Organizing to Compete in an Age of Disruption

For a list of reasons with which we are all too familiar, established enterprises struggle to embrace disruptive innovations, even when it is in their best interests to do so. It’s time to stop explaining why they don’t and start explaining how they can. That is the purpose of Zone to Win.

The prescription is simple: enterprises struggle because they are internally conflicted. To resolve these conflicts they must segment the enterprise into distinct management zones, each with its own methods and metrics.

Three of these zones will be quite familiar to most managers:

• The Performance Zone, home to the people who make what you sell and sell what you make, its critical metrics being bookings and revenues.
• The Productivity Zone, home to all the various cost center functions that enable the performance zone to perform, its critical metrics being efficiency, effectiveness, and regulatory compliance.
• The Incubation Zone, home to experiments in disruptive innovation that are deliberately sequestered from the prior two zones, its critical metric being viable options to catch the next big wave.

Now as long as it is not yet time to catch the next wave (or to keep the next wave from catching you), these three zones interoperate reasonably well. But when it does come time, none of them has the wherewithal to respond, and they all fall into squabbling with one another and pointing fingers. It is here that the CEO must step in and drive the temporary (two to three years) implementation of a fourth zone.

The Transformation Zone is home to any initiative that will fundamentally change the structure of the enterprise, ultimately resulting in a newly configured performance zone. Its demands are deeply disruptive to the functioning of all the other zones. Transformational initiatives can only succeed, therefore, by virtue of relentless, unremitting prioritization led and supervised by the CEO and enforced with strict discipline for the duration of the transformational period.

Zone to Win outlines precisely what those demands are and describes explicitly how to get transformations done. In addition, it presents two case studies, one from Salesforce, the other from Microsoft, in how these methods are being employed successfully today. In short, it arms executive teams with the tools they need to organize to compete in an age of disruption.

The challenge Zone to Win addresses is how to power through a transformational initiative in a public company in order to catch the next big wave of disruptive innovation (or prevent it from catching you). Such transformations create a crisis of prioritization because there are simply not enough resources to go around. Something has to give, and if you are going to be successful, it has to be the status quo.

The fastest and most effective way to drive a transformational change is to implement the discipline of zone management. This entails segmenting the enterprise into four zones, each with its own resources, management systems, and key metrics:

Each of the first three zones has its own best practices which under normal circumstances result in superior execution and in disrupted times are necessary just to survive. These are described in detail in chapters devoted to each zone, each ending with a “Faults and Fixes” section which outlines the most common mistakes established enterprises make and how to correct them.

The chapter on the Transformation Zone defies conventional wisdom, repudiating current best practices as being in fact worst practices instead. It prescribes a regime that ruthlessly prioritizes the transformational initiative above any and all other activities under way and describes how to engage across all four zones to manage it through to completion. This is the singular job of the CEO and the signature accomplishment for that role.

The book concludes with a short chapter on how to integrate zoning into the annual planning process and a final chapter presenting two case studies where these methods are being applied successfully. The first of these studies focuses on Salesforce, where Marc Benioff has led two successful transformational initiatives in recent years, and the second on Microsoft, where Satya Nadella is fending off a direct attack on his core business model.

The intent of the book overall is to provide executive teams in established enterprises with a vocabulary and a set of frameworks that accurately represent the dynamics of their encounters with disruptive innovations and a set of tools by which they can meet these challenges successfully. The goal is to put a stake in the heart of the innovator’s dilemma once and for all.