“What if there is some hidden force that is working against your best efforts? What if this force is operating inside your own company, with the full support of your executive team, your board of directors, your investors, and indeed yourself? What if this force is able to mysteriously redirect resource allocation so that it never quite gets deployed against new agendas? That force, I submit, is the pull of the past, most concretely embodied in your prior year’s operating plan.”
The scientific term, Escape Velocity explains the speed it requires for an object to escape the gravitational pull. In his book, Escape Velocity (2011), Geoffrey Moore offers executives and innovation leaders a pragmatic plan to engage one of the most critical challenges that established enterprises face nowadays: how to move beyond past success and drive next-generation growth from new lines of business (effectively, escape the gravitational pull of business as usual) . Achieving that goal by creating so much momentum by executing within the hierarchy of powers that your company can overcome its own inertia and break free from its past.
Dr. Geoffrey Moore is an organizational theorist, a management consultant, and author. He worked as a college professor and corporate trainer before opening his own consultancy firm, Geoffrey Moore Consulting and is a venture partner with Mohr Davidow Ventures and Wildcat Venture Partners.
When the author worked with senior management teams, he repeatedly found that executives were trapped by short-term, performance-based compensation schemes. The result was that critical decision-makers were placing too much importance on their legacy commitments, which led to low success rates in new product launches, and widespread failure in sustaining next-generation business at scale.
Escape Velocity provides executives and their teams a practical way to take advantage of the opportunities of an increasingly digitized industry, disruptive economy and globalization. It discusses how to analyze which markets will create your best returns and how to realign your management and resources to capitalize on them; who will design your next generation of offers, and for whom they will be designed; who are becoming your new competitors, and how you stack up against the norms they are setting; and on what basis you will be able to differentiate yourself from these competitors sustainably.
The book addresses a “power deficit” (different categories of power are detailed later in this article) in established enterprises that holds them captive to their legacy core business and renders them unable to capitalize on next-generation opportunities. Moore traces this deficit to a performance-oriented management culture that drives accountability for financial results without establishing equivalent responsibility for replenishing competitive advantage. In this context, enterprises continually draw down their power reserves to fuel the current quarter’s results while failing to stake out future positions of power to drive next-generation growth. Moore’s analysis shows this behavior as deeply embedded in the established norms and practices of global businesses and that a new set of frameworks and disciplines are required to correct for it. The book is centered right at the intersection of strategy and execution, the crucible in which next-generation successes and failures are formed.
The author presents a cogent strategy for generating future growth within an established enterprise. He organizes this material around a framework called the “Hierarchy of Powers”. This includes five sources of competitive power, all of which must be aligned in order to help companies recognize their strengths and weaknesses, to develop a plan and achieve overall success. They are:
- Category power: achieved through proactively entering and exiting categories to participate meaningfully in the best growth opportunities. Ask yourself: are you in hot high-growth categories or do you have category envy?
- Company power: achieved through highly asymmetrical allocations of resources to create “unmatchable” core capabilities. Ask yourself: do customers and competitors see you as the one to beat, or is that someone else?
- Market power: achieved through targeting the most strategic customer segments and skewing offers and programs to ensure winning dominant shares in each market. Ask yourself: are you winning the key “primaries” definitively, and are you winning them fast enough?
- Offer power: achieved through disentangling three distinct forms of innovation one from another and managing each separately to achieve differentiation, competitive neutralization, and internal productivity respectively. Ask yourself: do your flagship offers to set the bar for others, or are you playing mostly catch-up, and slowly at that?
- Execution power: achieved with a focus on transformational initiatives that realign the company around the next-generation capabilities required to execute its strategy.
The author suggests to:
- Focus on power first, then on performance. For example, you can do this by allocating resources to innovation programs rather than performance budgeting and focusing on go-to-market resources more than on R&D.
- Drive accountability for power into the operational plan: by adding power metrics to performance metrics and modifying compensation plans so that power objectives matter to all.
- Use the Hierarchy of Power to frame the effort: it provides a common vocabulary to get everyone on the same page and structures power issues in ways that are directly addressable.