A new management book by Geoffrey Moore was published Nov. 3. It is called “Zone to Win – Organizing to Compete in an Age of Disruption”.
Geoffrey Moore is probably best-known for Crossing the Chasm which is now in its third edition. I first read this book in the early 1990s and was very impressed by how easy it was to grok and how well it resonated with my own limited experience. I am now reading the third edition as a refresher.
As I understand it, you could say that Crossing the Chasm is the external view of how a new product is introduced by a company to the market, while Zone to Win is the internal model and playbook for how to nurture disruptive products. This is especially relevant given the rapid social and corporate changes that emerging new technologies are enabling.
The following are highlights of the key concepts that are being proposed (based on my understanding, of course).
Zone concepts
Zone to Win proposes a conceptual framework for nurturing disruptive products and bringing them successfully into the mainstream.
First, three horizons are defined when returns on investment will be realized:
- Horizon 1: the coming fiscal year, when existing operating plan(s) yield planned and predicted results;
- Horizon 2: the 2 to 3 year period, when ongoing product portfolio transformations result in negative cash flow; and
- Horizon 3: in 3 to 5 years, when R&D is being funded outside the operating plan in order to discover the “next big thing.”
Moore divides the product/service provider’s organization into four segments (i.e., zones):
- The sustaining (business as usual) side
- The Performance Zone – operation of established lines of business to generate returns in Horizon 1; includes product evolution management and the sale of existing products; serves as the customer facing organization delivering the “meat and potatoes” products; managed using a performance matrix;
- The Productivity Zone – a collection of shared services that are managed as cost centres; includes HR, marketing, technical support, legal, finance, etc.; inwardly facing parts of the company; services are provided mainly to the performance zone groups;
- The disruptive (next gen business) side
- The Incubation Zone – products with high potential in emerging categories and markets; R&D activities to create the next wave of products that can potentially deliver returns in Horizon 3; multiple competing product ideas;
- The Transformation Zone – the part of a company that takes a newly incubated products to a size that is at least 10% of current revenues (at which time it joins the Performance Zone); return on investment is Horizon 2 timeframes; represents what the company bets on as being both disruptive and a competitive advantage.
There are two types of product development activity:
- Zone offense: the company is aiming to bring a disruptive product to market in order to create a new line of business and get ahead of the competition; or
- Zone defense: the company is defending against another company who threatens an existing line of business by introducing a disruptive product.
Some points I noted from my first reading the book were:
- Management of disruptive zones should be separate from sustaining zones but all four zones need to work in tandem;
- When scaling a new line of business, the CEO must lead the transformation zone;
- Only one zone offense can proceed at the same time – moving multiple product lines forward simultaneously will lead to failure;
- The incubation zone could have multiple initiatives for the next disruption but only one can be a winner in a cycle and that one must be able to scale to at least 10 of corporate revenues;
- Overall, it will take excellent management all working harmoniously to be successful in either a zone offense play or a zone defense move.
A strong benefit of the book is that this can be used to essentially benchmark a company’s ability to handle a disruptive product introduction.
Case studies
I found the two case studies to be quite interesting and relevant, if for no other reason than to illustrate how zone analysis can focus your organizational thinking.
Salesforce was used as an example for zone offense. One sentence served to put zone management into context for me:
“At the end of the day, while I am proud that zone management frameworks are making a contribution to the company’s current success, in actuality they are only vocabulary.”
Microsoft was the case study for a zone defense.
It is stated in the book that, “in the tech sector at present no company is more directly under attack than Microsoft.” Microsoft Windows is being disrupted by Apple’s iOS and Google’s Android, Office is under attack by Google Apps, and Windows servers by cloud-based servers.
I think that the case studies could have been a little more in-depth in the comparison of the zone model to how things were actually working inside the firms.
Conclusion
Overall, I enjoyed reading the book and the “playbook” approach to the elaboration of the processes.
I do believe the book is valuable even if only to establish a vocabulary framework. The idea of a vocabulary and reference model is also being used more by standards developers as a way to approach new standardization topics.
One of the questions I had was whether this approach to disruptive product management could be applied to innovation management in general, even for services offered by IT to its corporate customers. I think there are similarities for all classes of “service provider.”
While I’m not sure this book will achieve the classic status that Crossing the Chasm has, it is without doubt a valuable addition to any senior manager’s reading list.