Depending on Moore’s zones of Management, IT needs to recognize the playing field it is on and play the right game. Let’s break down the implications of Zone Management on IT:
As each of the four zones aims at different outcomes and operates on different management models, IT needs to adapt to these. Let’s have a more detailed look at the nature of the zones and its implications for IT:
Performance Zone: Lean, effective IT
Here the top-line is made, no matter what. The mission is to make the sale. Effectiveness is king, efficiency is important but secondary. IT needs to be agile to be able to enable sales to win by applying the principles of lean IT described in the last posts, namely Platform as a Service, Continual delivery.
The performance zone is focused on systems of engagement with customers, supplier and other business partners. Systems of transactions take a back-seat, the more they are out of view of the performance zone by staying invisibly in the background, the better.
Ideally, the performance zone utilizes systems of perception to the maximum to gain ever new and refined insights into the customer preferences and sales opportunities.
The main error that IT can do here is to apply a limiting process and standard logic to come up with new systems supporting the performance zone. The performance zone is about opportunity, not about efficiency.
Productivity Zone: Lean, efficient IT
Efficiency is what the productivity zone is about. While the performance zone is busy making the sales and winning the customer, efficient fulfillment is what the productivity zone aims at. Here processes are standardized, compliance is enforced by systems and synergy, the economics of scale are realized. ERP systems, systems of transactions are ideal for that.
The productivity zone is much more rigid than the performance zone. It is about synergy, not opportunity. A deviation is frowned upon, compliance is expected.
IT is a historical part of the productivity zone, along with logistics, HR or finance. This explains a natural tendency to think as an organization in processes, setting standards and seeking workable, stable and efficient solutions. This is a systematic bias which hurts the value IT is able to supply to the performance zone. By recognizing this bias, thinking less about efficiency and more about an opportunity, an IT organization will be able to deliver much more value to the performance zone and the organization as a whole.
Nevertheless, efficiency is important, as it determines the bottom line. What is called for is a clear definition of fulfillment standards which are mandatory. Infringing on these will deliver more costs than benefits. To find the dividing line between mandatory standards and flexibility to make the sale is challenging and requires forecasting an uncertain future. The ultimate guidance to draw this dividing line is the business model: What is at the core of the organizations business model? If a business activity is not at the core of the business model, it is subject to be standardized for efficiency.
Finally, by embracing a platform as a service model, IT will be able to be much more accommodating to changes then a with a monolithic ERP centric architecture, without compromising efficiency.
Incubation Zone: Lean Start-up
Each start-up is an independent operating unit (IOU). The other zones involvement in the Incubation zone is strongly limited to:
- Supplying resources
- Supplying basic IT services to incubation centers such as desktop management or network services
- Offering supporting services (HR Travel Mgmt., Finance, and Accounting) to the various IOU’s
This level of support needs to be very light. As speed and the freedom to act in any way necessary are of the essence, corporate, IT takes on the role as an enabler – if it has any role at all. If there is any role of the IT department in this zone, it is to simplify but not to restrict.
Historically corporate IT departments have not been involved much with incubated activities in most companies. It will require a new positioning of IT to be allowed to support this zone, as IT is clearly located in the productivity zone in most companies today.
Ideally, once IT has achieved this new positioning by adopting a demonstrated positive attitude and aptitude to innovation, resources may shift between IOU and corporate IT freely. A state which has been by the likes of IT-based companies like Amazon and Google, but is a far cry for traditional companies. But employing an innovation-friendly IT, as shown in the last posts, sets IT on the track.
Transformation Zone: The Mission is everything
There are two archetypes of transformation:
- Transformation of operating model
- Build up new lines of business
IT’s role is strong in the former. If a new operating model is called for, i.e. a reconfiguration of processes to deliver more effective or efficient services for the existing customer base, IT’s role in the transformation is naturally strong. IT will have a key role in this transformation.
In contrast to this, building new lines of business is much less of an IT-centric effort. Still, IT might be required to integrate the new line of business into systems of transaction, engagement or perception and help to scale the new business. But the existing operating model is left untouched.
Enabling factors for IT to implement Zone Management
The extent to which IT will be ready to deliver value to each of the four zones is depending on three factors.
First, IT needs to have its capabilities in order. A PaaS platform, continual delivery with its huge demands on test automation, a backbone of systems of engagement, transaction and perception, an SOA based integration backbone – all come at a price. The more these capabilities are available, the better IT will be able to break out of today’s positioning in the productivity zone. Preparation is required.
Second, enterprise strategic management capabilities are required. G. Moores “Zone Management” Model is a Model, i.e., an abstracted way of thinking about a problem. It is worth nothing if vision and strategy are not clear. In this case, the model will help to move the organization forward, but in a rather random direction.
Strategic management capabilities vary strongly by a company. Strategic Management capabilities encompass the capability to anticipate market developments, formulate a coherent strategy, communicate that strategy clearly, break down the strategy into actions and put the plan into action (see Rumelt in sources). Just to know how to manage each zone is not enough, clearness of vision and strategy is required. Instead of this clarity, IT will struggle to implement Zone Management.
Third, the best-laid plans, be that zones of management or any other strategies must be executed. Even the best strategies are just plans, it needs execution to turn them into reality. On any level, CXO or lower the ability to execute include following abilities:
- Systematic follow-up
- Discussion and fact-based decision processes
- Clear, consistent communication
- Keeping the nerves, stick to a plan once adversity is discovered
- Political acumen, as multiple constituencies needs to support the change
Conclusion: Adapt the model to your needs
Every IT manager tries to play the game right. The value of the zone management model in the context of IT is that this is not enough.
IT needs to play not one game right: It needs to play 4 different games – and each of the game right.
The playing field and the rules are indicated by the zone management approach. But in every company, the playing field and the rules are heavily influenced by the enabling factors: Current state of IT capabilities, strategic management capabilities on the corporate level and ability to execute on the corporate level.
So scan the playing fields, assess the different rules, adopt them to your companies situation and capabilities and ramp-up your play!