Three Easy Mistakes to Make

By Geoffrey Moore

Author – The Infinite Staircase: What the Universe Tells Us About Life, Ethics, and Mortality

It can be challenging managing a large corporation because the landscape is littered with compromises.?Consider it to be part of aging, and celebrate the fact that you have succeeded in getting to scale, even if there are things in place you would wish to be different.?That said, there are compromises you really don’t want to make, and I am going to call out three of them here:

1. Adjusting your operating model to fit your reporting metrics instead of the other way around.?Whether the metrics in question are reported externally on an earnings call or used internally to calibrate performance compensation, they cannot be allowed to constrain adjustments to the operating model needed to keep pace with changing market dynamics.?For example, a next-generation offering might be pieced together from products coming from different operating units, and that can raise questions as to how the revenue should be reported and who should get credit for it.?Or a new business model might call for a different revenue recognition treatment, and that in turn could impact how sales commissions and bonuses are calculated.?In both cases, you can expect conflicts of interest, but you need to manage through them to get to the right metrics.?You know that what gets measured, gets managed.?Just remember that what gets mismeasured, gets mismanaged.
2. Adjusting your organizational model to fit your people instead of the other way around.?People who have been with the team for a long time often feel entitled to the next promotion in their career path, and because we have all worked together during this time, we can feel obligated to accommodate them.?Now, when your industry is not being disrupted, experience does matter, so promoting from within is often a good strategy.?But when disruption strikes, organizations need to change, often dramatically, and the new leaders need to be grounded in the emerging paradigm.?That is, they have to make quick decisions with little data based on pattern recognition and then course-correct them as the data comes in.?If the person in place does not have that pattern recognition, if instead, they have to learn the new system even as they are in the midst of operating it, decision-making slows down dramatically, and an agile approach becomes impossible.?For times like this, you need to bring in someone who already has the mindset needed to play the new hand.?You already know that what got you here won’t get you there.?Just remember that applies to people as well.
3. Adjusting the Performance Zone to serve the Productivity Zone instead of the other way around.?This sometimes happens when the Performance Zone has underperformed.?It also can happen late in a category maturity life cycle when growth is declining and operating profits are harder to come by.?In either case, the key signals are that now the CFO rules the roost, doling out resources on the basis of ROI hurdles that must be met in the current fiscal year.?Process management becomes the order of the day, with HR and Legal having more sway than Sales or Engineering.?Basically, the enterprise is unwittingly retreating into itself, all the while believing that it is doing what is best.?To be relevant, however, enterprises must serve their customers and engage with their competitors.?Both these tasks fall primarily on the Performance Zone, with the Productivity Zone providing much needed support.?If there are problems with the Performance Zone, fix them.?But don’t subordinate your revenue engine to the rule of cost centers.

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

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