Zone to Win
Organizing to Compete in
An Age of Disruption
November, 2015
The Impact of Disruptive Innovation
When the Marginal Cost Approaches Zero
2
Data Science
Social Networks
Cloud Computing
...
Burroughs – Sperry Univac – Honeywell – Control Data
MSA – McCormick & Dodge – Cullinet – Cincom – ADR
DEC – Data General ...
Three Investment Horizons
Where the Problem Lies
4
Horizon 1
ROI in 0 to 12 mos
Horizon 2
ROI in 12 to 36 mos
Horizon 3
RO...
Disruptive Innovation Model
It’s Not a Funnel. It’s an Hourglass!
5
Horizon 3
Horizon 2
Horizon 1
Sustaining
Innovations
D...
6
6
Engaging with Disruption
What Are You Looking to Change?
Cloud
Social
Data Science
Internet of Things
Mobile
Infrastru...
7
Technical Operations
Redefine Price/Performance
Efficiency!
Business Operations
Redefine Productivity
Effectiveness!
Bus...
The Four Zones
Organizing to Compete in an Age of Disruption
Disruptive
Innovations
Sustaining
Innovations
Incubation
Zone...
The Four Zones
Each Zone Has a Unique Funding Charter
9
• Performance Zone
• Deliver material bookings, revenues, and cont...
Performance Zone: Horizon 1
Getting the Performance Matrix Right
10
TOTAL
TOTAL
TOTAL
TOTAL
TOTAL
TOTAL TOTAL TOTAL TOTAL ...
Productivity Zone: Horizon 1
The Architecture of Programs & Systems
• Programs
• Customized services
• User funded
• Optim...
Incubation Zone: Horizon 3
Venture-Style Independent Operating Units
12
All functions report into GM
(No shared resources ...
Transformation Zone: Horizon 2
Transformational Initiatives
13
*
H2 TI
H3 IOU
*H3 IOU
*
H3 IOU
*
H3 IOU*
Incubation Set
In...
Prioritizing the Four Zones
“At Half Time” (No Transformation in Play)
Disruptive
Innovations
Sustaining
Innovations
Incub...
1
Prioritizing the Four Zones
Zone Offense
Disruptive
Innovations
Sustaining
Innovations
Transformation
Zone
Performance
Z...
Zone Defense
When You are the Disruptee, not the Disruptor
• Anchor business under direct attack
• Disruptive innovation u...
Prioritizing the Four Zones
Playing Defense
Disruptive
Innovations
Sustaining
Innovations
Incubation
Zone
Transformation
Z...
Modernizing Your Model
Each Game Plays Out in a Different Zone
Disruptive
Innovations
Sustaining
Innovations
Incubation
Zo...
For More Information
19
Incubation
Zone
Transformation
Zone
Performance
Zone
Productivity
Zone
Create options
for the futu...
gmoore@geoffreyamoore.com
twitter.com/geoffreyamoore
http://linkd.in/YnBwig
20
Thank You
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Zone to Win: Organizing to Compete in the Age of Disruption

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Presenting the "Zone to Win" strategy detailed in Geoffrey Moore's new book "Zone to Win" http://www.zonetowin.com

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Zone to Win: Organizing to Compete in the Age of Disruption

  1. 1. Zone to Win Organizing to Compete in An Age of Disruption November, 2015
  2. 2. The Impact of Disruptive Innovation When the Marginal Cost Approaches Zero 2 Data Science Social Networks Cloud Computing Smart Phones Internet of Things The marginal cost of computing The marginal cost of automating a personal transaction The marginal cost of adding a resource to a sharing economy The marginal cost of dynamic decision-making The marginal cost of systemic optimization Which wave will have the biggest impact in your world?
  3. 3. Burroughs – Sperry Univac – Honeywell – Control Data MSA – McCormick & Dodge – Cullinet – Cincom – ADR DEC – Data General – Wang – Prime – Tandem Daisy – Calma – Valid – Apollo – Silicon Graphics – Sun Atari – Osborne – Commodore – Casio – Palm – Sega WordPerfect – Lotus – Ashton Tate – Borland Informix – Ingres – Sybase – BEA– Seibel – PeopleSoft Nortel – Lucent – 3Com – Banyan – Novell Quest – America West – Nynex – Bell South Netscape – MySpace – Inktomi – Ask Jeeves – Yahoo! Blackberry – Motorola – Nokia – Sony Leaders Who Missed Their Next Wave
  4. 4. Three Investment Horizons Where the Problem Lies 4 Horizon 1 ROI in 0 to 12 mos Horizon 2 ROI in 12 to 36 mos Horizon 3 ROI in 36 to 72 mos Current Categories Meet Performance Commitments Break-Out Categories On-board next generation for future growth Future Category Options Develop options for future growth Do well here Do well here too Sticking point
  5. 5. Disruptive Innovation Model It’s Not a Funnel. It’s an Hourglass! 5 Horizon 3 Horizon 2 Horizon 1 Sustaining Innovations Disruptive Innovations
  6. 6. 6 6 Engaging with Disruption What Are You Looking to Change? Cloud Social Data Science Internet of Things Mobile Infrastructure Model Operating Model Bus Model
  7. 7. 7 Technical Operations Redefine Price/Performance Efficiency! Business Operations Redefine Productivity Effectiveness! Business Innovation Redefine Market Norms Competitive Advantage! 7 Infrastructure Model Operating Model Bus Model CIO sponsored CXO sponsored CEO sponsored Engaging with Disruption Three Different Games to Play—Choose One! The higher up in the model, the greater the disruption to absorb
  8. 8. The Four Zones Organizing to Compete in an Age of Disruption Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments Horizon 3 Horizon 2 Horizon 1 Horizon 1 8
  9. 9. The Four Zones Each Zone Has a Unique Funding Charter 9 • Performance Zone • Deliver material bookings, revenues, and contribution margins in Horizon 1 • Productivity Zone • Deliver programs and systems for compliance, efficiency, and effectiveness in Horizon 1 • Incubation Zone • Deliver viable business options to catch new technology waves in Horizon 3 • Transformation Zone • Scale a disruptive option to material revenue (greater than 10% of total enterprise revenue) in Horizon 2
  10. 10. Performance Zone: Horizon 1 Getting the Performance Matrix Right 10 TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL RowOwners SourcesofRevenue(BUs) Column Owners Channels of Bookings (Sales) Rows & Columns interlock at the cell level for joint accountability Every row and column has a unique owner Operating cadence: • Weekly commits (milestones) • Monthly status reports • Quarterly business reviews No row or column subtotal can be less than 10% of total Key Metrics: Revenue, contribution margin, churn/renewals, growth rate
  11. 11. Productivity Zone: Horizon 1 The Architecture of Programs & Systems • Programs • Customized services • User funded • Optimized for effectiveness • Programs adapt to users’ needs • Systems • Standard infrastructure • Centrally funded • Optimized for efficiency • Users adapt to system’s rules 11 Systems Interface Systems and programs are mutually incompatible Manage them separately—do not blend Programs Systems
  12. 12. Incubation Zone: Horizon 3 Venture-Style Independent Operating Units 12 All functions report into GM (No shared resources with Performance Matrix) Each IOU run by a dedicated General Manager Funding & reviews outboard of the Annual Operating Plan Venture-Based Metrics • Seed: Technology POC • Series A: MVP + first customers • Series B: Win beachhead market • Series C: Exit to scale Incubation Fund CEO + Board IOU #1 IOU #2 IOU #3 IOU #4 Finance Human Resources Administration 1. Transition to Transformation Zone 2. Transition to Performance Zone 3. Spin out 4. Get bought 5. Shut down FIVE EXIT PATHS
  13. 13. Transformation Zone: Horizon 2 Transformational Initiatives 13 * H2 TI H3 IOU *H3 IOU * H3 IOU * H3 IOU* Incubation Set Insert a new row into the Performance Matrix TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL H1 CEO sponsored Everyone on board No retreat Only one at a time
  14. 14. Prioritizing the Four Zones “At Half Time” (No Transformation in Play) Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments 3 4 1 2 14 Harvest your rewards, build up your reserves
  15. 15. 1 Prioritizing the Four Zones Zone Offense Disruptive Innovations Sustaining Innovations Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments 4 2 3 15 Enlist everyone in scaling the new business Subordinate incubation to transformation Incubation Zone
  16. 16. Zone Defense When You are the Disruptee, not the Disruptor • Anchor business under direct attack • Disruptive innovation undercuts the core business model • Maintaining the status quo no longer a viable option • Cannot fix the business in the Performance Zone • Wrong metrics, wrong compensation, wrong leaders • Must move the business into the Transformation Zone • Transformational goals • Modernize the operating model • Neutralize the disruptive innovation • Operational objectives • Get the business back into a healthy state • Put it back in the Performance Zone 16
  17. 17. Prioritizing the Four Zones Playing Defense Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments 2 4 17 Enlist everyone in stabilizing the current business Subordinate productivity to transformation 1 3
  18. 18. Modernizing Your Model Each Game Plays Out in a Different Zone Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments 18
  19. 19. For More Information 19 Incubation Zone Transformation Zone Performance Zone Productivity Zone Create options for the future Make a big change Make the top line Make the bottom line
  20. 20. gmoore@geoffreyamoore.com twitter.com/geoffreyamoore http://linkd.in/YnBwig 20 Thank You

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