By Justine O'Connor-Petts
July 13, 2000

The times, they are changing. At least that is what The Gorilla Game co-author Geoffrey Moore tells us in Living on the Fault Line, his new book on management strategy for the Internet age. His insightful exploration of management in today's high-tech world raises numerous issues and is a must read for the serious investor or business manager.

As the key point of the book, Moore asks, "What can management do when its home markets, territory it has nurtured and served for decades, come under direct assault from companies whose investors appear to have repealed the law of profitability?" He answers this by providing help for management that requires a little revamping.

From the kick-off, Moore points out that the stock price of an established company is the telltale indicator of that company's performance. When its stock price isn't performing, one must look to the management for the keys to its lack of success. The company, Moore tells us, must adapt its management in order to "convert stock price into a kind of management information system."

Using the fault line of an earthquake as a metaphor for the rapid technological change that is sweeping almost every industry, Moore investigates the plate tectonics -- in this case the Internet -- behind that change. In six in-depth chapters, he explains what management teams of traditional public companies must do to survive in today's marketplace against the e-companies and the dot-coms.

So just how does Moore suggest the older companies keep from being overtaken by those sneaky Internet companies? He talks about core versus context, where core is "any activity that could raise stock price" (i.e., core for Chuck E. Cheese is restaurant entertainment devices, the actual pizza is just context); companies must focus on core and employ other means to address context issues. What core equates to is competitive advantage. According to Moore, if a company is focusing on its core, it will have a competitive advantage in its specific market.

After establishing this idea, he addresses competitive advantage in high-tech markets and how technology enabled markets fit into the technology adoption life cycle, which is basically a model that shows the possible responses of any population to the introduction of a "discontinuous innovation." A discontinuous innovation is cool, new stuff that consumers want to buy but that, in Moore's terms, "isn't compatible with existing systems."

As this product moves through the technology adoption life cycle, companies must adapt the existing management systems to accommodate the changing technology. Moore concludes by explaining how to correct the default behaviors of companies that shy away from necessary change, behaviors that, left uncorrected, can cause the company's demise. In doing this, he examines four business cultures that can support companies in a world of technology that is constantly advancing.

Although the book is generally direct, well written, and comprehensive in its coverage of modern management issues, Moore's writing can be very technical and perhaps a little verbose. At times, Moore's technical talk can become overwhelming and drown the reader. Occasionally, abbreviations and acronyms are used without explanation, potentially frustrating and confusing the less-experienced reader, who may have to spend some extra time working through the jargon. Despite this occasional shortcoming, the writing is fairly casual and direct.

Living on the Fault Line is very well organized: each chapter is outlined with subsections and subsections within subsections. One of the most helpful qualities of each chapter is the "Summary of Key Points" at the end of each chapter -- it's like having the Cliffs Notes right in the book (if only they did this in novels for that English 101 class you took in college, right?).

While some of Moore's other books (including The Gorilla Game, a great introduction to investing in the high-tech industry) can be read and understood by almost anyone interested in knowing a little more about high-tech investing, Living on the Fault Line is more directed toward those with some established business knowledge and background. Nevertheless, Moore's ideas are sound, creative, and functional. Dive in and take on this earthquake that is shaking the business world and wreaking havoc on traditional management ideas.

Want to check Living on the Fault Line out for yourself? It's available on Amazon.com.

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