Zone to Win: Book Review
Organizing to Compete in an Age of Disruption
This month we’re reviewing the book Zone to Win by Geoffrey Moore. Last month we reviewed the book Crossing the Chasm by the same author. If you missed that review, you’ll want to check it out. But if you haven’t read the book yet, that is okay. You can dive into this one without a problem. While it is part of Moore’s series of books on innovation and technology practices, it isn’t reliant on information from the previous books.
So let’s dive in.
Many of us are probably familiar with the three horizons planning model. If you’re not, don’t worry. We’ll discuss it here.
I’ve used this model for company and product planning at several organizations, and it is a popular framework.
The three horizons model, unsurprisingly, uses three horizons for planning. The first horizon is the immediate future where you are working and executing on your current business. The second horizon comprises your plans for the next few years. Depending on the stage of your business, this could be anywhere from 2 to 5 years. Higher growth companies will have horizon two initiatives on the shorter side in my experience, while more mature organizations will be on the longer side (5 years). This usually includes key strategic initiatives that you are planning for now, and will pull into horizon one over the next 1-2 years. And the third horizon is 3-10 years out. It comprises your longer-term goals and ideas that need more incubation time before they become ready for the current business.
With that in mind, the book Zone to Win uses the three horizons framework as the principal idea behind its “zones”. It argues that businesses need to clearly define and separate zones in order to allow each area within the business to operate independently, but in coordination with the other zones for the most success. Each zone corresponds with a horizon, and a fourth zone is for improving productivity and efficiency in the business.
Zone to Win primarily focuses on larger organizations. It uses Microsoft and Salesforce as two key case studies. However, the principles of the zones (and the three horizons framework) are useful for any size business and for many of us.
So let’s inspect some key ideas.
Each Zone is Different
The four zones are:
Performance Zone - your current/core business
Productivity Zone - the shared services like HR, legal, marketing, etc. that drive efficiency for core business and help during transformations
Transformation Zone - the zone where ideas come to scale up and become part of the core business
Incubation Zone - where ideas are grown slowly apart from existing business before they are ready to scale
Each of these zones is important. We don’t have a business without the performance zone, where most of our sales and marketing and development effort are focused. But if we don’t also plan for the future, eventually that core business will be disrupted and fade away, like so many companies before. So we constantly need to be innovating, then incubating ideas in the incubation zone until they are ready to scale up and become part of the core business.
Each zone is different, though, and needs different things. Which is why Zone to Win argues that each zone should have its own leadership, its own incentives, and be separate but work together to ensure success. Ideas that are being incubated should not be held to the same standard, or have the same leadership, as ideas that are fully scaled and performing for the business. This is a surefire way to kill an idea in incubation.
Transformations take Focus
Not every idea from incubation becomes a fully fledged product or business line, however. Some ideas simply don’t have the ability to scale or the product/market fit. So those ideas can be added to existing products in our core business. I discussed this in a recent podcast on pricing:
But for the ideas that have the ability to scale, a company should focus on bringing one of those at a time into the business as part of a transformation effort led by the executive team and CEO.
Transformation is difficult, which is why focus is key. Many companies have failed simply because they haven’t focused their energy and effort on a singular new big idea that will transform their company. They remain too focused on selling their core products and maintaining existing business, and are never able to bring a big new idea to market.
As I mentioned before, this book focuses on large organizations. The ability for small companies to bring new, transformational products to market is different (and typically faster), but the principles are similar. It is much easier to stay focused on selling your core product unless you shift incentives (I’ve seen this firsthand several times now at startups). It is also difficult, even at startups, to make big shifts in the company without good leadership and a clear strategy and vision. So new, transformational products will languish and die in favor of the core business until an existential threat comes up. At which point, it is often much later than you’d like it to be.
Incubation and R&D
Finally, incubation differs from research and development (R&D). Companies should definitely do both, including having a skunk works area or a lab where new ideas can be tested and fostered. But we have to understand that the incubation zone, according to Moore, is an area where we’ve taken the skunk works ideas and are incubating some of them into viable products or business lines. They are no longer just ideas or tests, but are in development to become actual products or product lines. Eventually, we hope to pull them into the core business, either as fully fledged products or at least as add-ons to existing functionality.
The book Zone to Win by Geoffrey Moore offers good insight into the need for separating zones in an organization. Using the three horizons framework, it makes sense to allow different types of innovations to operate differently.
While the focus of the book is clearly on larger companies (Microsoft and Salesforce are the two companies used as case studies), many of the principles apply to any organization.
Overall, it’s a short read with some good insight. It can be dense at times, but worth exploring.