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Venture Spotlight: Geoff Moore, Mohr-Davidow Ventures
By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search
Angel Mehta: As I understand it, you were once a Professor of English…Now, as far I can tell, English teachers and high tech strategists are ordinarily on opposite ends of the spectrum…some of my friends are English teachers…and nothing I do makes any sense to them at all. So...I was wondering how an English teacher became a technology strategist?
Geoff Moore: I have a doctorate in Medieval English Literature and went off into the world afterwards to teach for four years at a liberal arts college in rural Michigan. It just wasn’t a very good fit for our family...Marie is from Palo Alto, and I’m from Portland, Oregon – so we’re kind of a west coast family. So we relocated to California but there was no way to stay in the teaching profession so I ended up getting a job in a software company as a training director and kind of migrated from there into marketing and sales. I joined Regis McKenna in 1986, which was, at the time, probably the leading PR firm in technology.
I was there for five years and it was there that I wrote, “Crossing the Chasm” which allowed me to start my own firm.
Angel Mehta: How did the other books come about?
Geoff Moore: What would happen is that with each book I put out, people would get interested in the ideas….create engagements for us, which would then prove that the book was not as good as we thought, which forced us to improve and develop our models to better deal with the real world – so we’d end up creating a whole bunch of new slides and then eventually you think…
Angel Mehta: Time to write another book?
Geoff Moore: Right. We’ve been through four books - the Chasm Group in the 90’s had quite a ride. Then with the downturn. we realized that to compete in this decade we were going to have to be more focused…but the different Chasm Group partners had different ideas about where they wanted to focus - so we ended up spawning three stems, if you will, off of the trunk of the Chasm Group.
Angel Mehta: What are the different businesses that have spun off?
Geoff Moore: One, is the Chasm Group’s traditional business which is focused on strategy and development in the tech sector. A second is a training company. We also always thought that we ought to have a teaching division, but it wasn’t anything we ever put enough traction behind. So that’s how the Chasm Institute was created. And then finally, several of us were interested in building a practice around this last book, “Living on the Fault Line”- addressing the issues large enterprises face trying to extract resources from low value-adding processes to re-invest them into the next generation of new competitive advantage capability. The need to do this is very easy for a consultant to point out but very hard for a company to do. That practice became ‘TCG Advisors’ - so we now have three practices. And because we are all focused on the practice we are most passionate about, I think this year we’re probably going to double the revenue of the group as a whole.
Angel Mehta: I remember sitting around and brainstorming with Mike Tanner back before all this happened, I suppose, and we were talking about how hard it is to scale a consulting firm….Do you think it was primarily a function of varying personalities or different competencies?
Geoff Moore: I’d say this: we all know each other very well, we all like and respect each other a lot…but we just didn’t share the same passions. So the net of it was we were holding each other back. If you said that to any of us at the time, we would have said, “No we’re not!”….but we were. To make these things work, you really have to commit the organization in a specific direction.
Angel Mehta: Out of personal curiosity, early on before the books became a hit, did the lack of an MBA or formal business training cause a problem for you in terms of credibility? I’m talking about with more academically qualified business managers?
Geoff Moore: No, it didn’t. I had the credibility of having worked at Regis for five years…So I had a pretty good fund of industry experience, having worked with different clients, as opposed to a guy who worked at just one company for five years. Then the way I would get consulting engagements is people would either hear a talk or read the book - so I had pre-registered credibility. I’m sure there were people who were thinking, ‘this guy has no credibility’, but they probably just didn’t call to tell me about it so I never knew who they were. [Everyone Laughing]
You know, books in our culture confer far more credibility then they probably ought to.
Angel Mehta: Worked out well for you though!
Geoff Moore: [Laughing]…Once you’re an author of a best selling book, people kind of go, “Well, he must know something”…which is probably not accurate but is certainly useful if it happens to work on your behalf.
Angel Mehta: Let’s talk about TCG Advisors; I’m interested in how the offering differs from the Chasm Group’s original practice….
Geoff Moore: What the two groups have in common is a focus on the technology sector, and both groups engage with executive teams on strategy. Where TCG Advisors tends to separate, however, is when the strategy question is followed by an even bigger problem: “How can I transform my company to execute on the new directive?” The larger the enterprise, the more challenging this question becomes. TCG Advisors is optimizing its practice to deal with very large organizations.
Angel Mehta: So it’s dealing with the problem of inertia?
Geoff Moore: Correct. Large companies have been successful…. so they have lots of processes, lots of people, and lots of relationships - all kind of fused together as a result of historical success. You don’t get invited in to do a new strategy until the existing strategy is depleted. The active change agents have probably left the company, and the people that have stayed on are loyal to the company - but that makes them even more closely aligned with the old strategy. So we lead them through an exercise that says, “Look, can you see that the market is going to be less and less responsive to this strategy going forward?” People aren’t stupid. So they go, “Yes, I can see that”.
Angel Mehta: Then what?
Geoff Moore: We take them through some key questions:
1) “What’s new?”… Fundamentally, we’re asking, “Why are we here?”.
2) If you’ve lost power, is it because of the category? What happened to the category? Maybe it’s the category’s problem - not yours as a company, necessarily.
3) What’s happened to your company’s power in relation to the other companies in the category? That is, whether the category is going up or down, inside of it, is your company going up or down?
4) If you don’t have a winning strategy already, what would a winning strategy look like? (This is what we really share in common with the Chasm Group’s original practice: we all look at that problem through a similar set of filters.)
5) Given your ideas about the next strategy, are your resources allocated properly?
6) Are you organized properly to execute the new strategy?
7) And finally, are you leading and motivating people through the changes in a way that is consistent with your culture?
Angel Mehta: Didn’t those questions come up with the Chasm Group’s old practice?
Geoff Moore: Absolutely. I think the difference between us is more about the size of client company we are optimizing ourselves to take on.
Angel Mehta: So how long do you expect it will be before the next book comes out based on this cycle of findings & feedback from engagements?
Geoff Moore: We’re probably still 18 months away from the next book - and I apologize in advance if I impose another book on people. As I said, each book has a very bold thesis but no thesis is ever completely accurate. So you make modifications as you go until you finally build up a body of intellectual property that requires you to restate it in a different frame of reference.
Angel Mehta: Let’s talk about core versus context as it would apply to an enterprise software company. How does a software CEO apply it?
Geoff Moore: First, how relevant it is depends on the age and size of the company. The interesting thing about start-ups, speaking as a venture partner at Mohr Davidow, is that ‘core vs. context’ is not a particularly important model for the INTERNAL workings of a start-up because they don’t have very much legacy inertia. ‘Context’ is the amount of resources you have devoted to things which no longer differentiate your company…
Angel Mehta: But they still have to get done regardless….
Geoff Moore: Yes, exactly….In fact, you might be doing those activities better but to no competitive avail. That’s a big problem for a company like Xerox, but it’s probably not a very big problem at a Mohr-Davidow startup.
Angel Mehta: So for larger enterprise software companies?
Geoff Moore: As an enterprise software company gets bigger and bigger, what happens is you get this HUGE list of enhancement requests from your installed base. I mean, you end up having three to four hundred things on the list. The truth is, if you did them all you wouldn’t move the shareholder value of your company very much - because by and large, these are things the customers may want but largely feel they’re entitled to. Customers certainly don’t want to pay more for them and if you’re in the ERP category or even the CRM category…or say the HR category or whatever…by and large, customers are on their 3rd generation of the application so the entire category may become context.