Tweet

Living on the Fault Line

Written by: Andy Marken

Article Overview: Book Review -- Managing for Shareholder Value in the Age of the Internet

Living on the Fault Line

Living on the Fault Line: Managing for Shareholder Value in the Age of the Internet
By Geoffrey A. Moore
Harper Collins Publishers
ISBN# 0887308880


Living in Silicon Valley as we do, Geoff Moore’s newest endeavor – Living on the Fault Line – strikes home at several levels. Obviously we actually do live in a fault area but we were also attracted to the book because it deals in the business area we live and work in daily and our clients are always concerned with both the stock market value and the shareholder value.

The founder and managing director of The Chasm Group has burrowed into a new set of issues facing companies today and arrived at another set of guidelines, ideas and recommendations that force us to think about what is really important and vital to a company’s success. We’re not certain if his latest book is evolutionary or revolutionary but like Crossing the Chasm and Inside the Tornado, his earlier best sellers, it gives business managers a clearer understanding of the challenges and opportunities they face today.

Every professional we know emphatically says that what he or she does creates shareholder value. And until you’ve read Living on the Fault you’re positive that’s true. After reading the book, you’ll question how much of what you do is – as Moore has identified the areas – core or context.

Why should you care about what Moore has to say? Quite simply being forewarned is forearmed. There’s a good chance your boss might read the book and have a new perspective on what efforts and activities are of real value.

Moore points out that too much of a company’s time is spent on tasks that are context and not enough time is spent on those that are core.

A task is core if it directly affects the fundamental value propositions of the firm. Or put simply, if it raises the stock price it is core…everything else is context. According to Moore the goal for context related activities are to execute effectively and efficiently based on the core functions.

Striking at the basic justification for our advertising brethren, Moore takes the position that differentiation based on context is the single biggest waste of resources of companies today. He explains that differentiation soaks up time, talent and management attention that don’t add to shareholder value. From his perspective if the company’s goal is to manage for shareholder value then these actions then they have to be stopped.

Moore explains that core and context interoperate to create quality and they are fundamental to the company’s effectiveness. How well they interact determines how much core value gets to the marketplace. But he warns that context can’t get in the way of core.

Moore gives management a simple litmus test. How much time is spent in meetings and how much in actually doing the business of the company. In small companies that exist throughout Silicon Valley Moore estimates that 20 percent of the time is spent in meetings and 80 percent is spent in doing – adding value. On the other hand, in large corporations 80 percent of the time is spent in meetings and 20 percent in contributing.

Bottomline?

It costs the large company four times as much to achieve the same throughput. Even then Moore asserts that much of that work is on context activities, not core work. Moore’s solution is simple…outsource the context. Obviously you can hire more people to do the context work to free yourself to focus on core activities but does that contribute to shareholder value? No because staff affects the bottomline while outsourcing comes above the line. Big difference to the company’s P&L and shareholder value.

An even greater danger for companies today and managers specifically is that while individuals realize their activities provide some level of contribution, they aren’t really core so their jobs could be eliminated. As a result, employees act in a conservative manner…they don’t rock the boat. This translates into an innate resistance to change even in the face of major, disruptive technology shifts. When these shifts take place as they do on an increasing basis today people resist and devote more time and effort on context tasks rather than core activities.

Business-as-usual exists throughout the corporation, not just in public relations. As a result, nothing is done quickly and often nothing is done at all.

Moore’s recommendations – which are the prime reason every manager should read Living on the Fault Line – is to outsource anything that doesn’t give the company a competitive advantage. Insource the design and management of the majority of your programs and outsource much of the execution and operation. That manages shareholder value.


Reviewed by G.A. “Andy” Marken
Marken Communications Inc.
Andy@markencom.com

Related Articles
  Insurance Agency Entrepreneurs or Business Managers Have An Untapped Source To Boost Income
  Take the Hit
  How to Decide if your Laptop Screen is Faulty or is Failing
  SMEs in Africa - is capitalism really dead?
  The Wisdom of the Snapping Turtle

Article Tags:



Related Forum Posts
Site after-posting problems? - Don't know if this is happening to me alone, or to everyone, but every time I post a message, instead of my message coming up after a few seconds, I get this error message: Failed sending email :: PHP :: DEBUG MODE Line : 235 File : emailer.php
profit line - I recommended Profit Line to one of my clients and they were not 100% satisfied with the service. Apparently one of the profit line people got a parking ticket while serving my client and then charged them for it. I haven't heard the other side of the story yet but the fact that I recommended them and it didn't work out makes me reluctant to recommend them again.
Re: What Do you Prefer More - Time or Money - Living the moment. I am living the moment since 4 years ago, after the docs found cancer. They removed it, of course, and since then I just do what i want. Jumping from an airplane was one thing, that was great. Now I want to fly to the moon. I need money for that.
Cold Calling - Hey Guys, I was wondering if anyone had any experience with hiring someone on straight commission cold calling. I am offering a co-worker 15% of my gross sales to cold call for one month (Line provided by myself) to set up meetings for me in Vancouver. I will be providing him with basic training, he seems pretty eager to try it out, but everyone usually is. Any tips or stories would be great! Thanks, Pete
Re: Teen Investors - [quote="LoveInventions":22s6btro]Being that my main source of income is from playing poker professionally I can see where your coming from, BUT I will say this just because you’re involved in sports betting/gambling doesn’t make you an addict, as with anything in life it’s up to the individual to set and stick to limits, just like with alcohol or food. I think it could be great for kids but it would only work if someone was there offering advice and tips and making sure that they learn from their mistakes. This could be so valuable in their development.[/quote:22s6btro] Hi LoveInventions, You're absolutely right. There's a huge difference between gambling/betting for fun or a profession vs being addicted. However, I just don't want people to "glorify" the power of the stock market or investments because I've known some people who have lost thousands (more than $20K) of dollars and gone into depression (or worse). In addition, when I made my comment, I was referring to the kids who are addicted (or aren't content with their losses) to Pro Line and the stock market. At one time in elementary school, I was betting on Pro Line every week and losing all of my allowance as well. Sure people can argue, "nothing ventured, nothing gained"... but the problem with that idealism is that you typically only hear about the few success stories, rather about than the millions who have lost their money. I think high schools should have more courses and projects where students participate in mock investment buying/selling/trading, so that no real money is lost.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Angel Investors Where Are You?

Resistance to Change and How to Deal With It

Selling On Ebay The Good The Bad And The Ugly

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.