Innovation matrix allows companies to plan for disruption

15 May 2016 - 02:00 By Arthur Goldstuck

Long before the dawn of Internet Man, in the dark ages of 1990, management consultant Geoffrey Moore wrote Crossing the Chasm, which explained why hi-tech products fail even when they win the adoration of early adopters. He used the established technology adoption life cycle, a bell curve that shows how products are first taken up by innovators, then early adopters, followed by the early majority, and then tailing off with the late majority into the slumber zone of the laggards.He inserted, between the early adopters and early majority, a gaping hole he called the chasm and set out to explain why even great products fail to cross the chasm.The model held true for 25 years, and to this day helps to explain the demise of apparently great products.story_article_left1But now Moore has come up with a new model - the four zones - saying in a business world facing radical disruption it is not enough to shepherd innovation across the chasm.The subtitle of his book on the topic, Zone to Win, encapsulates it: "Organizing to compete in an age of disruption".At the recent EMC World conference in Las Vegas, Moore presented a masterclass in his new thinking, starting with a crucial question: "How do you navigate new areas of disruption, while organising and structuring the existing business?"He pointed out that, in a large enterprise, "there are many sets of interest that are not inherently aligned", making disruptive innovation impossible. The first idea of zone management then, is: "Can we sort this out?"The answer is complex."First, we say there is sustaining innovation for established stuff, and disruptive innovation for new stuff."For both, the company must separate revenue performance activities and enabling investments, in that way splitting the functions of delivering results from investing in products that will deliver those results.This creates a matrix of four zones: a different revenue performance and enabling investment zone for both disruptive innovation and sustaining innovation. On the sustaining side, revenue performance is called the performance zone, and enabling investments become the productivity zone. On the disruptive side, revenue performance becomes the transformation zone and enabling investments become the incubation zone - "the domain of emerging businesses", says Moore.story_article_right2"When you use that sorting mechanism, you find that the performance zone is where you perform your work in the world, but to have it work, you have to have the support functions of the productivity zone in place."If you had no disruptive innovations in the world, you would be fine. But we have to get our fingers on the next technology, and that is what the incubation zone is for. The danger happens when you expose the incubation zone to the performance or productivity zone, because it will die there."Finally, the transformation zone is the home of a disruptive business model in an established enterprise. This is where companies catch the next wave, but also where they fail as they lose their nerve and pull back on investment in favour of traditional revenue-generating zones.At the very least, says Moore, management teams must understand the vocabulary of zones to deal with the massive changes that are upon them.Goldstuck is the founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram @art2gee..

There’s never been a more important time to support independent media.

From World War 1 to present-day cosmopolitan South Africa and beyond, the Sunday Times has been a pillar in covering the stories that matter to you.

For just R80 you can become a premium member (digital access) and support a publication that has played an important political and social role in South Africa for over a century of Sundays. You can cancel anytime.

Already subscribed? Sign in below.



Questions or problems? Email helpdesk@timeslive.co.za or call 0860 52 52 00.