What Makes the Productivity Zone Different?

Three of the four zones in zone management are defined by outcomes achieved within a given time horizon. They are:

• The Performance Zone, which is accountable for Horizon 1 outcomes in the current fiscal year. These include bookings and revenues by quarter, product launches and releases of updates and line extensions. These are very results-oriented metrics that must be achieved within a pre-established timeframe.
• The Incubation Zone, which is accountable for Horizon 3 outcomes (several years out). These are measured by intermediate milestones within the current year such as releasing a minimal viable product, securing a flagship customer reference, establishing an anchor use case that is both repeatable and in high demand, winning dominant share in a target market segment, and the like.
• The Transformation Zone, which is accountable for a singular Horizon 2 outcome (18 to 24 months out)—namely, the introduction of a net new product line, a highly disruptive business model, or a radically innovative operating model, something that will require organizations across all four zones to prioritize success here above all other objectives. The success metric is to reach a tipping point within the time horizon’s limits. This is the sort of thing that is hard to define, but we know it when we see it. Signals of success include an uptick in inbound customer interest, proactive outreach from partners, more routine coverage by press and analysts, and investors bidding up our stock—all of which indicate the world now sees the new initiative as a going concern.

The Productivity Zone is different. It is accountable for the policies, processes, and practices that sustain the ongoing operations of the enterprise quarter after quarter, year after year. Its primary role is to deploy and maintain systems that support the Performance Zone in its achieving Horizon 1 outcomes. This includes finance, HR, IT, facilities, procurement, quality control, security, and the like. These are not outcome-driven activities designed to hit a specific target. Instead, they are process-driven functions that seek to improve their effectiveness and efficiency on an ongoing basis. 

Success metrics in the Productivity Zone consist of improving operating ratios. These include lead-to-sales conversion, LTV to CAC, regretted attrition, Net Promoter Score, defects per million, days sales outstanding, ethnic and gender diversity, uptime percentages, and the like. Such efforts require sustained attention and do not lend themselves to heroic achievements. Rather they reward a continuous improvement philosophy of better, better, better, never best. 

The primary beneficiary of the Productivity Zone is the Performance Zone, for the former provides the foundation and underlying fabric that allows the latter to focus on winning new business and retaining existing customers. The policies, processes, and practices that provide this foundation are designed to operate at scale in support of established operations. They are not suitable, therefore, for use in the Incubation Zone, where nothing at yet is at scale, and it is not even clear if anything is ever going to be established. It is important, therefore, to insulate incubation efforts from the normal governance of the Productivity Zone, and that indeed is one of the primary functions of the Incubation Zone board.

Transformations wreak havoc on all zones, and the Productivity Zone is no exception. The ask is for it to spin up a whole new set of policies, processes, and practices to support a new entity racing to scale. This effort begins with delivering a suite of programs to deploy and monitor a new operating model. Once that operating model has got traction, the focus shifts to implementing and maintaining systems to run it with increasing efficiency at increasing scale. Oh, and by the way, please keep the rest of the enterprise humming as you always have in the past. Since there are never enough resources to do all this, Productivity Zone leaders inevitably experience a crisis of prioritization, to which the best response is to prioritize the Transformation Zone’s needs above all others, and take a raft of abuse from everyone else for so doing.

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

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