Moving a Business Unit from Transformation Zone to Performance Zone: 4 Points to Consider

Here is another real-world challenge to which we can apply the Zone to Win principles.

Question:

Hi Geoffrey,

I've been reading a lot about your Zone to Win model online, (which I am entirely bought into and I am about to order the book as a result). I run a business unit that was previously an IOU and which has since moved from the Incubation Zone to the Transformation Zone. My business unit now represents over 10% of the revenue of the agency.

My question is this; if we integrate a Transformation Zone Business Unit (BU) into the wider business (Performance Zone), using the performance matrix that you laid out, will this not create too much conflict and competition within the core business? Meaning, if each source of revenue BU has a specific owner, then the owner of a slow-growing or declining BU will feel threatened by the new fast growing BU that has transitioned in from the Transformation zone, and may look to sabotage or slow any further transformation of the core business.

What are your thoughts or experience of this? I look forward to reading the full book, and I am sure you have laid out a response or way forward for this scenario, but it would be great to hear from you directly on this.

Many thanks in advance.

Answer:

Thanks for this really interesting question/comment. It raises a number of points about the Performance Zone that need closer attention, including:

1. Different lines of business in the Performance Zone can (and should) be measured by different performance metrics, depending on the maturity of the category and the size of the installed base. The more mature the Line of Business, the more the metrics should favor growing earnings rather than revenues; and vice versa, the less mature, the more it is important to grow revenues even at the expense of maximizing earnings.
2. To make that idea work, sales compensation has to be adjusted to reward the right behavior. You cannot make this too complex, however, so the normal way to do this is to add bonus comps to tilt the scales a bit—not crazily.
3. Another thing that affects the dynamics of this situation is the culture of the sales teams. Younger teams play for growth, older teams like to harvest the rewards they teed up in earlier times. That’s OK up to a point, but what cannot be allowed is for either culture to force the other to play by its rules.
4. Finally, there is the culture of the business units themselves. Franchise lines of business get used to be top dog, and there will inevitably be some friction at the changing of the guard. You have to just work through this, but not at the cost of slowing down the growth in the new business.

 Hope these ideas help,

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

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