In Technology Innovation,
May 1, 2005
BY MICHAEL KRAUSS
must be hard to be an icon.
Once the protégée of Regis McKenna, the marketing
and PR wizard who created Silicon Valley, Geoffrey Moore is now
a stand-alone icon.
He’s an icon pointing the way to American prosperity in
a hotly competitive global economy. And he’s an icon with
ideas that can help each of us capitalize on the continuing technology
You may remember Moore as the author of Crossing the Chasm
and Inside the Tornado. Those two books defined high-tech
marketing, separating it from the traditional marketing we learned
from Northwestern University professor Phil Kotler and his Marketing
It was ironic to be on professor Kotler’s home court at
Northwestern in Evanston, Ill., the other day for the 11th annual
Kellogg Technology Conference. There at the podium, keynoting
the conference was Geoff Moore.
And Moore rocked. He knocked my socks off.
Geoff Moore just might have a shot at being the Michael Porter
of the current decade. (That’s Harvard Business School strategy
professor Michael Porter.) It’s too soon to tell, but Moore’s
new work--called Dealing with Darwin: The Evolution of the
U.S. Technology Sector, expected at year’s end--may
provide more illumination on the future of global competitiveness
than Porter’s Competitive Advantage of Nations.
OK, so I’m a little biased in Moore’s favor. Don’t
get me wrong--I’m not saying Moore has the fact base of
a McKinsey study or the steely gaze of Michael Porter. But he’s
offering up analytical frameworks that have intuitive appeal and
should grab us as much as Crossing the Chasm.
Moore wants to assure American competitiveness through continued
technology innovation. “In my entire lifetime, the economic
advantage lived in the United States,” Moore says. “Now
we are watching that torch cross the Pacific.”
Moore says the United States may soon look to Asia like Europe
looks to the United States today. “That doesn’t mean
the end of civilized life; in Europe they live pretty well,”
His point is that competitiveness and innovation wait for no one.
“Natural selection never sleeps,” Moore says. “We
want it to sleep. We want to feel entitled. You have to keep re-earning
it. It’s an endless game.”
Moore’s upcoming book is about how you play that game. He
again puts in place a vocabulary for defining what ails the technology
After the dot-com fall, Moore consulted with established companies.
He found a commitment to innovation but also enormous inertia.
Trying to understand the sources of inertia, he found technology
organizations frequently grew and scaled by becoming complex systems
Think of innovative companies such as IBM in the 1960s or Digital
Equipment Corp. in the 1980s. Something happens to these complex
systems providers. They give rise to companies that standardize
on their technology, modularizing and componentizing the technology.
Think of Compaq or later Dell in PCs. Low-cost volume operations
emerge. For a while, the complex systems providers collaborate
with the volume operations. Ultimately, the latter dominate, and
the former move on to new opportunities.
Think of how IBM migrated from a mainframe provider to today’s
model of complex global infrastructure and services. As the power
of mainframes became commoditized, former IBM CEO and Chairman
Louis Gerstner Jr. brought IBM to renewed prominence by evolving
the business model to a new form of complex systems delivery.
This was a painful process because of the inherent inertia in
IBM’s old mainframe-dominated culture. As a complex systems
player, IBM should have let go of the past and moved to the new
paradigm. Thanks to Gerstner they did, and now they’re back.
Moore points to the rise of Mountain View, Calif.-based Silicon
Graphics Inc. as an example. “They just nailed computer
visualization,” Moore says. “Then ATI Technologies
came along and took all the value. Nvidia put it into a chip.
For a while that was great. They could fly together. But eventually
the proprietary chips of SGI tanked. Nvidia and ATI went to the
What Moore’s describing explains the rise of Dell, a volume
operation, and it explains why IBM, a complex systems provider,
sold its PC operations to China’s Lenovo.
“If you look at how categories evolve in the technology
sector,” he adds, “there are two polarities. They
are complex systems and volume operations.”
Moore’s point is that a subtle choreography goes on in the
tech economy not unlike biological systems. Complex systems companies
innovate. Volume operations modularize. The two collaborate for
a while. Ultimately, the volume operations dominate. The complex
systems companies move on to new ground.
“You have to allow the volume operations to supply the commodity
elements in order to enable the next generation of complex systems,”
Moore says. “In theory, this is an infinite cycle. It’s
just like a double helix in DNA.”
In the process of this spiraling, individuals and investors can
have brilliant careers and make millions, or they can get stuck
in the downdraft of a devolving company, burn their career and
lose lots of wealth. Understanding the macro strategic marketing
processes can enable individuals and investors to make wiser choices.
That’s why Moore’s work is so important.
The model extends to the global economy in which Moore sees specialization
underway. China and India are becoming the world’s key “volume
“China is well suited to this game. The world is sending
China all its volume operations that are manufacturing-based,”
Moore thinks India has an interesting problem. It is culturally
a complex systems culture, but it is structurally a volume operations
first wave of Indian entrepreneurs was services outsourcers. “You
are seeing a second-generation Indian entrepreneur saying, ‘I
want to take on China,’” adds Moore, who feels India’s
low-cost manufacturing will rival China.
The complex systems side is where U.S. bread is buttered. There’s
still reason for optimism according to Moore, but we have to focus
and understand the game we’re playing.
Moore points out that the language of global business and the
style of global enterprise are uniquely American--that gives the
United States leverage in the global complex systems game. America
educates the world’s business class at American business
schools. This is also to our advantage.
Plus, the United States is the home of global digital providers
that have emerged from our expertise in complex systems. Companies
like eBay, Google, Amazon and Yahoo! are examples. But, Moore
worries the rest of the world is seeking to copy our advantage.
“EBay has to try to buy the local (offshore) eBay before
that local (offshore) eBay buys our eBay.”
As a strategic marketer approaching 60, Moore recommends that
America “continue to invest in new technology and exploit
our complex systems advantage even if the technology is incubated
in labs in Moscow and Beijing.”
“We know how to build complex systems companies in this
country, global complex systems companies. We have an advantage
there. Those companies should resist commoditization and exploit
volume operations for as long as they can,” he says.
“When things do get to the other side, punt,” Moore
says. Then go on to the next life cycle.
It’s a bit Darwinian, but so is life. I can’t wait
to read Moore’s new book.
Krauss is a partner with Marion Consulting Partners based in Highland
Park, Ill., and can be reached at Michael.Krauss@Marionpartners.com