Dealing with Darwin

Tags: Presentation Title, TCG Advisors LLC, Technology Sector, Volume operations, Systems technologies, U.S. Technology Sector, Solution architectures, Intellectual property protections, Consumer Model, dominant hand, Consultative sales, Solution Architecture, scarce resources, Natural selection, Legacy System, Brand Consumers, Services Legacy System, Geoffrey Moore, Complex Systems, Platform Architecture
Content: Dealing with Darwin The Evolution of U.S. Technology Sector Geoffrey Moore managing partner February 24, 2005
New Book · natural selection never ends · Competition for scarce resources (capital & customers) · Survival-of-the-fittest outcomesno entitlements · We are all caught up in the competition · How do we innovate for competitive advantage? · How do we overcome inertia that blocks change? · Lack a good vocabulary · Innovation requires a more detailed taxonomy · Inertia simply needs to be rethought · Dealing with Darwin · Focusing Innovation and Overcoming Inertia In Established Enterprises · Penguin, January, 2006
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Larger Forces at Work
· Evolution shapes life · We all participate in larger fabrics · They shape our strategic landscape · Patterns are hard to discern · Can't see the forest for the trees · Consequences can be painful · Need to step back every so often · What do we think is going on? · What is the big picture?
Let's talk about the evolution of the U.S. Technology Sector
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Evolution and the Paradox of Commoditization
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
How Categories Evolve complex systems Internet
Wireless
Mainframes Minicomputers Publishing Systems Office Automation
Laptops
PCs Work-
Boards
stations
Chips
Time 5
Volume Operations Presentation Title © 2003, TCG Advisors LLC March 31, 2005
PDAs
Business Model Innovation at Category Transitions
1
Complex
Systems
B
Advantage
A
PCs PDAs
Linux Clusters Mobile Workforce
C
3
Next-Gen
Complex
Systems
Emerge
3 Volume Operations Advantage
2 Complex Systems Volume Operations Co-opetition
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Cyclicality & Strategy Volume operations commoditize categories created by complex systems
C1
V1
C2
V2 C3
V3
Complex Systems
Volume Operations
Complex systems respond by creating the next level of complexity
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
The Paradox of Commoditization 1. Complex systems open up markets for volume operations 2. Volume operations cost-reduce complex systems to extend their viability 3. Volume operations overthrow complex systems and displace them in the market 4. Volume operations supply the commodity elements that enable next generation of complex systems
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Taking it to the Street Enterprise vs. Consumer
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Two Design Centers for Commerce
· Enterprise Model · Organized around the customer engagement · Optimal for complex systems · Few contracts in large amounts 103 times $106 = $1B · Consumer Model · Organized around the means of production · Optimal for volume operations · Many transactions in small amounts 107 times $102 = $1B
Hypothesis: There is not a third
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Organizing for the Enterprise Model
Target Customers
3rd party product Legacy System
Solution Sales Business Application & Services
Solution Architecture
Product #1
Product #2
Product #3
Platform Architecture
Integration Platform & Services
Legacy System
Legacy System
3rd party product Legacy System
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Organizing for the Consumer Model
Consumers
Brand
Consumers
Consumers Consumers Consumers 12
Offer Offer
Offer
Offer
Technology
Offer
Offer
Offer Offer
Consumers Consumers
Shared Infrastructure Distribution Channel
Consumers
Advertising
Presentation Title © 2003, TCG Advisors LLC March 31, 2005
Examples of Each Model · Enterprise: Complex Systems · IBM, Cisco, SAP; Goldman Sachs, Swiss Re, the World Bank; Boeing, Tektronix, Honeywell; Bechtel, Accenture, IDEO; Apache, Halliburton, Burlington · Consumer: Volume Operations · Nestle, Procter & Gamble, Nike; Dell, Apple, Sony; Microsoft, Adobe, Electronic Arts; Hertz, Hilton, United Airlines; eBay, Google, Amazon · Hybrids · HP, Johnson & Johnson, Nokia, General Electric
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Fundamental Strategy · Resist Commoditization
· Embrace Commoditization
· Hedge
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Inside a Company, Hedging is Hard Execution Dynamics Are Polar Opposites Complex Systems
LEARN DESIGN MAKE MARKET SELL SERVICE
Volume Operations
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Summarizing the Differences
value chain Element research design Build Market Sell Service
Complex Systems
Volume Operations
Qualitative Scenarios
Quantitative Analytics
Integrated Architectures Modular Architectures
Adaptive Methodologies Deterministic Processes
Value Chain Orchestration Branding & Promotion
High-Touch Persuasion Consultative Dialogs
Low-Touch Distribution Closed-Loop Transactions
You can mix & match. You must not blend
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
What Companies Must Do Adopting The Strategy of "Handedness"
"Left-handed"
"Right-handed"
Productivity and synergy are maximized when organizations become single-handed
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Implementing "Handedness" · Declare a dominant hand · Pick the model that best fits your economics · Optimize for the dominant hand · Invest in differentiation here · Emphasize in-house capability · Give relief to the other hand · Invest in productivity here · Partner and outsource whenever you can
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Competitive Advantage for the U.S. Technology Sector in an Age of Commoditization
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Making the Analogy to Economies
· China is playing a volume operations game · They are like Dell, Wal-Mart, and Southwest Airlines · Japan will migrate to complex systems · China becomes their volume operations complementer and their major market · Korea will play a hedged game for now · Consumerization of the chaebols · India will struggle with its opportunities · Its culture is biased toward complex systems · Its market and cost structure favor volume operations
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Evolution of the U.S. Technology Sector · Advantage Complex Systems · Access to target customers · Consultative sales and services · Solution architectures · Systems technologies · Disadvantage Volume Operations · Cost model forces outsourcing the middle · Differentiation rests on technology and brand · Low-cost economies, led by China, will attack both · Formerly high barriers to entry are coming down
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Wild Card Digital Goods & Services over the Internet · Volume operations markets for · Transaction services · Entertainment · Not sensitive to cost of living · Lets U.S. Technology Sector back into the volume ops game · Very sensitive to · Intellectual Property protections · Cultural trends and consumer values Impact on U.S. Technology Sector is unclear
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
My Final Word Complex Systems Strategy for the U.S. Technology Sector
Exploit
C
complex systems
advantage
B
A
Capitulate and transcend: Build the next level system atop the new layer of commoditization
Resist commoditization Exploit volume operations cost reductions
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005
Thank You [email protected]
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Presentation Title © 2003, TCG Advisors LLC
March 31, 2005

File: dealing-with-darwin.pdf
Title: Gorilla Game2
Author: Geoffrey A. Moore
Subject: RSCO gillsans
Published: Thu Mar 31 22:39:34 2005
Pages: 24
File size: 0.19 Mb


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