Will Marlow

My hero Geoffrey Moore often pushes businesspeople to think about their business in terms of core and context. 

The core activity is everything you do that makes you strategically different (that is, better) than your competitors.  Core is where you create value. Everything else that you do (activities that don't make you better) is context.  You want to put as many dollars as possible into core processes, because you expect to make those dollars back in spades.  

And you want to get as much of the context as possible for free.  For example, if you sell a database system to universities, you're willing to pay web developers a lot of your money to make your database even better than it already is.  But you won't pay those same web devopers to build you a proprietary internal email system if you can avoid it, because that would cost you money without differentiating you in any positive way from your competitors.  

It sounds easy to push your resources into core activities.  The challenge is what Geoffrey Moore refers to as "mission critical context."  This is the stuff that doesn't give you value, but if it fails, the failure could be catastrophic.  Middle managers like to tie up a lot of resources in this area under the label "mission critical."  The only way I know to fight this problem is to (1) be aware of the tendency of organizations to lose their competitive advantages by slowly adding resources to (non) mission-critical context activities, and (2) evaluate all context thoroughly before committing resources to them.  If something is truly mission-critical, by all means, you have a responsibility to protect that area.  But if you are spending money on an activity that creates zero value and there is no good reason for doing so, stop doing it.

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For the last 42 days, there has been a YouTube video of an awesome presentation about trends in high tech by my hero Geoffrey Moore (below). Over the last 42 days this video has been viewed a grand total of 617 times, according to the YouTube statistics.  Anyone who wants to gain a better understanding of cloud-computing, and how consumer software is entering the enterprise world, would be interested in watching this. 

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Sometimes it’s a good idea to put all your eggs in one basket.  This is one of the key lessons of the startup bible, Crossing the Chasm, which I’m re-reading right now.

The Chasm is the place where many high-tech startups die.  It’s the gap between the early market of innovators (people who are enthusiastic about buying a groundbreaking product that is only 80 percent complete) and the pragmatists (the people who look at a product that is 80 percent complete and say, Where’s the other 20 percent?). 

In order to leap across the Chasm, you need to commit to building the “whole product” for at least one target customer.  Rather than making the common mistake of building a product that’s got something for all your potential target customers, you need to give just one target customer everything.  If you do that, you’ll get your first round of pragmatist customers, who will be your reference base as you seek to get more pragmatist customers.  (Don’t forget: there are a lot more pragmatists than there are innovators, so you’ll want your reference base to be full of pragmatists so they can tell their friends.)

I regularly recommend Geoffrey Moore’s book Crossing the Chasm to other people who work at startups.  For now, this book, along with the sequel, Inside the Tornado and Guy Kawasaki’s Art of the Start, stands alone as required reading for entrepreneurs, in my opinion.  If anyone has suggestions for books that they would recommend to entrepreneurs, please let me know at will@alumnifidelity.com, or @willmarlow, or in comments below, or let me know when you run into me on the street :)

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