Chapter Seven: Installing the Zone Offense

This post is the seventh in a series of posts that will eventually become a book. I am looking to improve the text by incorporating readers’ feedback before I go to print. Find out more about this project or start from the beginning.

Read the previous chapter in this series

The principles reflected in this playbook have emerged from a handful of client engagements conducted over the past several years, the two most impactful being with Salesforce, sponsored by Marc Benioff, and Microsoft, sponsored by Qi Lu, the executive vice president who heads up the Applications and Services Group that includes Office and Outlook among other properties. Both these engagements are ongoing relationships at the time of this writing, and in neither case has the total model become institutionalized as yet. Moreover, both organizations are putting their own unique spin on things, reflecting assets, history, and points of view unique to them. That said, both, in my view, are being true to the spirit of Zone Offense and are hard at work trying to adapt it to their circumstances. And enough water has passed under the bridge for others to benefit from lessons they have learned along the way. So with that thought in mind, here they are.

Installing the Zone Offense from the Top Down: Lessons from Salesforce

Salesforce has enjoyed remarkable success from its founding in 1999 to the present, a journey characterized by entrepreneurial innovation, remarkable growth and industry leadership. And despite its now considerable size, with a greater than $5 billion revenue run rate in 2014, it shows few signs of slowing down any time soon. Moreover, it has an exceptionally straightforward and effective management system called V2MOM (more about this in a moment) which has been core to its success. So why would it be interested in something as newfangled as a Zone Offense?

The answer is simple. With size comes inertia, and with inertia comes resistance to change, and Salesforce quite simply is not done with change. So it needs to negotiate the same transitions that larger, more established enterprises do, albeit with the concrete not quite yet as hardened and thus, arguably, a bit easier to recast. How it is going about this journey offers object lessons for us all.

The core of Salesforce’s operations is governed by a planning process called V2MOM, standing for Vision, Values, Methods, Obstacles, and Metrics, something well documented in Behind the Cloud (Marc Benioff and Carlye Adler, Wiley, 2009). Here’s how it works. Each year Marc drafts an early version of next year’s V2MOM that reflects his CEO-level priorities for the enterprise as a whole. This draft is circulated at the beginning of the third quarter, socialized further during the fourth quarter, leading to considerable revision, and then is finally locked and loaded heading into the next fiscal year. In tandem with this effort, each of his direct reports build’s a V2MOM for their organization chaining off of Marc’s, piggybacking on their report-outs at these same quarterly offsite meetings to socialize their V2MOMs as well. As these solidify, they become the basis in turn for the next layer of direct reports to draft their V2MOMs, and so on, all the way down the management hierarchy. At the culmination of the process all employees at Salesforce have their own V2MOMs that chain directly all the way back up to the CEO’s.

To drill down a bit into this, here are the component elements of a V2MOM:

• Vision.This is a short pithy statement articulating a highly desirable future state, combining something of great value to Salesforce—typically a leadership position in a fast-growing category—with something of great value to the world—typically some kind of customer success. The purpose of this first V is to declare what you want more than anything else and by so doing establish your True North. Everything that follows should connect in some way to bringing about this desired state.

• Values. This is typically a set of three values that both enable and constrain the work to realize the vision. Traditionally at Salesforce trust has been the CEO’s top priority value year after year, originally perhaps because people were skeptical of the trustworthiness of cloud computing and software as a service, but more recently because more and more enterprises are entrusting their business success to these systems. Growth has frequently been the CEO’s second priority value, the sense being that the shift to cloud computing is going to happen so quickly, it is critical to stay out in front of it. The third value, by contrast, tends to change from year to year in the CEO’s V2MOM, depending on where the company is in its maturation.                                                                                                                     When the V2MOM cascades down to the CEO’s direct reports and below, each level gets to determine its own top three values. While there is a natural tendency to seek to align directly with the CEO’s values, there is no expectation to do so if some other value needs to be prioritized instead. The point is, everyone is explicit about the values that are shaping their choice of the methods that follow, and one of the ways methods are critiqued is in terms of whether they do indeed reflect the values beings asserted.

• Methods. These consist of a list of initiatives, typically ten or so, that embody the organization’s strategic approach to realizing the vision in the coming year. Virtually all funding is organized around these methods. That is how things get done. When something gets into your V2MOM methods, it is very likely to happen. In effect, then, methods are the engine that drives resource allocation and performance management at Salesforce.                                                                                                 What is both novel and impactful about these methods is that they are rigorously prioritized in stacked rank order such that any organization inheriting one knows exactly where it stands in the greater scheme of things.   And because each V2MOM’s methods are presented in strict priority order, an order that has been vigorously debated throughout the planning process, there is a common alignment and prioritization across the entire enterprise, top to bottom, which, among other things, makes the cut line in any budget reduction (or addition) crystal clear.

• Obstacles. Obstacles are paired one to one with every method, the goal being to call out the primary forces that could cause execution of that method to fail. This is a face brutal facts exercise, no rose colored glasses, no happy talk. Ambitious methods always entail serious obstacles. The point is to make sure everyone is aware of the breadth and depth of the challenge. When socialized at quarterly business reviews, this also lets peers query the team advocating the various methods for how they plan to deal with the obstacles in their way. In addition, just by hearing these obstacles presented, other teams can get a sense of where this team is going to need extra help, not to mention where their own behavior might become a potential obstacle in its own right. Finally, just as the methods chain back up the CEO’s, so in a sense do the obstacles, which means that there is no obstacle that can be summarily dismissed as “That’s their problem.”
• Metrics. Metrics are just what they say: objectively observable outcomes that signal the success or failure of each method. What is particularly effective about conducting V2MOM planning sessions at a quarterly business reviews is that they begin with each owner first reporting out on the metrics of their current fiscal year’s commitments. This helps to level set their credibility when they then turn to proposing next year’s V2MOM, and in particular, next year’s methods. For organizations that are knocking the cover off the ball, the expectation is that they might want to set their sights even higher. For organizations that are behind the eight ball, the first question is, what are you doing to get back on track this year, and then in that context, what can we realistically expect from next year?

Even from this cursory description it should be clear there is a lot to like in this approach, so why does it need the complement of a Zone Offense? As we have already made clear, the heavy lifting in the V2MOM system is done by the methods. To get the most out of a V2MOM, you have to get the most of your methods, and that means setting up each one to yield the most output from the least input against the most appropriate metrics. The key to so doing is to put it in the correct zone of the Zone Offense, based on whether you intend it to be disruptive or sustaining and whether it will be mission-critical or enabling. Both are judgment calls which need to be vigorously debated. But at the end of the day, by placing a method in one and only one zone, you make clear to everyone who touches it just what the stakes are and which rules of engagement apply.

More specifically, here are some key principles that correlate with each of the four zones:

• Performance Zone. Methods placed here embrace the performance matrix’s core metrics—bookings, revenues, churn, retention, win rates, market share, and the like. They tend to focus on developing more competitive offerings, funding market development programs, expanding sales coverage, driving more sales pipeline, and improving sales enablement.                                                                                                        A key challenge in achieving such metrics is securing cell-level interlock in the performance matrix and subsequently monitoring actuals relative to cell-level targets. The question is, at what level? It makes no sense to drive interlock accountability down to the individual salesperson as no one territory is ever likely to generate demand for the complete performance matrix portfolio, so at what level then should you enforce interlock? At Salesforce they are rolling this out one level up from the account executive at the regional vice president level. This is still a work in progress, one challenge being that even regional territories may not have a full complement of demand across a product portfolio, another being that it adds complexity to a first-level management job where the main focus should be on people skills first. My instinct at this point is that it will end up migrating one further level up, but we shall see.

• Productivity Zone. Methods in the Productivity Zone correlate with three types of metrics. For compliance initiatives, the focus is on percent conforming, the goal being to asymptotically approach perfect compliance. For systems initiatives, the focus is on maximizing adoption rate and minimizing manual interventions. And for program initiatives it is on the productivity improvement metrics set by the organization consuming the program. To get visibility into any of these three kinds of metrics requires some kind of overlay data processing outboard of the core enterprise IT systems of record. Making this an IT project is simply a mistake—that organization has too much on its plate. Instead, best practice is to design the metrics and data gathering into the system or program itself, so that it can report out automatically, giving both visibility and control to the operator in charge.                                                         One of the biggest challenges in the Productivity Zone is meeting the demand for risk mitigation. When risks are mission-critical, methods inevitably want to migrate upward into the Performance Zone, the place where sustaining innovation meets mission-critical obligation. But because risk mitigation has no financial upside—you get no prize for not setting fire to your building today—it cannot be managed within the performance matrix. And since the performance matrix is the engine that drives the entire company, you really don’t want to compete with it for attention in the Performance Zone. So now what?                                  First, accept the existential fact that you can never eliminate risk entirely, so the goal of risk mitigation is not to eliminate risk but to operate at the efficient frontier of risk reduction. This is a subtle distinction, and it takes considerable dialog with relatively sophisticated leaders to charter risk management correctly. Once a proper charter is in place, the next step is to emphasize programs for the short term and systems for the long term. That is, correcting a problem requires an intense burst of attention focused on a very specific outcome, the goal being not just to remediate the immediate condition but redirect the culture. That’s what programs are good at doing. The long term goal is then to codify that new direction by embedding it in systems that just do the right thing programmatically. Until something has become a system, it is just a phase, or worse, a fad.        To put this in perspective, to keep pace with the increasing demands of globalization and cyber-security, at one point Salesforce went into program mode to reorganize and consolidate all the separate compliance functions for technology, finance, and HR under a single executive sponsor who in turn put them under a single, highly empowered operating lead. That enabled everyone to get better line of sight top to bottom into the current status of potential problems and report out clearly to the CEO and the Audit Committee and to fund major initiatives to take systems up to the next level. This is all part and parcel of an entrepreneurial culture and company stepping up to the systems demands of industry leadership. The key is to act swiftly and decisively within the parameters of the Productivity Zone.

• Incubation Zone. Salesforce does not use the formal approach to managing the Incubation Zone advocated in this playbook, but it is a constant focus for the CEO, which is arguably the most important principle. Because the tech sector is moving so quickly, many initiatives here get started with an acquisition, typically something modest in size and impressive in technology crown jewels. Marc’s fingerprints are on every one of these transactions. Once acquired, Salesforce follows the industry standard practice of leaving the incubating entity to its own devices as much as possible. This is a time when “helping” does not help.                                                                                                              What does help, on the other hand, is the V2MOM system. Because every entity’s V2MOM must ultimately chain back up to the CEO’s, the leaders of the new acquisition need to connect directly with Marc to make sure they are directionally aligned. This is actually a big plus, as acquired companies can easily go rogue, spurning the acquiring entity’s vision and values as too mundane and uninspiring.                                             Second, the V2MOM system allows the new entity to set its own methods and metrics, which means it does not have to get burdened by the Performance Zone’s operating ratios at a time when such metrics make no sense. This actually was becoming an issue at Salesforce when the Four Zones framework was first introduced, but the model quickly allowed everyone to see that different zones required different standards, and that there was a real discipline both to zoning itself as well as to governing transitions between zones.                                                                           And that is the third area where Salesforce innovated, specifically around the perennial high-tech challenge of when and how should you integrate the new acquisition with the enterprise as a whole. The “organ rejection” that often accompanies such efforts is so well known that many management teams have lost confidence in how to get this done. The Zone Offense is quite clear on this point: there are five exit paths, and you have to be on one of them by the end of your tenure in the Incubation Zone, a period which should never exceed five years, and more normally would be three.                                                                                                     Where Salesforce innovated was in making these calls at the CEO level and driving these transitions to occur sooner rather than later. In particular, in 2013 Marc called out one acquisition, ExactTarget, subsequently to become the Marketing Cloud, as the Transformation Zone focal point. By virtue of the one-transformation-at-a-time principle, this meant that the remaining recent acquisitions, of which there were several, needed to find some other exit path from the Incubation Zone. Most were directed to find a home within an established business. Thus Data.com became connected to the Sales Cloud, as did Pardot, which was a company ExactTarget acquired prior to the Salesforce acquisition. Desk.com, bought to compete at the low end of the service market, was connected into the Service Cloud. BuddyMedia and Radian6 were connected into ExactTarget to form the Marketing Cloud. The key point here is that all these acquisitions at one time were potential candidates for the Transformation Zone themselves. The fact that they did not get picked is primarily a function of the mathematics of that zone—one and only one initiative can make the transition at any given time, and the time that initiative will take to scale is likely to be two to three years. That was the lesson that Steve Jobs taught, and Marc took it to heart.                       From the nascent business’s point of view, transitioning into the Performance Zone inevitably means there is something lost in translation. Yes, it is gaining authentic representation in the performance matrix, which is nothing to sneeze at, but as it reconfigures its technology and products to fit in with its new host business, it inherently becomes less differentiated. Indeed its function is no longer to differentiate so much as to neutralize. That’s because established lines of business face a perennial challenge to keep their existing product lines up to date, particularly when a new crop of disrupters are nipping at their heels. The market is still predisposed to buy from the incumbent, but only if it can show it is getting close to par with the core features the next new start-up is touting. That is where these “diagonal” transitions in the Zone Offense can have a big impact.

• Transformation Zone. I have said that transformation is the signature responsibility of the CEO, and it is hard to imagine a CEO who has embraced this principle more strongly than Marc. Yet here is the interesting thing. In order to shore up the gains from Salesforce’s amazing growth, in the past two V2MOM exercises his top three priorities each time were a) virtually the same as in the prior year, and b) more focused on sustaining innovation than disruptive. That is, his first priority in each year focused on enterprise-class trustworthiness, his second on customer success, and his third on sales execution. The point here is that in this period Salesforce had some basic knitting to attend to, and that took priority.                                                                                                            That said, the fourth priority in both years was Salesforce1. This is a rallying cry for making the entire suite of Salesforce offers an end-to-end mobile-first business platform, as exemplified in its current tag line, “The Customer Success Platform: Sales, Service, Marketing, Community, Analytics, and Apps.” This would be transformative to the degree it would cause CIOs in large enterprises to begin to describe themselves as a “Salesforce shop.” Such a change would be transformational because it would move the focus of the overall sales dialog from product to platform.   Why would this require CEO involvement? Well, to begin with, all the financial metrics in the V2MOMs, from Marc on down, are centered on the performance matrix. This naturally leads to each cloud clamoring for more features to help win its product-specific competitive battles—more marketing programs that highlight its specific offers, more sales head count dedicated to its specific customers. To move up to platform status, the company needs to close much broader and bigger deals, ones that transcend any particular departmental function and help reengineer the customer’s enterprise as a whole to meet the challenges of a digitally disrupted world. That requires a different engineering, sales and marketing approach, and if the CEO does not champion this, inertia being what it is, it simply will not happen.                                                              Two concrete consequences of this prioritization are already showing their impact. The first is that the development side of the house is putting much more resource into cross-product deliverables, porting the entire platform to run naturally on mobile devices, and porting the modern mobile user experience back onto the desktop where appropriate. Neither of these create direct revenue credit to anyone’s account, but both help secure the customer success platform promise. And second, the sales side of the house is putting much more emphasis on the mega-deal with Salesforce as a way to shift enterprise IT’s focus away from maintaining its on-premise investments toward investing in comprehensive cloud computing SaaS solutions.                                                                          This puts considerable pressure on the performance matrix as the preponderance of any sales organization is both more comfortable and more competent at selling specific products, and there is an inevitable attrition during any changing of the guard. To keep sales growth going during this kind of transition demands that the entire executive team suit up to support the mega-deal sales motion, and the fact that the CEO not only calls for this but calls out specific behaviors during quarterly business reviews related to this, provides the impetus for it to become the norm rather than the exception.

Overall, the key lesson that Salesforce teaches is that leadership must be principled if it is going to operate a Zone Offense at scale. Here are three questions Marc routinely asks when someone proposes an initiative be placed in the Transformation Zone:

• Does it require disproportionate investment?
• Does it require disproportionate focus?
• Does it represent future materiality?

That is the spirit in which transformations are unfolding at Salesforce, and it is one you want to keep very much in mind as you roll them out in your enterprise.

• The Philanthropy Zone.

The what? Where did this come from?

Philanthropy is absolutely central to Salesforce’s playbook, its whole reason for being, and its meteoric success. And yet, as Marc has pointed out to me, there is no place for it in the Zone Offense. He believes we should expand this playbook to make it more of a Zen Offense, and I find that idea hard to argue with. Let me explain why.

Salesforce’s core strategy is to provide systems of engagement that allow enterprises of any size to leverage mobile, cloud, social, and data science technologies to better communicate with and engage their prospects, customers, partners, and employees. This is not just a technology journey. It also involves inspiring and enlisting people to embrace these systems of engagement to multiply their impact many times over. But that entails overcoming a whole lot of incumbent inertia. In this context, philanthropic causes have an extraordinary effect. They evoke a generosity of spirit, a joy of engagement, and a fulfilled sense of purpose in your community that spills over into the rest of their lives. People align better, they pitch in more, they reach out further, and they find ways to make things work more often.

Salesforce has gone out of its way to capture and institutionalize this energy via its 1/1/1 commitment to donate 1% of its equity, 1% of its products, and 1% of its employee time to philanthropic causes. This is a wonderful thing in itself, but it is also a strategic act of generosity. The world is simply more receptive to Salesforce’s initiatives because they are enthralled by its spirit, most obviously demonstrated by the most recent Dreamforce event in 2014 that attracted 150,000 registered attendees, outstripping the reach of its much larger competitors by a long shot. The company punches far above its weight class, and this is why. When people pitch in voluntarily, when partners and customers go the extra mile because they see you going the extra mile, the returns can be staggering.

The Productivity Zone, in other words, need not just be an in-house affair. If you’re looking for extra resources, having the whole world on your side is not a bad place to start.

Installing the Zone Offense from the Bottom Up: Lessons from Microsoft

Qi Lu is the executive vice president of the Applications and Services Group (ASG) at Microsoft, which includes all of the Office products and services (Word, PowerPoint, Excel, Outlook, Exchange, Sharepoint, etc.) Outlook.com, OneNote, Skype, Bing, and MSN, both on devices and in the cloud. In total, this makes Qi responsible for close to half the company’s revenues and arguably its single most important set of assets for the immediate future.

At the surface Qi and Marc could not be more different. Marc is not only larger than life in personality, he also stands about 6 foot 5 with an imposing frame to match. Qi, by contrast, fits comfortably into a coach seat on any airplane, which is the only seat he will take when he travels, even when it is internationally. Marc grew up in the San Francisco Bay Area as part of a well-to-do family. Qi grew up in the middle of China, the one child of a family who could never have afforded on their own to give him the education he got. Marc rose through the capitalist system in sales and marketing to become a charismatic executive. Qi rose through the communist system in computer science to become—and here we start to see the commonalities—a charismatic executive. Both men are dedicated and driven, both are in service to values that transcend their own personal interests, each is a thoughtful listener and a clear speaker, each is gifted with the ability to see both the forest and the trees, and each has a remarkable international reputation. Needless to say, it has been a huge privilege to work with both individuals.

Qi spent ten years at Yahoo!, where he led the R&D organization including the search and advertising business that competes directly with Google. After leaving Yahoo!, Qi was contemplating going back to China to help build the IT industry and had called his colleague Harry Shum, now EVP of Technology & Research at Microsoft, who subsequently arranged for Qi and Steve Ballmer, then CEO of Microsoft, to meet. Steve persuaded Qi to stay in the US and join Microsoft to help advance the search and online services efforts, and hence Qi joined in January of 2009 as President of the Online Services Division (OSD), helping to launch Microsoft’s new search engine, Bing.com, in June of 2009.   Thereafter, he led the discussions that culminated in the Microsoft-Yahoo! Search Partnership deal whereby Bing powers all of Yahoo!’s search.

Microsoft’s investments in search were both a defensive play against Google’s attack on Microsoft’s core franchises as well as a long term offensive move to build data science innovation into all of Microsoft’s products and services. Elements of this investment are already beginning to show in recent releases of Windows, Cortana, Xbox, Skype, Office, and Windows Phone. To achieve this end Qi had to enlist Microsoft’s legacy businesses in supporting the sizable investment required to compete in search, particularly given the uphill battle against a dominant competitor like Google, and to navigate the resource and strategic tradeoffs that had to made not only within his own organization but across the rest of Microsoft as well.

Qi’s response to this challenge was to engage his team in a collaborative process to build consensus around a mission and vision, strategy pillars, priorities, objectives, and operating principles. In essence he was covering a lot of the same ground as a V2MOM, but because he wanted to enlist these leaders, he wanted to take a bottom up approach. To do that he decided to leverage a prior version of the Four Zones framework called the Core/Context model, and that is how I came to be involved. (Note: While there are subtle differences between these two versions of the framework, they both resolve into the same four zones, and so for the purposes of this playbook the two can be taken as one and the same.)

Our initial engagement was framed around workshops to help install the vocabulary of the framework and apply it to the planning efforts under way in what was then the Online Services Division whose two most notable properties were Bing and MSN. This effort helped establish a principled foundation for hard dialogue around what the strategic priorities were, how they should be resourced, what efforts should be exited, and how to be disciplined about innovation incubation.

In the year following, Steve Ballmer re-organized into the “One Microsoft” organizational structure, at which time Qi was made the EVP of ASG as referenced earlier. Steve shortly thereafter announced his retirement, and Satya Nadella was named CEO. Once again Qi’s challenge was to enlist a new and frankly skeptical executive team to leverage the Zone Offense frameworks in their strategic planning efforts.

That effort is still a work in progress, but the experience base of the original Bing teams, now part of the new ASG, comprises four completed planning cycles leveraging the Zone Offense frameworks. During this period the role of Bing has evolved from being simply an Internet search engine to also providing an embedded search capability within the Windows operating system, a machine learning engine that underlies all of Office 365, and a foundation for Cortana, Microsoft’s voice-activated personal assistant.

In the course of this evolution the Bing team has developed some valuable insights which include the following:

• The “Fractal” Nature of the Zone Offense. Early on in the process of installing the Four Zones framework, teams at various levels in the management hierarchy struggled with the idea of being in only one zone. From their point of view, it was clear they were doing work in all four. The ultimate realization was they needed to do both.                                      That is, from the outside in, or from the top down, a given workload needs to be funded and managed within one and only one zone. That single zone establishes its key metrics, its base operating model, and its priority relative to the other initiatives with which it is competing for resources. It also establishes the protocols for how it will interface to the rest of the organization.                                                                                                  That said, once a workload has been funded and launched, then it itself should be broken down into its own set of four local zones to govern how its total resource pool should be allocated across its set of component tasks. To be sure, not every workload will have elements in each of the four quadrants, but any given workload might. Thus at each level in a management hierarchy it is the manager’s responsibility to both deliver against a single defining zone’s metrics established at the time the work is delegated and at the same time leverage the tactics of multiple zones to help the team get the most out of the resources at their disposal.

• Lessons from the Performance Zone. Microsoft managers naturally gravitate to Performance Zone workloads because they have well defined objectives and crystal-clear metrics, highly desirable attributes in its performance-oriented corporate culture.   Frequently the key metrics are associated with closing a gap with a competitor through high-speed neutralization efforts. This overtake-from-behind approach has been a go-to play for the company ever since its inception, and the roster of defeated competitors it has left in its wake is staggering.                            A perennial challenge here, however, is to align actual engineer behavior with this neutralization playbook. An engineer’s natural tendency is to innovate beyond the norm—that, after all, is what developers expect to do for a living. But in a neutralization play, time spent going beyond “good enough” is far better spent on upgrading the next feature and the one after that. The goal is to commoditize a competitor’s differentiation as rapidly as possible, not to create some local bit of your own.                                  At the end of the day, this is not as hard to understand as it is to sell. Who wants to put neutralization maven on their resume? But efficient execution on this play is absolutely core to Microsoft’s continued relevance to the future of enterprise IT.

• Lessons from the Productivity Zone. This is an exceptionally challenging zone for Microsoft. The company’s anchor franchises have enjoyed such prolonged success that legacy productivity systems have hardened in place. As a result, each organization tends to get isolated in its own silo with its own engineering infrastructure. This means that any ASG-wide program that seeks to reallocate resources from one silo to another runs smack into a host of structural barriers. Add to this the natural anxiety managers feel about sharing or losing resources, and it is easy to see how the forces of inertia can subvert even the strongest strategic intent.                                                                                                           Within the confines of the prior Online Services Division (now part of ASG), on the other hand, which is in effect its own local silo, things have been much more fluid. Teams here have been able to reallocate resources effectively to deliver differentiating ingredient capabilities to both Windows and Office, neutralizing features to pursue ongoing competition with Google Search and Apple’s Siri, and optimization of the advertising systems that fund Bing itself. They have done so via a six-month planning cycle that reprioritizes workloads twice a year, enabling them to continually reprioritize core deliverables ahead of context, swiftly shifting resources to a new point of attack. Work at this level has been exceptionally granular, getting down to 5-person units in an organization that hosts several thousand developers, each unit being charged to deliver on one—and only one—vector of innovation: differentiation, neutralization, or optimization.                                               To scale this capability across all of ASG is still a work in progress, but it is much needed. The company has highly skilled developers locked into one place when they are desperately wanted in another. Breaking up such matrix lock-in is a Six Levers project of daunting dimensions, but the lesson of history is clear: If you do not do this proactively in order to win the next market battle, you will end up doing it reactively because you have ended up losing it. Downsizing is an ugly word. It is not a tactic to improve productivity. It is a testimony to your failure to have done so when it really mattered.

• Lessons from the Incubation Zone. The Incubation Zone has never been a sweet spot for Microsoft, not for lack of talent, but rather because its Performance Zone operates at such scale, it is hard to imagine any new row ever getting big enough to find a place in the performance matrix. Thus even when managers say they want to invest in disruptive innovations, experience shows that they do not in fact allocate the resources to do so. And frankly, until the Transformation Zone can successfully add a new row to the performance matrix, they are right not to.                                                                                                                  What this means is that the disruptive innovations that constitute ASG’s current vision of core, the ones that will fulfill Microsoft’s stated mission “to empower every person and every organization on the planet to achieve more in the mobile-first and cloud-first world” by being the platform and productivity company, do not in fact come from the Incubation Zone, but rather they are a repotting of existing assets from the Performance Zone. That is, the key transformation under way in ASG is the migration of Office’s core assets—Word, Excel, PowerPoint, and Outlook—to cloud-delivered services across all mobile end-points, with a richer and deeper experience on Windows devices. The key insight here is that the world has made deep commitments to the Office suite of products and would prefer to maintain those commitments, but only if they can be delivered on the devices and via the business and operating models of choice.                                                                                     Longer term, on the other hand, the opportunities for true incubation loom large. The operational data-flows that underpin cloud computing, once they are subjected to forces of machine learning, become an extraordinary innovation asset in their own right as both Amazon and Google have demonstrated to great effect. At Microsoft, one can readily envision a future in which a social graph of work could inform and enhance business interactions in the same way that Facebook’s social graph of relationships informs its consumer services. This represents a huge field for innovation, both for Microsoft and its ecosystem of partners, but only after the current heavy lifting of Mobile First, Cloud First is behind it.

• Lessons from the Transformation Zone. Within ASG, as in most technology companies, everyone is gravitationally attracted to the Transformation Zone—managers for the prestige and the access to premium resources, developers for the truly challenging “career-making” workloads. As a result, there is a natural tendency to represent a disproportionate amount of one’s workload as “belonging” to this zone. This, of course, defeats the whole purpose of the Four Zone system, as it dilutes the very focus one is trying to create. It is critical, therefore, to prune this zone’s contents rigorously. Here are two principles that ASG executive management is applying to do so:
  • Most mission-critical work is not core. That is, successfully executing this work will not in fact meaningfully separate you from your competition. Rather, it is work that simply must not fail to deploy on time, on spec and on budget. So yes, it is very important, but it belongs in the Performance Zone.
  • Most core work is not mission-critical. That is, there is normally still wiggle room to experiment, to pivot, even to fail. That’s because the total size of the effort is not yet material to the Horizon 1 metrics by which the overall organization is being measured.   This too is important work, but it belongs in the Incubation Zone.

It is essential to move these workloads out of the Transformation Zone in order to ensure that what remains inside the zone warrants the exceptional prioritization it is going to receive.

In leading ASG, Qi Lu has made absolutely clear from day one that Office 365 – Microsoft’s cloud services offering of Office —is the anchor for mission-critical core, the focal point for the Transformation Zone. It is clearly mission-critical, for Microsoft is putting its entire Office franchise in play. And it is clearly core, meaning highly differentiated from any other competitor, for no one has ever before put such a massive and pervasive asset in the Cloud.

At a macro level this one declaration ends up defining natural homes for the entirety of the ASG portfolio, along the following lines:

• Office 365 is in the Transformation Zone. It is highly disruptive and it simply must not fail. Nothing else has this kind of prioritization.

• On-premise Office products along with SharePoint are in the Performance Zone. They are bringing home the bacon today and will continue to do so for some time to come.

• Next-generation vehicles for collaboration like OneDrive and OneNote are in the Incubation Zone. Although they are not differentiated in and of themselves, they will reinforce the differentiation of Office 365 by building out its footprint even further. They share space in the zone with the machine-learning initiatives that truly will differentiate future releases.

• Everything else is in the Productivity Zone, either to be optimized itself or to be an engine of optimization in service to offers in the other three zones.

Final Remarks

These lessons learned at Salesforce and Microsoft conclude our Zone Offense playbook. My work, in other words, is done. Your work, to the degree you are interested in pursuing this thread, has just begun.

The core claim of the playbook is that established enterprises have repeatedly engineered their own demise by not keeping separate from one another the four zones of performance, productivity, incubation, and transformation. This has resulted in management teams applying the wrong plays at the wrong time with predictably disappointing results. The corollary to this claim is that by implementing the Zone Offense model, enterprises can apply the right plays at the right times, and by so doing, catch the next wave and maintain their ongoing relevance.

That is the bet this book is asking you to make. The next move is yours.

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