Even though I have not completely read Geoffrey Moore's latest book, Zone to Win: Organizing to Compete in an Age of Disruption, I had to put it down and write a blog post about his brilliant insights. If you are not familiar with Moore's books, he is most famous for taking Roger's Diffusion of Innovations theory and turning it into business strategy. I read Moore's first book, Crossing the Chasm, when I was a Presidential Management Fellow at the Social Security Administration. Although, he was writing about private sector companies, I could see immediate parallels to government management back in the late 90s when the early Internet was revolutionizing how the Federal government operated.
Almost twenty years later, his latest book has also spurred my thinking on improving government management. Moore's Zone Management is simple: companies should divide up their organization's operations into four zones to best deal with disruptive change. The four zones are based on three investment horizons:
Horizon One – Return on investment (ROI) is realized in the first year.
Horizon Two – ROI is realized in two to three years.
Horizon Three – ROI is realized in three to five years.
The reason behind the horizons is to ensure that company is producing revenue today and in the future while containing the potentially damaging effects of disruptive change. A company does this by having four zones:
The Performance Zone – What the company currently does to generate revenue and sustain the company now.
The Productivity Zone – The enabling functions such as IT, HR, and finances that help keep the performance zone running at full efficiency.
The Incubation Zone – Placing small bets on potential disruptive ideas that could propel the company into the next phase of growth.
The Transformation Zone – Scaling up one of the disruptive ideas from the Incubation Zone to be ready to enter the Performance Zone.
As Moore advises, each zone needs to be managed differently with a different set of operational expectations and measures. Overlaid on the zones is a lightweight governance structure that helps guide each zone management system. The key is not to have a uniform method for governing all four zones because that will benefit only one-fourth of the company (for the short term) while mismanaging the other three zones. For example, expecting HR and IT (Productivity Zone) to generate profits like you would expect from the Performance Zone, can greatly diminish the Productivity Zone's ability to support the revenue generation of the Performance Zone. You may have a profitable HR function but if this leads to constant turnover, replacing employees will eat into the Performance Zone's profits.
How does this relate to government? Well, replace the Performance Zone with the Mission Zone. Then, redefine the Horizons as:
Horizon One – The agency's Mission Fulfillment Success (MFS) is realized in the first year and is at or near 100%.
Horizon Two – MFS is realized in two to three years at or near 100%.
Horizon Three – MFS is realized in three to five years at or near 100%.
Stated this way, the agency is constantly focused on achieving its mission now and in the future. The Productivity Zone is constantly refining supporting functions to support better the Mission Zone. Meanwhile, the agencies are using the Incubation Zone to forecast possible disruptions to the agencies' missions and develop solutions to meet the future challenges. Once an Incubation Zone idea has matured and proves promising, the agencies move the idea to the Transformation Zone to scale up the idea and prepare it to enter the Mission Zone when current Mission Zone activities have outlived their usefulness (the Dead Zone?).
What I especially like about Zone Management is that it may help with the current "Twilight Zone" that many agencies seem to find themselves. Twilight Zones occur when there is a mismatch between the zones because of not fitting the right management style, metrics, and outcomes to the right zone. Twilight Zones can also occur when zones are not cooperating with each other, or one zone tries to dominate the other zones. I've seen this happen when certain functions in the Productivity Zone (IT, HR, or Finance to name a few examples) attempt to dominate the other three zones. Zone Management is not a justification for building silos or protecting turf. Rather, the true value of Zone Management is appreciating how different parts of the organization can support each other while recognizing the unique needs of each zone. Good Zone Management is like managing a sports team; every player has their role but, it is the combined efforts that make the organization succeed.