My interview with Geoffrey Moore

A special treat this week. For you, my dear Vortician friends, I secured some quality time with Geoffrey Moore, noted author of classics like ‘Crossing the Chasm’ and ‘Inside the Tornado’, to talk about the tech industry today. As I’ve discussed in earlier Digests, Geoff is my co-producer for VORTEX ’04, where we’ll be focusing on the new enterprise IT marketplace and the major changes ahead.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.

Niccolo Machiavelli

Dear Vorticians,

A special treat this week. For you, my dear Vortician friends, I secured some quality time with Geoffrey Moore, noted author of classics like “Crossing the Chasm” and “Inside the Tornado”, to talk about the tech industry today. As I’ve discussed in earlier Digests, Geoff is my co-producer for VORTEX ’04, where we’ll be focusing on the new enterprise IT marketplace and the major changes ahead.

In this Q&A, Geoff shares his thoughts on what we’ve been through, what’s down the road and a key concept called “orchestrating the stack.” If you want to ask Geoff any additional questions, or comment on these answers, drop me a line at jgallant@vortex.net.

Q. The technology industry has seen the highest of highs and the lowest of lows in a very short span. What should we have learned from everything that’s happened? Have we learned it?

A. The key learning from the past seven years is that there was nothing unnatural about what occurred — only the scale at which it unfolded. I think people actually get this. That said, humans are famous for having short memories, shorter attention spans, and a pronounced aversion to delayed gratification — all of which will fuel the next wave of excess.

Q. So, now we’re coming out of what’s been a really terrible time for tech companies, but no one seems quite certain what the near-term future holds for enterprise IT. What do you see ahead?

A. I am betting on a decade of non-disruptive innovation being the cornerstone of the tech sector, for two reasons. First, we are still a bit spooked by the past quakes. And second, there’s a lot of incremental improvement to do that will pay significant dividends to all involved.

Q. What will be the key drivers of change in the coming years?

A. We still have a decade or more work to do to assimilate the Internet, even as we know it today. More generally, the coming decade in IT will be centered on communication rather than computing. The big computing opportunity in my view is in biotech.

Q. You’ve talked about a concept called “orchestrating the stack”. Describe what you mean by this concept.

A. In the current economy, all major problems are solved by a value chain of partners interoperating to mutual benefit. Every time the underlying technology shifts, the players need to regroup and reform the chains. Orchestrating the stack refers to the market development strategy and execution challenges involved whenever a company seeks to influence or guide this process.

Q. What does the conflict inherent in this orchestration of the stack mean for the gorilla companies that are involved? What are the potential upsides and downsides?

A. The downturn secured for each of the current gorillas a very strong position in the current Enterprise IT stack — a flight to quality, if you will. Any change in the underlying paradigms creates “cracks” in the current stack, where disrupters can enter and destabilize the gorilla’s position. At the same time, gorillas can exploit the same cracks to enter adjacent layers of the stack. In general, gorillas resist instability since it has more downside than upside for their stakeholders.

Q. What will it take for a gorilla company to be successful in the transition ahead? What will mark the likely winners from the losers?

A. Gorillas must be able to “embrace and extend” every instability that comes their way. The three enemies of gorilla success, to steal a phrase from Gary Hamel, are Denial, Arrogance and Nostalgia.

Q. How long do you envision these transitions taking? When will we know who has been successful and who has failed in the re-orchestration of the stack?

A. My view is that if the executive teams running all of the established gorilla companies were abducted by aliens tomorrow, their companies’ performances would be largely unchanged for most of this decade. But they would be in desperate straits come the start of the next one.

Q. What does this mean for innovators? How can they maneuver through this process and be successful?

A. Any time a paradigm shifts, advantage goes to the disrupter, as they have no legacy inertia to contend with.  The key is to slip through a crack in the infrastructure and get there “fustest with the mostest.” That’s what venture is all about.

Q. Perhaps more important, what does this mean for CIOs and IT executives?

A. Change is expensive and painful. So the first lesson for CIOs is, voluntarily embrace change only when your executive team is committed to achieving clear competitive differentiation on a performance element that impacts customer preference in purchase decisions. Everywhere else, go as slow as you reasonably can without jeopardizing the integrity of your infrastructure.

Q. How can information systems executives at corporations navigate the changes ahead? What are the potential pitfalls?

A. I think major IT organizations need to align with one or two gorilla vendors’ views of the future, and use that as a backplane for shaping the rest of their strategy. Against that backdrop, I would encourage a migration to outsourcing for all non-differentiating business processes, and an aggressive use of advanced technology where it can create genuine, sustainable competitive advantage. 

Q. Take the investor’s point of view — how do you capitalize on this process?

A. In the public markets, there is not a lot of upside in the gorilla’s stocks. Most of them are already priced to win and will lose significant value if they do not. Emerging technologies, on the other hand, both in venture and in the public markets, still have both category and company upside. That is where the growth investor will focus.

Q. What could disrupt the changes and leave even the gorillas in continued flux?

A. Any of the four horsemen of the Apocalypse. And all four have been sighted on CNN recently.

Thanks, Geoff. If you have any thoughts on the stack or Geoff’s other views, drop us a note at jgallant@vortex.net.

VORTEX ’04 Update: 

A new feature I’m adding this week is a brief update on the progress of the VORTEX ’04 conference, which runs from October 4-6 at the Bacara Resort and Spa in Santa Barbara, Calif. One of the key goals of VORTEX is to bring in not only the top executives of the most powerful vendors – companies like IBM, SAP, Cisco, Oracle, EMC, HP, Sun and more – but to convene the most powerful CIOs, as well.

To that end, we’ve already received speaking commitments from Don Haile, CIO of Fidelity Investments, Ron Ponder, CIO of Wellpoint, thegiant health care company, and Steven Silberstein, managing director ofLehman Brothers. They’ll talk about the key business drivers behind theirtechnology investments, and they’ll share their views on the strategies of the major vendors. I’ll keep you posted as we add even more senior IT executives.

As always, you can find the latest on the program, including speakers and key themes, at http://www.vortex.net.

Bye for now.