Living on the Fault Line: Managing for Shareholder Value in the Age of the Internet [Hardcover]

Geoffrey Moore's first two books, Crossing the Chasm and Inside the Tornado, were gospel to a generation of high-tech managers. The challenge those books addressed was how to market and sell according to what he called the "Technology Adoption Life Cycle". In Living on the Fault Line, Moore takes his message to a very different group of execs, those who have never had to worry about marketing technology, but who now face the biggest and most disruptive technology life cycle of all--the Internet.

Moore contends that the Internet has changed everything--and he means it. As many companies are now discovering, market share is worth more than earnings; virtual integration trumps vertical integration; and the IT department, once relegated to a stuffy back office, is no longer "about the business--it is the business". The best proxy of a company's success? Try its stock price. Moore writes, "Stock price is in effect an information system about competitive advantage, it can help you sort through which markets to attack, which strategies to pursue, which partners to endorse and which tactics to execute. Capital, in other words, flows to competitive advantage and abandons competitive disadvantage."

For some, Moore's prescriptions may seem over the top. But those grappling for a handhold on the Internet economy will find much to ponder here. For example, managers faced with a scarcity of time and resources will find his analysis of core and context a powerful prism to manage by. He defines "core" as activities that differentiate a company in the marketplace and thereby drive its stock price. "Context" is simply everything else the company already does. His suggestion--assign your best people to the core and outsource as much of the context as possible.

If you've enjoyed Moore's previous work, you'll find Living on the Fault Line a must. If you've never read Moore before, get this on your bookshelf before your competition does. Engaging and highly readable, this one's a keeper. --Harry C Edwards, Amazon.com --This text refers to the Paperback edition.

"A readable book about an important subject." (Ambassador, December 2000)

"a step–by–step approach" (Gulf Business, December 2001)

"A readable book about an important subject."
(Ambassador, December 2000)

"a step–by–step approach"
(Gulf Business, December 2001) --This text refers to the Paperback edition.

"...a step-by-step appraoch" --This text refers to the Paperback edition.

Living on the Fault Line is the long awaited new book from Geoffrey Moore, author of Crossing the Chasm and Inside the Tornado, two bestselling works that have helped guide the high–tech revolution.
Moore focuses on the most important business question for the early twenty–first century: the age of the Internet. How can companies living on the fault line of rapid, disruptive, technological change be managed successfully?
–Old management truths are dead
– Twentieth century business models must be replaced
– The dot.com revolution is changing every aspect of business
– Blue chip companies are under direct assault from new companies that nobody had even heard of last year
Living on the Fault Line will reset the management agenda in the age of the Internet and is essential reading for all companies both old and new.
∗ Simultaneous publication with HarperCollins US release
∗ Guaranteed Business Book of the Month slots with key retailers
∗ Major PR coverage across the media including FT, The Times, Telegraph, Guardian, Observer
∗ Massive direct mail promotion to leading FT 500 multinationals
∗ Crossing the Chasm has sold over 50,000 copies worldwide
∗ Huge internet marketing campaign --This text refers to the Paperback edition.

Moore′s first two books, Crossing the Chasm and Inside the Tornado, focused on the marketing challenges posed by high–tech products and services and the technology adoption life cycle. This time Moore focuses on the management challenges.
Moore frames the new discussion around a single theme: how should a public company that rose to prominence prior to the age f the Internet manage for shareholder value now? He guides executives and managers who are coping with the disruptive technology that is destabilizing their core market positions, providing them with new models, metrics, and organizational practices to meet the challenges of the new economy. --This text refers to the Paperback edition.

Here at last is the long–awaited new book from Geoffrey A. Moore, author of Crossing the Chasm and Inside the Tornado, two bestselling works that have helped guide the high–tech revolution.
Now, Moore turns his attention to the most important business question for the early twenty–first century, the age of the Internet. How can companies living on the fault line of rapid discontinuous, disruptive technological change be managed successfully?
Moore shows us that the old management truths are dead. Business models that worked admirably until the last decade of the twentieth century must be replaced. E–business is invading every sector of commerce, overturning established relationships and re–engineering markets. How should management respond? How can older, more established companies successfully compete?
Living on the Fault resets the management agenda in the age of the Internet. Moore shows why sensitivity to stock price is the single most important lever for managing in the future, and ofr making necessary changes in organizations that have traditionally been impervious to change. Living on the Fault Line is a highly prescriptive guide to managing the disruptive forces of the new economy.
"We have been incorporating ideas from this book into our executive development program, and the feedback has been tremendous" – BOB HERBOLD, Executive Vice President and COO, Microsoft
"Living on the Fault Line reveals Geoffrey Moore′s understanding of fast growth industries and offers insight to help us manage shareholder value in today′s Internet economy." – JOHN CHAMBERS, CEO, Cisco Systems
"Living on the Fault Line cuts through the hype of the Internet econmy. It gets at where real benefits lie." – ERIK FYRWALD, Vice President e–commerce, Dupont Corporation --This text refers to the Paperback edition.

Geoffrey A. Moore is chairman and founder of the Chasm Group, where he still actively consults. He serves as a venture partner at Mohr Davidow Ventures and is the author of several bestselling books on high–tech markets: Crossing the Chasm, Inside the Tornado and The Gorilla Game. Moore was recently named by Upside magazine as one of the Elite 100 leading the digital revolution. --This text refers to the Paperback edition.

The Age of the Internet

Living on a fault line causes one to take an interest in what geologists call plate tectonics. These are the forces under the earth that create the conditions for recurrent and severe earthquakes. In the case of the new information economy, the emergence of the Internet is demonstrating itself to be just such a force.

In this chapter, we are going to examine how what used to be bedrock economy, the foundation upon which most established companies "built to last," is now in fact shifting beneath our feet. This in turn will call us to put a new focus on information technology, require us to manage a new level of commitment to focus our resources increasingly on core processes only.

By the end of this chapter, we will see that in the new economy strategies that heavily leverage outsourcing have a distinct competitive advantage. At the same time, we will acknowledge that the inertia within established organizations resists moving to such strategies. In the search for a lever to move our companies forward, we will hit upon shareholder value and stock price, which will transition us smoothly into the next chapter.

It is a known disease of writers and editors to declare the era they live in "the age of..." something, and for the present "the age of the Internet" seems reasonable enough. But why should any self-respecting manager or executive fall prey to this vice? The answer is, only if it will help you to manage for shareholder value better. In this case I think it will.

The claim that we are entering a new age is based on the notion that over the past decade a series of subtle but profound changes in the nature and structure of business have fundamentally changed the game we are playing. At one level, we see the impact of these changes in the unprecedented behaviour of our stock market: It appears to overvalue the new and speculative and undervalue the proven ways - dramatically. At another level, we see line functions that used to be the heart of our businesses - like manufacturing - now being outsourced while other disciplines that used to be staff functions like computer systems - have come to the fore. Looking elsewhere, we see the graduates of our finest business schools uniformly agreeing that a Fortune 500 corporation is the last place they would want to work - even when that corporation is footing the bill for their schooling! What makes this last observation even more chilling is that it is not based on the corporation being boring, slow-moving, or lacking in advancement opportunities. No, the big beef the new crop of graduates has with the Fortune 500 is that they think going forward, these companies are going to be losers! (Heaven only knows what they think is in store for all the corporations out there.) So in the words of Buffalo Springfield, "Something's happening here, though what it is ain't clear." The job of this chapter is bring that something to light and to assess what it means for the management agenda.

Backfield in Motion

The forces that are reshaping business are for the most part happening in the background and not manifesting themselves directly in events happening in the foreground. As a result, they don't get reported in the Wall Street Journal, do not come up on quarterly conference calls with investment analysts, and are not raised by customers in advisory board sessions. Thus, not surprisingly, they do not tend to register on the executive team's radar screen.

These forces are best understood in terms of a series of remarkable transitions, of which we will look at six. In each case, note that power is shifting away from something that has long been a trusted source of value creation and toward something that heretofore was considered secondary, derivative, or tangential.

From Assets To Information

In Being Digital, Nick Negroponte describes how value in the age of the Internet has migrated from atoms to bits. The implication for the new management agenda is that information about an asset has become more valuable than the asset itself. It is now more profitable, in other words, to own information about oil than to own oil, information about airline flights than to own an airline, information about a nation's currency than to own the currency itself.

This is bizarre, so let's take a moment to see why it is true. Suppose you own 100 barrels of oil worth $10 each. In other words, you have $1,000 invested in oil. Suppose the price of oil goes up $5 per barrel. You make $500. But suppose for $1 per barrel you could buy the option to buy oil at $10 a barrel at some future date. You wouldn't own any oil; you would just own "a position' in oil. Now you could take your $1,000 and instead of buying 100 barrels of oil you could buy the option to purchase 1,000 barrels. Once again, the price of oil goes up $5. Now you can call in your option, buy (virtually) 1,000 barrels of oil at $10 and sell them (again, virtually) at $15. Instead of $500 you make $5,000 minus the $1,000 you paid for the options, or $4,000. --This text refers to the Paperback edition.