Zone to Win

Organizing to Compete in
An Age of Disruption

November, 2015
 The Impact of Disruptive Innovation
When the Marginal Cost Approaches Zero

The marginal cost of systemic optimization

Internet of Things

The marginal cost of dynamic decision-making

Data Science

The marginal cost of adding a resource to a sharing economy

Social Networks

The marginal cost of automating a personal transaction

Smart Phones

The marginal cost of computing

Cloud Computing

Which wave will have the biggest impact in your world?

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 Leaders Who Missed Their Next Wave
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
 Three Investment Horizons
Where the Problem Lies
Do well here too
Break-Out
Categories

On-board next
generation for Horizon 3
future growth ROI in 36 to 72 mos
Current
Categories
Future Category
Meet Horizon 2
Options
Performance ROI in 12 to 36 mos
Commitments Develop options
for future
Sticking point growth
Horizon 1
ROI in 0 to 12 mos

Do well here
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 Disruptive Innovation Model
It’s Not a Funnel. It’s an Hourglass!

Horizon 3

Horizon 2

Horizon 1

Sustaining Disruptive
Innovations Innovations
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 Engaging with Disruption
What Are You Looking to Change?

Cloud
Mobile Bus
Model

Operating
Model
Social
Data Science
Infrastructure
6 Model

Internet of Things

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 Engaging with Disruption
Three Different Games to Play—Choose One!

Business Innovation
Bus
CEO sponsored Model
Redefine Market Norms
Competitive Advantage!

Business Operations
Operating
CXO sponsored Model
Redefine Productivity
Effectiveness!

Technical Operations
Infrastructure
CIO sponsored Model
Redefine Price/Performance
Efficiency!
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The higher up in the model,

the greater the disruption to absorb
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 The Four Zones
Organizing to Compete in an Age of Disruption

Disruptive Sustaining
Innovations Innovations

Transformation Performance
Revenue Zone Zone
Performance Horizon Horizon
2 1

Incubation Productivity
Enabling Zone Zone
Investments Horizon Horizon
3 1

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 The Four Zones
Each Zone Has a Unique Funding Charter
• 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

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 Performance Zone: Horizon 1
Getting the Performance Matrix Right

Column Owners
Channels of Bookings (Sales) Every row and column has a
unique owner
TOTAL
Sources of Revenue (BUs)

No row or column subtotal can be

TOTAL less than 10% of total
Row Owners

TOTAL Rows & Columns interlock at the

cell level for joint accountability
TOTAL
Operating cadence:
TOTAL • Weekly commits (milestones)
• Monthly status reports
TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL • Quarterly business reviews

Key Metrics: Revenue, contribution margin, churn/renewals, growth rate

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 Productivity Zone: Horizon 1
The Architecture of Programs & Systems

• Programs
• Customized services
Programs • User funded
• Optimized for effectiveness
• Programs adapt to users’ needs

Systems Interface
• Systems
• Standard infrastructure

Systems • Centrally funded

• Optimized for efficiency
• Users adapt to system’s rules

Systems and programs are mutually incompatible

Manage them separately—do not blend
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 Incubation Zone: Horizon 3
Venture-Style Independent Operating Units

Each IOU run by a dedicated

IOU IOU General Manager
IOU #2 #3 IOU
#1 #4
All functions report into GM
(No shared resources with
Performance Matrix)

Incubation Fund Venture-Based Metrics

CEO + Board • Seed: Technology POC
• Series A: MVP + first customers
• Series B: Win beachhead market
Finance
Human
Administration • Series C: Exit to scale
Resources

Funding & reviews outboard of the

1. Transition to Transformation Zone Annual Operating Plan
FIVE 2. Transition to Performance Zone
EXIT 3. Spin out
PATHS 4. Get bought
5. Shut down
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 Transformation Zone: Horizon 2
Transformational Initiatives

TOTAL

TOTAL

H1
TOTAL

H2 TI TOTAL

*
TOTAL

TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL

Insert a new row into the

H3* IOU Performance Matrix
*
H3 IOU
* CEO sponsored
H3 IOU
*
H3 IOU Everyone on board
No retreat
Incubation Set Only one at a time

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 Prioritizing the Four Zones
“At Half Time” (No Transformation in Play)

Disruptive Sustaining
Innovations Innovations

Transformation Performance
Revenue Zone Zone
Performance
4 1

Incubation Productivity
Enabling Zone Zone
Investments
3 2

Harvest your rewards, build up your reserves

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 Prioritizing the Four Zones
Zone Offense

Disruptive Sustaining
Innovations Innovations

Transformation Performance
Revenue Zone Zone
Performance
1 2

Incubation Productivity
Enabling Zone Zone
Investments
4 3
Enlist everyone in scaling the new business
Subordinate incubation to transformation
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 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

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 Prioritizing the Four Zones
Playing Defense

Disruptive Sustaining
Innovations Innovations

Transformation Performance
Revenue Zone Zone
Performance
1 3

Incubation Productivity
Enabling Zone Zone
Investments
2 4

Enlist everyone in stabilizing the current business

Subordinate productivity to transformation
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 Modernizing Your Model
Each Game Plays Out in a Different Zone

Disruptive Sustaining
Innovations Innovations

Transformation Performance
Zone Zone
Revenue
Performance

Enabling
Investments
Incubation Productivity
Zone Zone

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 For More Information

Transformation Performance
Zone Zone
Make a Make the
big change top line

Incubation Productivity
Zone Zone
Create options Make the
for the future bottom line

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 Thank You

[email protected]

twitter.com/geoffreyamoore

http://linkd.in/YnBwig

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