{"id":872,"date":"2019-12-23T14:31:32","date_gmt":"2019-12-23T14:31:32","guid":{"rendered":"https:\/\/sellingsherpa.com\/?p=872"},"modified":"2019-12-23T14:31:40","modified_gmt":"2019-12-23T14:31:40","slug":"zone-to-win-book-summary","status":"publish","type":"post","link":"https:\/\/sellingsherpa.com\/index.php\/2019\/12\/23\/zone-to-win-book-summary\/","title":{"rendered":"Zone To Win (Book Summary)"},"content":{"rendered":"
\n

Zone to Win: Organizing to Compete in an Age of Disruption by Geoffrey A. Moore<\/a><\/p>\n\n\n\n

Foreword<\/strong><\/h2>\n\n\n\n
  • Disruptive innovation \u2014 incubating or scaling new products or business opportunities \u2014 must be segregated from sustaining innovation \u2014 making improvements to existing entities.<\/strong> <\/li>
  • And, revenue performance \u2014 financial commitments from the more established parts of the business \u2014 must be separated from enabling investments \u2014 funding and resourcing new product and business opportunities.<\/li><\/ul>\n\n\n\n

    Chapter One: A Crisis of Prioritization<\/strong><\/h2>\n\n\n\n
    • You simply have to be a growth company. If your enterprise is not in a growth category, if all you are doing is optimizing your current market positions, you are a sitting duck.<\/li>
    • It turns out, to disrupt someone else\u2019s business, you have to add a net new line of business to your own portfolio.<\/li>
    • The real truth is most companies take run after run at this hurdle, but each time, at the critical juncture, that moment when you have to either go big or go home, they shy away.<\/li>
    • When a go-to-market organization is charged to scale two or more new franchises while at the same time being expected to make the numbers in the established lines of business, anyone with experience knows this is simply not going to happen.<\/li>
    • When it comes to making a big bet on your next big thing, pick one. Not two, not three \u2014 one. <\/strong>All of Apple\u2019s new lines of business were brought to scale one at a time!<\/li>
    • Every decade or so you must get your company into one net new line of business that has exceptionally high revenue growth.<\/strong><\/li>
    • The question you want to answer at the outset, therefore, is whether you are being disrupted at the level of your infrastructure model, your operating model, or your business model.<\/strong><\/li>
    • Take the disruptive impact of mobile smartphones on the airline industry:
      • Infrastructure Model: Adapt personnel (travel agents, etc.) and equipment (inflight services, etc.) to be mobile-first\/friendly.<\/li>
      • Operating Model: Offer a powerful mobile app to book flights, secure boarding passes, etc.<\/li>
      • Business Model: No change – Transport high-margin business travelers<\/li><\/ul><\/li>
      • Take the disruptive impact of mobile smartphones on the advertising industry:
        • Infrastructure Model:<\/li>
        • Operating Model:<\/li>
        • Business Model: Change from relationship-based media buying (with a complex ‘supply chain’) to algorithmic-based media buying (with a low barrier to entry, direct-to-advertiser model)<\/li><\/ul><\/li>
        • No established enterprise can reasonably expect to change its core business model, ever. So what must you do instead to prevent the next wave from catching you? Two things, actually: (We call this playbook zone management)
          • First, on an emergency basis, you must race to modernize your existing operating model as best you can, incorporating enough of the next-generation technology to at least blunt the impact of the disruptor in the short term.<\/li><\/ul>
            • Second, in parallel, you must turn to your own portfolio of next-generation opportunities to accelerate your own progress toward catching some other wave of disruption emerging in some other category.<\/li><\/ul><\/li>
            • None of these four local playbooks is likely to be unfamiliar to you. There are no radical prescriptions in zone management. Rather, what is radical is, first, for executive management to explicitly distribute operations across the four zones and to seek different outcomes within each one, and second, for operational leaders to play within their assigned zones, following the playbook appropriate to each one and collaborating respectfully with other members of the enterprise who are executing different playbooks in other zones.<\/li>
            • The foundation for this kind of zone discipline is established in the annual plan.<\/li><\/ul>\n\n\n\n

              Chapter Two: The Four Zones<\/strong><\/h2>\n\n\n\n
              • Allocate resources across three investment\nhorizons.
                • Horizon 1: In the coming fiscal year, making it\naccretive to the operating plan. Horizon 2: In two to three years, following\nsignificant negative cash flow in the intervening period, making it dilutive to\nthe operating plan. Horizon 3: In three to five years, consisting primarily of\nresearch and development that is funded so as not to be dilutive to the\noperating plan.<\/li><\/ul>
                  • Horizon 2 efforts are largely taken up with developing\nthe next generation of products to fill Horizon 1.<\/li><\/ul>
                    • Hastily assembled Horizon 3 products and teams\nare rarely a match for the battle-hardened entrepreneurs and their venture-backed\nstartups with whom the company now competes,<\/li><\/ul><\/li><\/ul>\n\n\n\n
                      \"A<\/figure><\/div>\n\n\n\n
                      • To win you must catch a wave of next-generation\ntechnology just as it is entering its secular growth phase and then put the\nfull force of your global go-to-market capability behind it.<\/li>
                      • All transformation initiatives, whether on\noffense or defense, inevitably entail a J-curve wherein performance metrics go\nsouth before they turn the corner to go north.<\/li>
                      • The productivity zone spends most of its time\ntargeting efficiencies to be gained by improving operations in the performance\nzone.<\/li>
                      • The incubation zone will have a number of things\ncooking at any given point in time. Each will have been funded based on its\npotential to catch the next big wave \u2014 there are no resources wasted on \u201cinteresting\u201d\nprojects that have no clear path to scale.<\/li>
                      • Because transformations are expensive, risky,\nand exhausting, in most years the transformation zone is likely to be empty.<\/li><\/ul>\n\n\n\n

                        Chapter Three: The Performance Zone<\/strong><\/h2>\n\n\n\n
                        • If our current plan is failing and we want to make a change, should we swap out the horse (the product or service we are offering), the rider (the manager in charge of the function that is underperforming), or the trail (the market segment we are targeting)? Most plans and organizations can absorb one change per year. Few can tolerate two.<\/strong><\/li>
                        • One of the key levers established enterprises can bring to bear on offense, one where they have a clear advantage, is their ability to redirect their professional services organization to prioritize projects that impact the transformation zone.<\/li>
                        • As an established enterprise, your number-one asset is the inertial momentum of your installed customer base. Your number-two asset is an ecosystem of partners that makes its living adding value to your established offerings<\/strong><\/li><\/ul>\n\n\n\n

                          Chapter Four: The Productivity Zone<\/strong><\/h2>\n\n\n\n
                          • Systems are services that provide ongoing\noperational infrastructure.<\/li>
                          • If systems lay down the tracks upon which the\nperformance engine runs, programs provide the fuel.<\/li>
                          • Programs are services that deliver specific\noutcomes to targeted groups of users at specified points in time, with priority\ngiven to the performance zone.<\/li>
                          • Whereas systems should be funded out of a\ncorporate budget, programs should be funded out of earmarks in the budgets of\nthe organizations consuming their services.<\/li><\/ul>\n\n\n\n

                            Chapter Five: The Incubation Zone<\/strong><\/h2>\n\n\n\n
                            • The key criteria an offering must meet to warrant Horizon 3 investment from a publicly held corporation are:
                              • It embodies a disruptive innovation that can drive a 10X improvement in a performance metric of great importance to the target market.<\/li><\/ul>
                                • It represents a business opportunity that has the potential to scale to material size, the minimum threshold being 10 percent of total enterprise revenue at the time when it reaches scale,<\/li><\/ul>
                                  • When successful at scale, it should represent a net new line of business for the enterprise, as opposed to an adjacency to an existing line of business.<\/strong><\/li><\/ul><\/li>
                                  • Entry into the incubation zone proper, by contrast, requires making a credible claim to becoming the next big franchise.<\/li>
                                  • They need to have specialized sales, marketing, and professional services to compete against other startups on their market-facing side, and they need customized supply chain services to design, build, and operate their next-generation disruptive offers.<\/strong><\/li>
                                  • In the incubation zone you are not just funding R & D engineering \u2014 you\u2019re funding entire companies.<\/li>
                                  • The critical elements of this model are as follows:
                                    • Each entity in the incubation zone operates as an Independent Operating Unit (IOU) with its own general manager and dedicated resources for product development, product delivery, sales, and marketing.<\/li><\/ul>
                                      • The IOUs themselves are funded outboard of the annual planning calendar, based on milestone target dates that are not expected to align with the fiscal year.<\/li><\/ul>
                                        • The incubation zone as a whole is governed by a \u201cventure board\u201d that determines what areas of innovation warrant investment, which business plans get funded, which IOUs get follow-on funding, what performance rewards go to which general managers, and the like.<\/li><\/ul>
                                          • The entire portfolio of IOUs in the incubation zone is supported by a small team of liaisons to the various shared services in the productivity zone.<\/li><\/ul>
                                            • Each IOU is subject to a venture-funding discipline that requires meeting specific milestones in order to secure the next round<\/strong>, typically along the following lines: Initial seed round: Validate the technology. Series A round: Build a minimum viable product and validate the market. Series B round: Target a beachhead market, build a viable whole-product solution, and win a dominant share of new sales within that segment. Series C round: Scale into adjacent markets in preparation for an exit into the transformation zone.<\/li><\/ul>
                                              • When IOUs fail to reach a milestone, they will often warrant getting a second chance. They normally will not deserve a third.<\/li><\/ul><\/li>
                                              • Even at this early stage, you need an entrepreneur, a single point of accountability for delivering the sum of all future outcomes.<\/li>
                                              • Five years is a good rule of thumb for maximum time spent in this zone.<\/li>
                                              • One tactic to consider here is to create a sub-brand specifically dedicated to sponsoring next-generation innovations<\/li>
                                              • IOUs in the incubation zone must be led by entrepreneurial GMs. A good pool to draw from is ex-CEOs from acquired companies that have successfully navigated a venture trajectory in the past.<\/li><\/ul>\n\n\n\n

                                                Chapter Six: The Transformation Zone<\/strong><\/h2>\n\n\n\n
                                                • When the disrupted category is adjacent to the\ncore business, established corporations can play offense. When it is their own\ncategory that is getting disrupted, they must play defense.<\/li>
                                                • Unlike the other three zones, the transformation\nzone is a transitory institution. It comes into existence to meet (or create) a\ncrisis, and it passes out of existence once the crisis is resolved.<\/li>
                                                • The CEO\u2019s first task here is to pick one \u2014 and\nonly one \u2014 business to scale. As we have said repeatedly, allowing two or more\nentities into the transformation zone at the same time is a showstopper.<\/li>
                                                • The CEO\u2019s second task is to sponsor a dramatic\nreallocation of resources, one that will put everyone\u2019s nose out of joint.<\/li>
                                                • The CEO, with the support of the board of\ndirectors, should revamp the executive compensation plan to give everyone on\nthe team a significant stake in the transformational initiative\u2019s success and a\ncorrespondingly painful consequence if it fails.<\/li>
                                                • The strategy for playing defense in the\ntransformation zone is built around a three-step program: 1. Neutralize. 2.\nOptimize. 3. Differentiate. The order is critical.<\/li>
                                                • IBM\u2019s legacy value proposition had always been\nto deliver enterprise productivity through information systems.<\/li>
                                                • On offense, there is the opportunity to\nspringboard the enterprise into a whole new dimension, the way cloud computing\nhas reset the trajectory for Amazon, the way that music and smartphones reset\nit for Apple, the way that Pixar reset it for Disney, the way The Sopranos\nreset it for HBO, the way the Prius did for Toyota.<\/li>
                                                • On defense, there is the opportunity to\nreposition the franchise to give it a new lease on life, the way committing to\nwireless helped to reposition Verizon, the way committing to software as a\nservice helped to reposition Adobe, the way acquiring TurboTax helped to\nreposition Intuit, the way acquiring WebLogic helped to reposition BEA, the way\ncommitting to web content management helped to reposition Documentum.<\/li><\/ul>\n\n\n\n

                                                  Chapter Seven: Installing Zone Management<\/strong><\/h2>\n\n\n\n
                                                  • Zone your orgs. Every organization, as well as every major initiative, needs to be funded out of one \u2014 and only one \u2014 zone.<\/li>
                                                  • Lock in the performance matrix. It is important to clarify and formalize the structure of the performance matrix right from the start.<\/li>
                                                  • Activate the productivity zone.<\/li>
                                                  • The first order of business is to establish a set of organizational units such that all indirect spending rolls up to a manageable number of accountable executives.<\/li>
                                                  • Fence off the incubation zone. What should be established at this time, on the other hand, is the size of the incubation zone fund and the composition of the venture board that will have governance over it.<\/li>
                                                  • Determine the status of the transformation zone and proceed accordingly<\/li><\/ul>\n\n\n\n

                                                    Chapter Eight: Zoning to Win at Salesforce and Microsoft<\/strong><\/h2>\n\n\n\n
                                                    • Playing Zone Defense: The Example of Microsoft. Specifically,\nhere are some of the challenges it must embrace in the productivity zone:
                                                      • Migrate its consumer marketing from brand\nadvertising, imposed from the outside in, to viral engagement emerging inside\nout organically from the user experience.<\/li><\/ul>
                                                        • Migrate its enterprise marketing from high-volume\nhorizontal use cases driving tiered pricing bundles to high-value vertical use\ncases driving usage-based pricing based on consumption.<\/li><\/ul><\/li>
                                                        • Incubation Zone. Microsoft has never been much\nof an incubator. Its classic market triumphs are based on a fast-follower\nstrategy that overtakes an early market leader.<\/li>
                                                        • Google\u2019s approach to knowledge worker\nproductivity has been to relocate the productivity focus on collaboration. This\nreflects fundamental changes under way both in the structure of work and in the\nculture of the workforce.<\/li><\/ul>\n<\/div>","protected":false},"excerpt":{"rendered":"

                                                          Zone to Win: Organizing to Compete in an Age of Disruption by Geoffrey A. Moore Foreword Disruptive innovation \u2014 incubating or scaling new products or business opportunities \u2014 must be segregated from sustaining innovation \u2014 making improvements to existing entities. And, revenue performance \u2014 financial commitments from the more established parts of the business \u2014 […]<\/p>\n","protected":false},"author":1,"featured_media":874,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_import_markdown_pro_load_document_selector":0,"_import_markdown_pro_submit_text_textarea":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":{"0":"post-872","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uncategorized","8":"entry"},"aioseo_notices":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/sellingsherpa.com\/wp-content\/uploads\/2019\/12\/zone-to-win.jpg?fit=1200%2C353&ssl=1","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9j2qV-e4","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/posts\/872","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/comments?post=872"}],"version-history":[{"count":1,"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/posts\/872\/revisions"}],"predecessor-version":[{"id":875,"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/posts\/872\/revisions\/875"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/media\/874"}],"wp:attachment":[{"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/media?parent=872"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/categories?post=872"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sellingsherpa.com\/index.php\/wp-json\/wp\/v2\/tags?post=872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}