This post covers some other highlights from Geoffrey Moore’s Dealing with Darwin, a book focused on how companies can innovate at every stage of their lifecycle and my favourite read on innovation to date. Below “Core vs Context” is discussed, and then how companies can recycle resources to keep focus on the core, the activities which are valued by the market.

Core
Any activity which creates sustainable differentiation in the target market resulting in premium prices or increased volume. Core management seeks to dramatically outperform all competitors within the domain of core. (Note this use of the term is unrelated to either core competence, which describes differentiated capability, or core business, which describes categories accounting for a high percentage of overall revenues.). Cores ets you apart. Emphasis resources put on core. Your core will be the innovation zone and vector you choose, the way you separate yourself from the herd.  Everything else is context.

How to choose? Ask:

1) What paths of innovation is the market valuing right now?
2) What paths of innovation are our competitors on and how do we stay clear of those
3) Which paths of innovations fit our brand and heritage?

Answers to these questions will help with forming a great innovation strategy. IT can enable and amplify the core chosen, can also help extract resources from context and put into core (via six levers model).

Context
Any activity which does not differentiate the company from the customers’ viewpoint in the target market. Context management seeks to meet (but not exceed) appropriate accepted standards in as productive a manner as possible. Your competitors also do it.

Core/context analysis
A resource prioritization framework that discriminated differentiating processes from all other work. Core/context management advocates funding differentiating initiatives in growth markets by extracting resources (carefully) from mission-critical context initiatives in mature markets.

Strategy is about investing in the next generation of innovation. This is core. Everything else is context. Core will differentiate you and be a driver of your business into the future. Market and investors place value on core. Core becomes context over time. Everything else is, market doesn’t reward. The end of context is commoditization.

In order to stay competitive and protect profit, companies must continually innovate and do so strategically. Strategic innovation means identifying what differentiates a company from its competitors (”Core”) and focus company efforts and resources accordingly. Too often, however, companies focus too heavily on the basic points of competition (”Context”), committing resources to activities that are expected and necessary but have a low ROI. Continued focus on Context at the expense of Core leads to commoditization of services and the erosion of profit.

In a start up, a lot is in the core. More mature businesses -  a lot of stuff in context. Can look at core/context for: geographic focus, customer segment focus, product category focus.

Companies can fund innovation by extracting resources out of “context” to re-purpose for “core”. This funding strategy has the added benefit of reducing inertia, which builds up in context activities.

Companies should focus resource management around balancing the disciplines of invention, deployment, and optimization. Most people think established enterprises lack invention capability, but in actual fact they invent plentifully but have trouble deploying their inventions. The reason why is that their deployment resources are stuck trying to grind out the next quarter’s numbers from an increasingly aging prior set of innovations. If these companies could better optimize their resource utilization in established markets, they could free up the necessary resources to build the market for their next set of inventions.

Resource recycling
A human capital management strategy which recycles a work force to optimize an individual’s contributions in one of three zones: invention, deployment, or optimization. A work management strategy that deconstructs inertia-bearing legacy in order to fuel and accelerate the adoption of next-generation innovations.

Invention zone
The left two quadrants in the core/context analysis model which share the attribute of being core, the zone most scrutinized by industry analysts and venture investors. The natural zone in which to recycle inventors.

Inventors
People who excel at developing core, inventors are key to ensuring a continuous supply of innovations that create sustainable competitive advantage.

Deployers
People who excel at managing mission-critical programs on time, on spec, and on budget, deployers are key to ramping business processes to scale.

Deployment zone
The upper two quadrants in the core/context analysis model which share the attribute of being mission-critical, the zone most scrutinized by securities analysts and growth investors. The natural zone in which to recycle deployers.

Optimizers
People who excel at extracting resources from mission-critical context to repurpose for core, optimizers are key to funding the next wave of innovation and deconstructing the organizations that would create inertial resistance to it.

Optimization zone
The right two quadrants in the core/context analysis model which share the attribute of being context, the zone most scrutinized by productivity analysts and value investors. The natural zone in which to recycle optimizers.

Need to move people around so they are doing what they are good at.

Context consumes a lot of resources and you don’t want to fail, a lot of resource goes in here. How do you extract resources? Use the Six levers model, to repurpose resources from context processes in order to spend them on core.

Centralize and Standardise
Simplify workload and make it less expensive to maintain. E.g industry standard packaged applications.

Modularise and Optimize
Reengineer business processes to eliminate waste. Need an adaptive infrastructure, allow process to evolve.

Outsource
Take the workload outside the corporation, but must instrument it to maintain control first.

The whole aim of this is to free up time, talent and management attention as they are needed to deploy next generation innovations.