by Elizabeth Ferrarini

Geoffrey Moore, a managing partner at TCG Advisors, has made the understanding and effective exploitation of disruptive technologies the core of his life's work. He divides his time between consulting on strategy and transformation for tech companies such as Cisco Systems, and developing mental models to support this practice. His best-selling books, Crossing the Chasm,  Inside the Tornado, The Gorilla Game, and Living on the Fault  Line, have become required reading at leading business schools. Moore's  most ambitious work to date, Dealing With Darwin -- How Great Companies  Innovate at Every Phase of Their Evolution -- offers the bold theory that innovation takes many forms, not just disruptive, and these forms change radically during a company's or product's lifecycle.

Geoffrey Moore recently provided Enterpriseleadership.org with some insight  into his new book, Dealing with Darwin, as well as thoughts on outsourcing IT, putting IT into a shared service, and defining the core versus context role of the CIO. Here's what he had to say:

EL: In Dealing with Darwin, you use a series of metaphors to define categories in the lifecycle of a company and/or a product. Can you elaborate on what causes people to get swept into the tornado cycle and how well new technologies will fit into this category?

GM: As a technology or product begin to take off, they start to sustain and then fade, depending on where it is in its lifecycle. The very new stuff starts off the technology adoption lifecycle, called "early market." People who want to try to stay ahead of the herd usually comprise this early market. The tornado emerges immediately once everyone decides they need the product or technology. This has an explosive amount of growth and just sucks every one in its vortex. If you were a vendor in the 1980s and 1990s, you always looked for the next tornado. Things advanced so fast that IT departments wiped out the prior generation of systems and started over.

The new millennium signaled the maturity of technology as if it were a standard industrial sector. New technologies and new ways of adoption still abound, but they now emerge on a beach that has been hit by many waves. The notion that you would swap out a lot of infrastructure and start over is no longer even considered. The real question now is this: How do you evolve your systems rather than revolutionize them?

EL: Still referencing your book's categories, what tech sectors are  in the "bowling alley" right now, or the tornado?

GM: The bowling alley is where technology is gaining acceptance in one or more markets. RFID is still crossing the chasm between general acceptance or not; in other words, it's between and betwixt. Digital photography and WiFi are in the tornado. Electronic books never crossed the chasm. WiMax hasn't crossed the chasm yet. The bowling alley is a transitional phase. Linux is still in the bowling area. Linux has established itself in either scientific clusters or in embedded computing. Linux could be in the bowling alley forever.

EL: Your article in the Harvard Business Review (July-August 2004) says that a lot of companies make the assumption that the success of the new systems will draw resources away from the legacy systems. Thus, companies leave the legacy systems unchanged. Is this a common mistake IT makes?

GM: It isn't always a mistake. IT needs to freeze the legacy systems, and then make them a module in a larger architecture. No further changes should be made inside of them. The goal of the new architecture is to turn them into a services-oriented module. To this end, you can ask the systems to do what they have always done, but don't ask them to do anything new. Trying to change a legacy system can cause more damage then good.

EL: I've read that you're a big proponent of outsourcing. Should IT be outsourced to an EDS or put into a shared services model, which has kind of slowed down a bit?

GM: The shared services model and the outsourcing model are part of the same march. You're a little way down the path with the shared service and at the end of the path with outsourcing. We came to this conclusion based on going through three pairs of levers. The first pair says to "centralize and to standardize," which is the shared services model. The second pair says to "modularize and to optimize," both of which provide a transition to outsourcing. Here you deconstruct your systems into smaller ones so you determine which ones to eliminate, which ones to keep unchanged, and which ones to consolidate. The third pair includes "instrument and outsource." If you had outsourced without going with the second pairs of levers, you would waste a lot of money. To "instrument" means to put service levels in place before outsourcing.

EL: Can you run a shared service as a third-party  business?

GM: Some companies have tried it and failed. It's usually a bad idea. Keep in mind, the parent of the shared services usually isn't in the IT business, and probably won't be willing to invest in an IT service business. So, as an independent company, the shared services needs to transform itself into a commercial entity with a sales and marketing force.

EL: You are well aware of GM's major effort to establish common processes for its $15 billion IT outsourcing initiatives. What went wrong?

GM: GM made a horrible mistake the first time with EDS. Why? GM didn't use the three pairs of levels before it decided to outsource. Instead, GM through IT over the transom and prayed for the best.

Now let me tell you about the time GM did a brilliant job of outsourcing. In the 1990s, GM used the three pairs of levers to move the supply chain to tier-one and tier-two vendors.

EL: What is core and what is context for a CIO?

GM: Each company has a unique core. To this end, the company defines what is core for the CIO. The CIO has to first interact enough with the executive team to understand the company's claim to fame in its market space. Is it to be the most cost efficient or to provide the best customer experience? Any IT system that can help differentiate the company's performance in that area is core; any other system is context. The CIO's number one task is to figure out what is core for the business, and then figure out what it means for IT. The CIO's colleagues can provide some of the answers, which will be different for every business. So, the CIO needs to excel as a thoughtful leader. The CIO also needs to develop different strategies for dealing with technology as it moves through its lifecycle.

EL: An IT department came up with the idea of rollover minutes. In  his book, Does IT Matter, Nicholas Carr asks the reader to consider whether or not IT can help a company innovate. What's your feeling about this argument?

GM: Carr assumes that IT serves no core, but simply all context. That's not true. He says this to be deliberately provocative. For years, too many IT professionals have pretended they were core to the business. Most companies have the same IT resources as their competitors. If you use these same systems in the same way, then IT isn't core. On the other hand, if you build your systems in-house, then you have something different from your competitors. That uniqueness becomes core.

EL: Oracle, which is more than 25 year old, bought a slew of startups and now is buying its competitors. Is this a feasible strategy for Oracle?

GM: The relational database rests at the heart of client-server computing, which has been around since the 1980s We nearing the end of the client-server lifecycle, but Larry Ellison has no intention of leaving and moving on to services-oriented architectures or Web servers. The network, not the relational database, forms the foundation of this new architecture.

To this end, Ellison is buying all of the old client-server properties the same way Computer Associates bought all of the mainframe properties. He's not innovating, but consolidating to create a legacy installed base to milk.

EL: Do you think it was a good idea for Sun to acquired  StorageTek?

GM: Sun has some similar issues as Oracle, but Sun also has some very visionary ideas, but is caught in a tough place. Sun's idea of computing by the drain doesn't lend itself to an expensive research and development model, which Sun has.

By purchasing StorageTek, Sun gained a source of revenue during its transition. Sun views storage has tactical, but strategic. It will be interesting to see where Sun ends up.

EL: How do your views differ or compare from those of Harvard  Business School's Professor Clayton Christensen?

GM: I love his book, but both of us have spent too much dealing with the disruptive nature of innovation in the 1990s. The title of my new book, Dealing with Darwin -- How Great Companies Innovate in Every Phase  of Their Evolution, sums up where innovation is today. Christensen, on the  other hand, still associates innovation with disruption.

My book says that innovation is whatever it takes to create competitive advantage. The book defines 15 different types of innovation -- only one is disruptive. The innovation types include application, product, process, and marketing.

Today, the big tech gorillas, such as Cisco and Microsoft, are creating enormous wealth. They're doing incrementally valuable things, such as unique integration methods, which help to differentiate them from their competitors. Their competitors have to try to match these gorillas on a point-to-point product basis.

EL: Should IT professionals or even marketing professionals be  concerned about offshoring?

GM: At one time, IT professionals presumed they were insulated from offshore challenges. This is no longer true. Today, no one can tell, nor do they care, where bits come from across the Internet. Unless you're doing something unique in IT in a geographic area, such as San Francisco, you face the challenge of offshoring.

If you're a global corporation, you need to engage in offshoring or else give your competitors a price advantage. This is why I called my book, Dealing  with Darwin. To survive in the tech ecosystem, you need to raise the bar on what competitive success requires through every cycle. Clinging to entitlement puts you at risk. Look at General Motors.

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Elizabeth Ferrarini is a free-writer technology from Boston,  Massachusetts. Reach her at elizabethferrarini@yahoo.com.