Free your Company's Future from the Pull of the Past

Escape Velocity is a book about freeing your company’s future from the pull of the past, but we should ask ourselves right from the start, why should one believe it is in need of liberation? What’s the matter with the status quo? Why isn’t Steady as she goes the mantra of choice, or perhaps Stay the course? What change is so dramatic that it calls into question the working assumptions that have sustained successful business performance for past half century? In a word: globalization.

For all my life enterprises hosted in the U.S., Western Europe, and Japan have had “home field advantage” in the great growth markets of the 20th century, with privileged access in particular to the American consumer economy. This is our proud past, and its pull is palpable. In the 21st century, however, we can already see that these advantages no longer obtain. The American consumer is as readily accessed from Singapore as Seattle, and the great growth market opportunities will come from the developing, not the developed, economies. Of the next 1.3 billion people to be added to the world population, only 90 million are expected to come from developed economy countries. This means the current set of global enterprise leaders will have to develop new skills for playing “away games” or see their power marginalized.

At the same time, the first generation of successful enterprises coming out of the developing world also need to reorient themselves to their future, leaving behind a past, in which their growth came primarily from penetrating mature markets with lower cost offers. As their standards of living rise, their cost advantages decline, and playing a game where partners and customers lead and they follow will no longer serve. They themselves must take the lead or again be content to see their power marginalized. One way or another, for everyone involved, globalization means a whole new ball game.

And that means back to the drawing board for vision, strategy, and execution. What, to begin with, do we think this new world will actually want from developed economy companies? What will it want from IBM? Apple? Google? Microsoft? HP? Dell? More of the same? Well, yes, to some extent—but what else? And what else will it want from your company?

Posing that question unlocks a whole storehouse of questions to follow. Which markets will create your best returns, and how will you realign your management and resources to capitalize on them? Who will design your next generation of offers, and for whom will they be designed? Who are becoming your new reference competitors, and how do you stack up against the norms they are setting? On what basis will you be able to differentiate against these competitors sustainably? And how will your legacy business models stand up in an increasingly digitized, globalized, and virtualized economy? These are vexing questions indeed.

Now, to be sure, the forces we are invoking will take time to unfold. The sky is not falling—yet. There is still plenty of opportunity to read and react, to listen and evolve. If you can make reasonable and steady progress toward staking out positions in next generation markets, while at the same time leveraging your current positions in current markets, you can be optimistic about your chances. Or can you?

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 the new agendas?

That force, I submit, is the pull of the past, most concretely embodied in your prior year’s operating plan. That plan exerts a gravitational force that pulls inexorably at any investments that seek to depart from its inertial path. The larger and more successful the enterprise, the greater the inertial mass, the harder it is to alter course and speed.

Escape Velocity addresses a “power deficit” in established enterprises that holds them captive to their legacy franchises 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 reserves of power 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 is 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.

Escape Velocity organizes this material around a “framework of frameworks” Moore calls the Hierarchy of Powers. This is comprised of five types of power, all of which must be aligned to achieve escape velocity. They are:

• Category Power, achieved through proactively entering and exiting categories to participate meaningfully in the highest growth opportunities;
• Company Power, achieved through highly asymmetrical allocations of resources to create “unmatchable” core capabilities;
• Market Power, achieved through targeting the most strategic customer segments and skewing offers and programs to ensure winning dominant shares in each;
• Offer Power, achieved through disentangling three distinct forms of innovation one from another, managing each separately, to achieve differentiation, competitive neutralization, and internal productivity respectively; and
• Execution Power, with specific attention on transformational initiatives that realign the company around the next-generation capabilities required to execute its strategy.

Escape Velocity devotes chapters to each of these five types of power, presenting models and frameworks to help management teams perceive and address the issues at hand, complemented with in-depth case examples that illustrate successful applications of these methods. All this material, in turn, is encapsulated in a strategic planning framework that grafts it onto the corporate planning calendar as a front end to the annual budget and operating plan process.

Moore pulls no punches as he draws on his twenty years of experience advising high-tech management teams to call out the misconceptions and behaviors that trap enterprises into decaying franchises, and he is adamant about the responsibility of executive management to reverse such trends. At the same time, he is empathetic about the challenges involved and highly pragmatic about how best to meet them. The result is a book centered right at the intersection of strategy and execution, the crucible in which next-generation successes and failures are formed.