We don’t innovate around here any more;
9. Product life cycles are getting shorter and shorter;
8. We need a Chief Innovation Officer;
7. We need to be more like Google;
6. R&D investment is a good indicator of innovation commitment;
5. Great innovators are usually egotistical mavericks;
4. Great innovation is inherently disruptive;
3. It is good to innovate;
2. Innovation is hard;
1. When innovation dies, it’s because the antibodies kill it

I particularly liked what he wrote while taking the stand that innovation need not be inherently disruptive – his view : "And the more established your company, the less likely it is a type for you to specialize in. Alternatives include application innovation, product innovation, platform innovation, line extension innovation, design innovation, marketing innovation, experiential innovation, value engineering innovation, integration innovation, process innovation, value migration innovation, and acquisition innovation. This last one, in particular, is usually an established enterprise's best bet for dealing with disruption".

It has opened up some room for discussion with Tom Foremski,countering that innovation has to be very disruptive and that innovation needs to offer a superbly excellent ROI in order to gain attention, and overcome cost of switching barriers. His point is innovation can not get commoditised. Geoff does not buy it by pointing out that if you are a member of the establishment, you do not want to overcome the inertia of the status quo as it works to your advantage. What enterprises want to do is overcome the force of commoditization, which works to its disadvantage, eroding margins. Market distruption if pursued can create opportunities for new entrants. Such innovation is not disruptive but does create new differentiation-essentially what all the othe forms of innovation are all about. An excellent read.

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