Turning the Zones Upside Down

What Happens When the Productivity Zone Rules the Roost?

“You are old, Father William,” the young man said,

“And your hair has become very white;

And yet you incessantly stand on your head-

Do you think, at your age, it is right?”

Zone management is founded on the principle that the core of any company is its Performance Zone, the place where it both “makes the number” and delivers value directly to its customers. The organizations in this zone sell what you make and make what you sell, and everyone else in the company is, or should be, in service to them. Specifically, the Productivity Zone, which hosts all the support organizations performing the behind-the-scenes functions necessary to enable the enterprise to operate-finance, HR, legal, IT, customer support, quality, procurement, facilities, security, and the like-does so in order to support the Performance Zone. That’s the pecking order when all is going as it should.

But now consider what happens when the Performance Zone goes off the rails. Say it makes some missteps, loses some bets, and misses its numbers-now what? Well, ideally everyone rallies to review the situation, identify the appropriate remedial actions, and get the operation back on track. But life is not always ideal, and there are many scenarios where key influencers act politically and parochially, undermining each other’s actions, pointing the finger of blame anywhere but at themselves, causing the enterprise as a whole to balkanize into cliques of entitlement and entrenchment, taking its eye off the market, neglecting customers and competitors alike, thereby making a bad situation worse. Clearly an intervention is needed, but what should it be?

What most companies do in these circumstances is turn to their Productivity Zone for help, transferring all material decision-making power to the functions hosted therein. Resources for the Performance Zone are doled out by the finance organization, with a strict focus on ROI in the coming year. In parallel, the Incubation Zone is subjected to the same sort of oversight and ROI scrutiny even though they are manifestly not fit for purpose. Meanwhile, whatever downsizing that is required is being driven by the HR organization, with staff reduction quotas distributed evenly across all orgs, without consideration to the zone they are in or the kind of value they provide. Most importantly, across the board, process has become king, the guiding principle being that if we will just all follow a set of disciplined processes, we can get through this together and emerge on the other side, ready to take on the world again.

Attractive as this may sound, it just doesn’t work, and it is important to understand why. Process, as it is practiced in the Productivity Zone, takes time. Decisions need to be planned, reviewed, and approved. But for an organization in crisis, time is the scarcest currency. Rapid, often iterative, decision-making is critical to getting things back on track. Latency of any kind is excruciatingly debilitating. Absent timely decisions, key opportunities pass by, key allies pull back, key competitive threats go unchecked, and key talent defects, all causing the enterprise’s future prospects to dwindle and vanish.

Now, to be clear, it is not that process itself is unnecessary. Every zone needs process to operate efficiently and effectively at scale. Rather it is that the Productivity Zone’s version of process-what one might describe as the deliberate and orderly application of risk-reduction protocols-while good for the Productivity Zone, is not fit for purpose anywhere else. Try applying it to the Incubation Zone, and you will stifle innovation for the rest of time, because innovation implies embracing risk, not forestalling it, making agile moves based on intuition and course-correcting along the way. Try it in the Performance Zone, and you restrict your future to a pedestrian set of incremental offers, which, by the time you have decided they are safe to release, will have long since passed their sell-by date. Try it in the Transformation Zone, and you will sufficiently dampen down your change initiatives to ensure they never reach the tipping point, after which you will conclude they were unwise risks to take in the first place.

Such observations, of course, are hardly new, which begs the question, why do organizations turn to their Productivity Zone in a time of instability? I think it is as much psychological as anything else. The Productivity Zone feels like a safe place to go. Even in a crisis, its processes remain stable, with competent professionals fully engaged in a steady stream of orderly transactions that appear meaningful. But such transactions are only in fact meaningful when they are conducted in support of the Performance Zone. Without a successfully functioning Performance Zone, the Productivity Zone-indeed the rest of the enterprise as a whole-has no reason to be.

So then, what should enterprises do when their Performance Zone goes off track? To be blunt: Fix it! Change the leadership at the top immediately, and empower the new leader to bring in as many trusted lieutenants as he or she can, as fast as possible. If you have to cut budgets or downsize, so be it, but run your Productivity Zone processes at warp speed-there is no time to linger over painful decisions. Accelerate the exit of those who cannot or will not get on board, and make sure you overweight any budget cuts to the Productivity Zone itself. In parallel, prioritize any investments that can add power to the Performance Zone’s offers in the short to medium term. You cannot address your flagging in-market performance until you restore offer power.

The ultimate lesson to learn here is one at the very core of zone management itself. Each of the four zones has unique methods, metrics, and governance mechanisms, all of which are optimized to improve and enhance its own operations. That is goodness. None of these protocols, however, is a proper fit for managing any of the other three zones. In other words, you can never entrust the resuscitation of one zone to the leaders of another. Instead, reform must be led from within the zone in question, normally with a new person at the top, and always with a whole lot of help from the teams in the other three zones.

That’s what I think. What do you think?

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Geoffrey Moore | Zone to Win | Geoffrey Moore Twitter | Geoffrey Moore YouTube

Originally published at https://www.linkedin.com on December 26, 2017.

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The opinions expressed here represent those of the author and not necessarily the views of Wildcat Venture Partners.