Five Levers Model – Extracting Resources

In two previous post I have been talking about the book on innovation called "Dealing with Darwin".  One of the keys to innovation is extracting resources from Context to apply to innovation.  Moore comes up with five levers which are a sequence for management action for re-engineering mission-critical work to extract risk so one can extract resources.  These resources will then be used innovate in the Core.  You will recognize each of these levers because you will likely have been on the receiving end of some of them.

Centralize     A process that has been recognized as context, that is it is not a key differentiator, even though it is important, the first way to extract resources is to centralize.  Centralization eliminates management overhead and thus some resources for reassignment.  Often people cling to their processes (we can do it better) but in the relentless search for productivity the marginally better cannot  be justified.   An example might be moving all the billing processes under one central billing group.

Standardize    Now that the process has been centralized under a single point of control, opportunities to increase productivity can be identified.   Again using the billing example, many unique billing processes can likely be converted to a standard billing process.  These improvements can again reduce the resources required and even be done faster.   These two move things from a decentralize services model to a shared services model. 

Modularize      Once the service has been standardize one can then consider adopting best practices used elsewhere.  Radical different approaches have been taken by companies to change the way billing are done by looking at things totally differently.  Could the billing process be combined with an earlier step in the fulfillment process?  Many companies have look to other industries for ideas they can adapt to their industry.  For example maybe billing is unnecessary for some products. 

Optimize        Similar to the step above, taking a hard look at the way things are done can eliminate some major efforts.  Again looking at best practices and process improvement stories can free up needed resources for innovation in Core.

Outsource       Once you have taken all the risk out of this mission critical activity, now one can safely consider outsourcing.  One clearly needs to retain some resources to manage the outsourcer but clearly this can really create a resource pool of people and capital that can be applied to innovative core activity. 

The book deals with some of these things in more detail but I found these five levers a good model for thinking about how to free resources from context to apply to core.

Moore also deals with an associated problem that some of the people involved in context activity may not be suitable for core projects.

I found the book had many good ideas which is typical of Moore but much of the book is boring.  Moore has a gift for creating some neat mental models.  His presentations are much more entertaining than his books.

Leave a Reply

captcha *