The last time I heard Geoffrey Moore speak live was over ten years ago shortly after he had written his book Crossing the Chasm. I still have the book and looking at it makes me feel a bit dated. So when I walked into the convention center in San Jose and sat down in the main hall and out walked Geoffrey Moore I felt like I had been transported back to the early 90’s. His message then was pretty similar to now although he has put a finer point on it and now is emphasizing innovation as the rocket fuel for company success. There were no crazy Silicon Graphics people running around with purple workstations so I was able to quickly gather my wits and realize that unlike John Cusak and Craig Robinson I had not been sent back in time to relive a previous event in my life and try to get it right this time. It is really too bad, If I knew then what I know now I think I could have made a lot more companies successful. Nonetheless with Moore’s latest insights we can definitely make some major strides towards growth and profitability if we can execute on the ideas he presented at the conference and are captured in his latest book Escape Velocity. This article will review Moore’s speech at the conference and tie it in to the PLM platform and how it can help facilitate some of the approaches that Moore recommends.

When I read Crossing the Chasm ten years ago it made so much sense to me. The concept of the early adopters and developing enough critical mass to go mainstream fit in really well with the Internet Bubble start up paradigm. Since that time I have read and learned firsthand that Moore’s vision while viable in specific market segments might be an oversimplification when you try to apply it to today’s product development space. It could even be argued that certain products especially Apple’s IPOD and IPAD disproved the whole early adopter concept and went straight to the mass market. Nevertheless, launching successful products continues to be a tricky business with a lot more misses than hits. It is one thing to be a startup business solely focused on launching a product but as Moore pointed out in his speech innovating while running an existing business can be difficult. As an existing company Moore suggests that you need to be intentional with your approach to innovation. He suggests companies consider the strategic value of innovation in the specific context of their market. He talks about three paradigms for innovation; differentiation, neutralization and optimization. Before a company starts spending on innovation they need to decide which approach makes the most sense for them. The three paradigms require different strategies and resources so it is important to spend the time to identify what makes the most sense for your company.

Differentiation is the version of innovation most of us are familiar with. This is what the startups are doing and larger companies consider this to be an essential part of their strategy. The idea is to create the unmatchable offer and to get to market with it before anyone else. The rewards are fame and fortune, high growth but not necessarily high margins since the cost of sales is higher and the speed and research and develop needed for this type of project comes at a premium. According to Moore, a lot of companies lose their nerve with these types of projects and either don’t have the confidence to sufficiently invest or panic once they start to see the true expense and time investment associated with the launch. Many companies will try and hedge their bets by launching multiple projects of this type in the same timeframe. The problem with this is that very few companies have the resources to pull off multiple differentiation type projects simultaneously. It goes back to the famous proverb, “If you chase two rabbits they will both escape.” So given that this is a blog about Product Lifecycle Management how does PLM facilitate these types of projects and how can it allow companies to have more success in the big bang product launch? Before Oracle’s launch of the Innovation Management Module (IM) PLM would have provided some level of decision support, cost analysis, project management, supply chain oversight and this all would have been useful and beneficial. Without PLM companies are really flying blind in many areas, just playing the hunches of hopefully competent and experienced executives. As the statistics reveal most of the time these executives get it wrong. You can’t really blame them; there are a lot of variables that go into new product introduction (NPI). It is one of the hardest things to get right. With PLM you have a database of existing cost, resource utilization, and timeframes for comparable efforts. This allows a decision maker to evaluate the true cost and timeframe for new product launch; IM just increases the amount of data and the tools to evaluate the decision. It provides a component for easier evaluation of the viability of the idea by improving the ability to solicit more input regarding the concept. It allows you to pull empirical information from the PLM to provide concrete information about timeframes and cost, it also allows for capture and assessment of critical requirements. The analytics component will allow for taking all of these factors and scoring based on resources, cost, requirements, etc. taking away the guess work from deciding if it is worth going all in. In a way IM is sort of a time machine in that it allows you to use all of the accumulated data to go into the future to see how things will work out if you pursue this path.

The other types of innovation that Moore identifies; neutralization and optimization are really strategic responses to competitive forces in the market and are driven by the business objectives of the innovating company. If other companies have made the big investments in differentiation and you still want to compete with them you can either try and outspend them and come up with something bigger or better or you can identify what is needed to develop a product that can be brought to market quickly that has the most critical of features of the competitor’s product and offers similar capabilities at the same price or even slightly less. Microsoft and Samsung have excelled at being “fast followers” and offering somewhat equivalent solutions after companies like Apple have validated the market. Optimization just takes the concept further in that as the market and product line matures you attempt to offer functionality at lower cost and higher margins due to your ability to out execute your competitors and to take advantage of the maturity and size of the market to offer optimized product that capitalize on the availability of materials and expertise in manufacturing products at a lower cost. PLM again plays a key role in this type of innovation since it is important to be able to execute crisply in order to respond to new products in the market and to have the ability to identify cost drivers early to ensure profitable product development. IM again raises the stakes since it provides more information along these lines about existing capacities and what the impact will be to current projects if new ones are adopted. It also allows for the iterative analysis of requirements to right size the features of products around the business drivers to ensure that you don’t miss the mark from capability, cost, and/or time objectives.

Throughout his speech Moore advocated that companies need to balance their need for growth, revenue and profit around the types of innovation they adopt. PLM allows companies to see the full view of their organization when it comes to innovation. Standalone requirements and PPM solutions do not provide the insight into existing activities or into historical execution information and this limits their effectiveness. Effective innovation management is tied to the product execution systems and provides real time information to executives to allow them to identify which type of project they can execute against and what the impact will be to the capacity and revenue stream of the company. I suspect Moore’s view of innovation further complicates the picture of innovation but provides a framework that can be leveraged to increase the likelihood of success. Tying innovation to business outcomes and understanding the different types of innovation is critical to doing it well. Trying to accomplish this without PLM and IM would be a formidable task. IM provides the glimpse into the future that companies need to increase the odds of success. It is not quite the same as being able to travel back in time and already knowing what happened but it is a lot better than playing hunches and guesses that may or may not pan out. I am certain Moore would agree that PLM is an essential component for innovation and Oracle’s new IM module just adds more value to an already essential component for new product launch.