Geoffrey Moore: Why Middle Managers Are the New Kings, Stiff-arming Shortsightedness, & the Money “Chasm” in the Mobile-Social Sphere

3/16/11Follow @curtwoodward

Author, consultant, and venture capitalist Geoffrey Moore has written a half-dozen books—his latest comes out later this year—including the classic “Crossing the Chasm,” an analysis of how businesses can push through the deadly barriers to broad adoption.

This Friday, he’ll be a keynote speaker at the Washington Innovation Summit sponsored by the Technology Alliance. Booking him may not have been as difficult as you might expect, since Technology Alliance director Susannah Malarkey is actually a cousin of Moore’s.

We checked in with Moore ahead of the event to get a preview of his speech, the lowdown on his new book “Escape Velocity,” and some thoughts on how his chasm metaphor applies to today’s rapidly expanding tech world.

Moore says his speech for the summit focuses on the need to spread social network-type technologies into the middle management layer of business. He argues that business has relied for too long on the baseline computing power that undergirds modern commerce, without building up new systems that mirror those available to regular consumers.

Think of it this way: Jane the middle manager spends her weekend buying gifts on Amazon.com, reviewing restaurants on Yelp, getting a hotel deal on Priceline, drumming up better customer service through Twitter, and checking in with her high school friends via Facebook.

Then she gets back to work, and she’s armed mostly with some basic computers, e-mail, and some instant messaging or project-management software. There might even be a conference call or two.

“So the question at some point in the venture community was, ‘Well, are we just going to invest in cleantech and biotech, or is there another wave here for IT?’” Moore asks. “The next big wave of investment in enterprise IT will be around this consumerization of enterprise IT. And it’ll be around, in particular, helping companies communicate, coordinate, and collaborate across company boundaries.”

Why are the folks in the middle so important? Moore says it’s because the organizational model of business has been flipped on its side. Instead of operating as a cog in a vertical monolith, middle managers are now straddling huge, globally scattered processes and need information tools and connections to make things happen with their peers elsewhere. Some big companies and startups have begun to develop better stuff for people at this level, Moore says, but it’s still not getting the investment it deserves.

“We have not invested in technology for middle managers, really ever. A BlackBerry and a laptop have been the two biggest things we’ve ever done for middle managers,” he says. “In this new world, middle managers are the cartilage. They’re the ones who hold this whole thing together. The guys in the big office don’t do it, and the guys who are doing transaction processing don’t do it.”

In his new book, Moore tackles a bigger topic: How established companies can get new businesses to market without losing them in the mire of besting last year’s or last quarter’s results. Keeping companies innovative is a topic that has gained plenty of attention in the business world, but Moore says his latest book is focused on practical ways to reinvent and rethink the inertia that can stop “adolescent” businesses from making it out of the nest.

“For a long time we thought, ‘Well, if our R&D were just better, if we were more innovative.’ And it turns out we’re plenty innovative and we’ve got lots of R&D,” Moore says. The answer, instead, lies with changes like rebuilding the compensation and planning systems to make sure companies are keeping their eyes on their future businesses rather than just dividing up next year’s budget between the current heavyweights.

In the Seattle area, Moore says there are two apt examples in Amazon and Microsoft. Amazon has done extraordinarily well, Moore says, at stiff-arming Wall Street when necessary to ensure that cloud computing, e-readers and other future businesses were delivered well.

“I would say that Amazon might be one of the best companies in the world at that. [Founder Jeff] Bezos—for years he fought off the Street when the Street said ‘You’ve got to convert to performance. This whole thing around the cloud, Jeff, what are you doing?’”

But that’s an exception. Like most big businesses, Moore argues, Microsoft has had a harder time making good on all the smarts at its disposal for executing new products.

“If you look at the problem statement you’d say, gosh, Microsoft has these two mega, mega, mega-franchises. It’s very hard for anything else to get airtime there. And so, what are you doing with your R&D money? Because if you can’t get the next business out, why are you trying to build it? Maybe you should just buy it.

“So organic innovation at Microsoft is a real challenge right now—not because you can’t get the R&D budget. You can’t get the go-to-market footprint that would matter.”

As we wind down the buzz from South by Southwest Interactive, it was also interesting to ask Moore how his classic “chasm” analysis compares to the current period, where products and services have the ability to get a huge number of users in a relatively short amount of time. Moore says the original chasm-crossing metaphor has held up very well on the business-to-business side of things. But on the consumer side, he jokes, “Facebook is going to a billion users—where was the chasm, dude?”

Moore says the answer there is in monetization, which echoes something that fellow business thinker Steve Blank touched on at SXSW in his presentation “New Rules for a New Bubble.”

“What happened with the Web is we separated adoption from monetization. That’s why adoption could essentially be friction-free, if it were viral,” Moore says. “It has been a monetization chasm. There was a period where it was not clear how Google was going to monetize. There was a period where it was not clear how Facebook was going to monetize.”

Those are the successful ones. But they can be easily countered with YouTube or MySpace or a number of even less notable money pits.

There’s plenty more where that came from—I haven’t even gotten into Moore’s thoughts on the new social, mobile and cloud infrastructure that today’s growth is going to give us on the other side of any bubble-burst. Safe to say the guy has plenty of ideas and can talk about them for quite some time.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • http://www.geoffreyamoore.com Rich S

    Great article, we need more pioneers like Geoffrey Moore making sense of the fast twists and turns that technology and business are taking these days. Looking forward to reading Escape Velocity!