Summary: Living on the Fault Line

Review and Analysis of Moore's Book

BusinessNews Publishing

• Publisher: Must Read Summaries
• Year: 2016
• eBook ISBN: 9782511017937
• Topic: Computer Science
• Subtopic: Computer Science General
• Index: Computer Science

The must-read summary of Geoffrey Moore's book: `Living on the Fault Line: Managing for Shareholder Value in the Age of the Internet`.

This complete summary of the ideas from Geoffrey Moore's book `Living on the Fault Line` asks a fundamental question: `What should an established company which rose to prominence prior to the age of the Internet know and do about its stock price now the Internet has arrived?`. The answer is both simple and complex to achieve - companies must use the internet to build a competitive advantage. In his book, the author explains ways to accomplish this ambition in the online age. He suggests that companies now need to look closely at how they can add value with new technology – in the value chain, for example, or in company execution. This summary will teach readers to understand the process of new technology adoption and why it plays a big role in building competitive advantage.

Added-value of this summary:
• Save time
• Understand key concepts
• Expand your knowledge

To learn more, read `Living on the Fault Line` and discover how you can take advantage of the internet to get ahead of competitors and stay there.

Summary of Living On The Fault Line (Geoffrey Moore)

1. The Challenge of the Internet Era

Main Idea

The Internet moves the sources of competitive advantage away from where they have historically resided for most business organizations. In particular, the Internet compels business leaders to repeatedly refocus on “core activities” – where the organization creates shareholder value – and to outsource everything else (the “context activities”) so the company can focus resources where they produce the greatest results.

Supporting Ideas

The Internet is the driving force behind six key business transitions currently underway:

1. Assets : Information
   In the Internet era, real time information about an asset is becoming more valuable than owning the asset itself. As more efficient and open global markets are developing, access to better information is becoming a key advantage. (Example: It’s now more profitable to own the information about airline flights than it is to own an airline).
2. Products : Services
   Services are more valuable than products with the availability of the Internet simply because they can be delivered electronically to a wider market at lower costs. In fact, every product is rapidly on its way to being delivered as a service. (Example: Ford is moving from being an automaker to the premier provider of consumer services in the automotive industry).
3. Vertical Integration: Virtual Integration
   In the past, companies protected their competitive advantage by hoarding their value chain. In the Internet era, an open value chain (like personal computers) attracts more competitors, greater innovation and ultimately delivers exceptional value to the consumer. The Internet enables the development of robust and open value chains.
4. Command & Control: Self-Organizing
   Open value chains are self organizing systems. They start out by battling other value chains, so participants have to collaborate together to create visibility. Once momentum starts building, participants compete against each other for market leadership. These dynamics are beyond the control of any single management team.
5. Money : Time
   In the Internet era, the bulk of the created wealth goes to those organizations that capture market-share leadership in emerging markets. There is a premium awarded for achieving the first-mover advantage (shortest time to market) rather than being the most efficient (using the least amount of capital).
6. Profit & Loss : Market Capitalization
   In the Internet era, market capitalization has become the sole scorecard for business success. That’s because it is the only financial measure which applies right across the economy. Profitability becomes significant once the market size and scope have become more clearly defined, but at an early stage of development the capture of market share can have far greater significance.

In short, the Internet is forcing every organization to redesign itself with information technology as the center of operations around which the entire business is organized.

Any business activity which raises the stock price is defined as a “core” activity. Everything else is classified as “context”. The central business challenge of the Internet era is to maximize the amount of resources ( time, talent and attention) applied to core activities while outsourcing context activities to the most efficient service providers.

Core activities differentiate a business organization. Over time, as technology becomes more widely available, core gradually becomes context. Thus organizations must be continually enhancing their core activities, or they lose a market leadership position and become one of the masses.

Take, for example, the e-commerce field where the spectrum between core and context business activities can be visualized in this way:

Each of the lower steps on this spectrum started out as core activities and later became context activities as more companies did sim...

Table of contents

• Title page
• Book Presentation
• Summary of Living On The Fault Line (Geoffrey Moore)
• About the Summary Publisher
• Copyright