1. Escape Velocity Free Your Company’s Future from the Pull of the Past
Geoffrey Moore
Managing Partner

2. HarperCollins
Paper & eBook format
Release Date: Sept 6, 2011

3. Introduction

4. The Problem: We’re Stuck
Technology and globalization keep changing the game
Extraordinary opportunities, each also a threat
We must engage with these new growth opportunities
But face massive internal resistance to reallocating resources
Year in, year out, we end up with the same old portfolio
Nothing new ever achieves materiality—we are well and truly stuck
How can we achieve escape velocity?
How do we free ourselves from the pull of the past?

5. Companies Who Did Not Escape
Burroughs - Sperry Univac - Honeywell - Control Data – MSA – Cullinet – Cincom – ADR - Digital Equipment Company - Wang - Data General – Prime – Apollo - Tandem - Kodak – Polaroid - Lucent – Bay Networks - Nortel - Compaq – Gateway – Packard Bell - Lotus - Ashton Tate – WordPerfect - Borland – Software Publishing – Aldus - Novell – Banyan - Motorola – Nokia - Pacific Bell - Quest - America West – Nynex – AT&T – Silicon Graphics – Sun – Ingres – Informix

6. The Mistake We Keep Making
We focus on performance, not on power
Performance Is critical to success, and we are good at managing it
Power fuels performance; without it there is no performance
So we must continually renew power if we are to perform long term
But we do not know how to manage power consciously
We recognize power when we see it
But we lack the frameworks and metrics to go out and acquire it
And our systems do not hold us accountable for doing so
So instead we manage performance more intensely
Which, of course, consumes even more power
Making us even more anxious as performance gets harder to create
Making our focus on performance even more intense
Beware the performance trap!

7. The Solution: Manage Power Directly
Focus on power first, then on performance
Create a “power generation” plan before your performance plan
Allocate resources to power programs before performance budgeting
Focus on go-to-market resources more than R&D
Drive accountability for power into the operational plan
Add power metrics to performance metrics
Earmark resources for power program usage only
Modify the compensation plan so that power objectives matter to all
Use the Hierarchy of Powers to frame the effort
Provides a common vocabulary to get everyone on the same page
Structures power issues in ways that are directly addressable

8. The Hierarchy of Powers
Category Power Company Power Market Power Offer Power Execution Power
Growth rates of your major categories Performance compared to your competitors Growth rates of your target markets Differentiation of your offerings Speed and impact of your key initiatives
Goal : Align all of the above to achieve escape velocity

9. The Hierarchy of Powers How Much Power Do You Have Today?
Category Power Company Power Market Power Offer Power Execution Power
Are we in hot high-growth categories, or do we have category envy? Do customers and competitors see us as the team to beat, or is that someone else? Are we winning the key “primaries,” and are we winning them fast enough? Do our core offers set the bar, or are we playing a lot of catch-up? Can we make stuff happen and make it stick, or are we continually pushing the reset button?
Where do we have anchor strengths?
Where do we have to do better?

10. Case Example: The Power of Apple
Category Power Company Power Market Power Offer Power Execution Power
Music, mobility, & media: All hyper-growth The team to beat in all three No current need to target market segments iPod, iPhone, iPad + iTunes, AppStore All of the above in less than one decade
And that is why Apple is currently
the most highly valued company in high tech

11. “Mere Mortals” Case Examples
Cisco – Sybase – Agilent – Cognizant Akamai – BEA – Adobe – Amdocs Documentum – SAP – Activant – Lawson BMC – Agile – McAfee – Autodesk Synopsys – Rackspace – TeleAtlas Symbol – Compuware

12. Our Agenda
Present frameworks for each level of the Hierarchy of Power to
Assess the current landscape of threats and opportunities
Identify the most attractive “power plays” for your company
Guide the planning and execution of those plays

13. Category Power Reengineering Portfolio Management

14. Category Power Diagnostic
Where is category growth contributing to our overall growth objectives? Where is lack of category growth inhibiting our growth objectives?
Organizations tend to over-commit to their legacy franchises in large low-growth categories
To the degree we participate in multiple categories, how well balanced is our overall portfolio in terms of contribution to current earnings, current growth, and future growth objectives?
Common pattern: strong on current earnings and future growth, weak on current growth
In light of the above, do we need to enter a new category, divest ourselves from a category we are currently in, or stay the course with our current portfolio?
Most companies stay with their current positions regardless—this is the pull of the past
Is there time to develop our category position organically, or must we leverage M&A as well?
For companies over several billion dollars is size, the answer is almost always the latter

15. Category Maturity Life Cycle
Indefinitely elastic middle A B C D
Revenue Growth
Emerging
Market
Growth
Market
Mature
Market
Declining
Market
Fault
Line! E
Technology Adoption
Life Cycle
End of
Life
Time 15

16. Where Are Your Resources Today? A Portfolio Analysis Framework
High Growth
Low Growth
PRESENT REWARDS
Material B C A D
Not Material
FUTURE REWARDS

17. Typical Portfolio Pattern for a Public Company
High Growth
Low Growth
Material 2 3 1 4
Not Material
What is the first question the board asks?
Why don’t we have more businesses in Quadrant 2?

18. Pursuing Growth in a Mature Category Successive Generations of R&D Have Diminishing Impact
High Growth
Low Growth
Material
Not Material

19. Overfeeding a herd of aging cash cows—
What’s Going On?
Market is well established and highly material
Customer relationships are established, products are well known
Cost of sales is low
R&D investments continue to improve the product
For a while, better is better, and new R&D drives revenue growth
After a while, good enough is good enough, pricing deflates, growth stalls
Unit growth continues, but revenue growth flattens
Lots of competitors meet the good enough standard
Market bifurcates into commodity (growing) & value-add (shrinking)
Overfeeding a herd of aging cash cows—
waste of good fodder

20. Pursuing Materiality for an Emerging Category Successive Attempts at Market Development fail to Cross the Line
High Growth
Low Growth
Material
Not Material

21. Underfeeding a herd of hungry heifers— never reach material size
What’s Going On?
Next-generation initiatives are not transitioning to materiality
Products are immature, relationships are few
Cost of sales is high
Growth rates are high, but off a small base and at a high cost
Overlay sales forces, dedicated marketing, complex services
The more revenue you target, the higher the added cost
Field organization cannot bear the cost burden
Must prioritize resources to make the current quarter
Next-generation initiatives are left to get by as best they can
Underfeeding a herd of hungry heifers—
never reach material size

22. Freeing Your Company’s Future The Three Horizons Model
Step-Out Businesses
On-board next generation for revenue growth & share growth
Horizon 3
36 to 72 months
Current Businesses
Defend & extend the franchise
Growth Options
Explorations into future
high-growth businesses
Horizon 2
12 to 36 months
Horizon 1
0 to 12 months
030326HKO_MOT057_v1i 22

23. Portfolio Dynamics High Growth Low Growth Horizon 1 Material Horizon 2
Negative growth
Not Material
Horizon 3

24. Portfolio Dynamics The Impact of Performance Management
Performance management focuses on meeting material commitments (Horizon 1)
This leads H1 managers to hoard spare resources to ensure they can meet them
That crimps H2 efforts because they compete with H1 for the same resource pool
It also makes H1 managers reluctant to exit H0 businesses (because every little bit of revenue helps)
Horizon 3 is unaffected by any of these portfolio dynamics
High Growth
Low Growth
Horizon 2
Horizon 1
Horizon 3
Horizon 0
Material
Not Material

25. The Horizon 2 Gap This is not a failure to invest in R&D innovation
All the other horizons are OK
H1 gets first dibs at resources
H3 gets funded outboard of the process
H0 is snuck in under the covers
H2 is out in the cold
H2 competes directly with H1 for resources
H1, under pressure to meet current obligations, does not release resources willingly
H2 cannot compete with H1, particularly when metrics and compensation focus on material returns in the current year
This is not a failure to invest in R&D innovation
This is primarily a go-to-market problem

26. Meeting the Horizon 2 Challenge Best Practices in Four Key Areas
Planning & Budgeting
Organizational Structure
Metrics
Compensation
These practices adapt venture capital ideas
to enterprise realities

27. Best Practices: Planning & Budgeting Separate Resource Pools for Each Horizon
Organize planning and budgeting by horizon
All funding requests are attached to one horizon only
Funding requests compete within each horizon
Funding request do not compete across horizons
Executive team determines overall resource allocation
Sets percentages for H1, H2, and H3
Functions each directed to allocate according to overall plan
Special attention is paid to all market-facing functions
Interlock to ensure functional allocations align with corporate priorities
Don’t fund next-generation R&D
if you are not willing to fund the go-to-market surcharge

28. Best Practices: Organization Business Unit Structure for Horizon 2
Line function structure is the default model for enterprises
Best way to achieve efficiencies at scale
Best support for professional and career development
Integrated business unit with dedicated resources key to H2
BU structure achieves much greater effectiveness
Faster and more agile to adapt to changing market dynamics
BU structure is virtual and temporary
Team is seconded from the line functions, reports directly to BU GM
Participants are 100% dedicated to BU which covers all their costs
GM reports directly to CEO or EVP for Next-Gen Businesses
Organization dissolves once H2 initiative graduates to H1

29. Best Practices: Metrics Different Metrics for Each Horizon
TIMEFRAME
HORIZON 1
(0-12 mos)
HORIZON 2
(12–36 mos)
HORIZON 3
(36-72 mos)
Driving
Goal
Run a
Business
Become a
Material Business
Enter a
Business
Key
Performance
Indicators
Revenue vs plan
Bookings
Contribution margin
Market share
Wallet share
Target accts vs plan
Sales velocity
Deal size
Segment share
Time to tipping point
Name-brand customers
Deal size
Name-brand partners
PR buzz
Flagship projects
“Op Ex”
“Time Ex”
“Cap Ex”

30. Best Practices: Compensation Everyone is on the Hook
CEO and his or her direct reports
Significant variable compensation tied to each Horizon 2 initiative achieving its core metrics
BU GM
All variable compensation tied to meeting the BU’s Horizon 2 metrics
Business Unit participants
Significant variable compensation tied to the BU meeting its Horizon 2 metrics
Horizon 2 initiatives are “must win” battles
Be careful how many you undertake

31. Company Power Making Asymmetrical Bets

32. Company Power Diagnostic
Which power game are we playing: Complex Systems or Volume Operations? Which power tier are we on: Tier 1, Tier 2, or Tier 3?
Achieve escape velocity relative to your reference competitors on the same tier with the same business model
For that game and that tier, what is our ranking relative to our peers? Do we want to proactively change our game, our tier, or our ranking?
Normally you do not change your game, but you do change your tier or ranking
Do we have crown jewels that could power this change in state? Are there disruptive market forces in play that could enable us (or our competitors) to gain new power?
To achieve escape velocity requires exceptional force: it cannot be done incrementally
Are we making a sufficiently asymmetrical bet to distance ourselves from the competition definitively and sustainably?
Most organizations fall short on this criterion. People are too afraid to make an error of commission and so they fall into making an error of omission

33. Two Business Architectures Complex Systems vs. Volume Operations
Sweet
Spot
Sweet
Spot
Effectiveness
Complex
Systems
Volume
Operations
Complexity
Volume
100
101
102
103
104
105
106
107
108
109
Number of Customers
Government
Programs
Small
Business
Societal
Entitlements
Enterprise
Consumer
Figure 3.2 33

34. The Models are Polar Opposites
Area of
Focus
Complex Systems
Model
Volume Operations
Model
Research
Qualitative Interviews
Quantitative Analytics
Design
Assembled Architectures
Stand-Alone Modules
Sourcing
Exploit scarcity
Exploit abundance
Manufacturing
Adaptive Methodologies
Deterministic Processes
Marketing
Relationship Marketing
Branding & Promotion
Sales
High-Touch Persuasion
Low-Touch Distribution
Services
Consultative Dialogs
Closed-Loop Transactions
For escape velocity initiatives,
choose one as your competitive frame of reference

35. The Power of Tiers Three Tiers Tier strategy
Tier 1: Flagship enterprises
Cisco, Microsoft, Singtel
Tier 2: Known brands with niche followings:
Juniper, Mozilla, T-Mobile
Tier 3: Brand-less companies with low prices
OEM/ODM supply chain companies
Tier strategy
Markets support all three tiers for both architectures
Escape velocity initiatives can focus on winning the #1 position in your current tier or moving up a tier

36. Achieving Escape Velocity Asymmetrical Bets Change the Balance of Power*
Create unmatchable capability in your core innovation zone
Competitor 1 * *
YOU
Competitor 2 *
Over-invest to the point that competitors cannot or will not follow
Competitor 3 *
Redefine buying criteria for the category by setting a new standard
Competitive Set
Same tier
Same architecture

37. Innovation Zones Pathways to Escape Velocity
Product
Leadership
Zone
Customer
Intimacy
Zone
Operational
Excellence
Zone
Disruptive Innovation
Line Extension Innovation
Value Engineering
Application Innovation
Enhancement Innovation
Integration Innovation
Product Innovation
Marketing Innovation
Process
Innovation
Platform Innovation
Experiential Innovation
Value Migration Innovation

38. Product Leadership Innovation Types
Disruptive Innovation
Results in a new category. Not backwards compatible. Order of magnitude improvement.
Enterprise: Genetic sequencing (Applied Biosystems)
Consumer: Online auctions (eBay)
Application Innovation
Also called solution innovation. New markets for existing products by finding unexploited uses.
Enterprise: Fin services for high tech (Silicon Valley Bank)
Consumer: GPS range-finders for golf (Sky Caddie)
Product Innovation
Existing products in existing markets differentiated through dramatic increase in price/performance
Enterprise: Telepresence (Cisco)
Consumer: iPad (Apple)
Platform Innovation
Repositioning a ubiquitous product to become an enabler of entire class of new offerings built on top of that product
Enterprise: Relational databases (Oracle)
Consumer: Game-enabling computers (Sony)

39. Customer Intimacy Innovation Types
Line Extension Innovation
Creates a subcategory to engage new customers or re-engage old ones. Underlying infrastructure remains unchanged.
Enterprise: Rugged mobile computers (Symbol)
Consumer: Children’s Tylenol (Johnson & Johnson)
Enhancement Innovation
Innovation in finer and finer elements of detail with less and less impact on the primary function of the offer
Enterprise: High-quality color printing (Xerox)
Consumer: Fashion watches (Swatch)
Marketing Innovation
Focuses on differentiating the interaction with a prospective customer during the purchase decision process
Enterprise: Pro bono executive briefings (McKinsey)
Consumer: American Girl stores (Mattel)
Experiential Innovation
Innovation based on differentiating the experience of the offering (as opposed to its function)
Enterprise: Package status visibility (Federal Express)
Consumer: First class airline travel (Singapore Airlines)

40. Operational Excellence Innovation Types
Value Engineering
Extracts direct cost from a product or service without changing its external properties
Enterprise: Business Process Outsourcing (Tata)
Consumer: Feature phones (Nokia)
Integration Innovation
Integrates many disparate elements into a single centrally managed system, reducing indirect operating expense
Enterprise: Enterprise Resource Planning (SAP)
Consumer: TV/phone/video/Internet service (Comcast)
Process
Innovation
Extracts waste from enabling processes by removing non-value-adding steps from the work flow
Enterprise: Lean Manufacturing Process (Toyota)
Consumer: Social networking (Facebook)
Value Migration Innovation
Redirects the business model away from a commoditizing element in the value chain toward one more rich in margins
Enterprise: Software as a Service (Salesforce.com)
Consumer: From razors to razor blades (Gillette)

41. Selecting Your Core Innovation Type
Good fit with your crown jewels
Play in the innovation zone you are most qualified for
In demand at this point in the category’s life cycle
Product leadership plays best in secular growth categories
Customer intimacy and operational excellence are better for cyclical growth categories
Has not been preempted by your competition
When you attack your competitors’ strengths, it is not likely you will become unmatchable any time soon

42. Crown Jewels Checklist
Technology
Expertise
Platform products
Passionate customer base
Scale
Balance sheet
Brand
Relationships
Business model
Other

43. Making the Asymmetrical Bet
Restrict the competitive set
One architecture, one tier to escape from
Over-invest in the core innovation zone
To the point where competitors cannot or will not follow
Leverage a mega-trend
To fill your sails with wind
Leverage one or more crown jewels
To win and to retain dominant power

44. Disruptive Mega-Trends
Globalization
Changing demographics
Digital technology
Disruptive business models
Regulatory interventions
Emerging market opportunities
Global warming
Terrorism
Other

45. The Standard to Meet Customer base adopts enthusiastically
Never-before-seen price/performance
Ecosystem rallies to support
Everyone wants to get onto the new bandwagon
Reference competitor is left behind
Cannot or will not compete on these terms
Investors revalue the franchise
Moves the P in the P/E ratio

46. Executive Leadership Style Required We Must Look to Leaders instead of Managers
Asymmetrically allocate their time and attention
Change the game to their advantage
Expect mistakes and correct them quickly
Get out in front of their peers
Test their relationships
Are visionaries
Equitably allocate their time and attention
Play the hand that they are dealt
Take extra time to avoid mistakes
Stay in step with their peers
Preserve their relationships
Are pragmatists
Look to managers drive on the straight stretches
Look to leaders to take you through the turns

47. If We Fail, Why We Fail Performance bias Internally focused and driven
Compensated for performance only, no accountability for power
Always safer to play the hand you are dealt
Leads to privileging managers over leaders
Internally focused and driven
All about making our numbers
Lose sight of our mission to be in service to the world
Not adapting to mega-trends

48. Market Power Guaranteeing Early Wins for Asymmetrical Bets

49. Market Power Diagnostic
Is targeting a market niche a priority for our current strategy to succeed?
Are we looking to start a fire?
Is the market segment we have targeted big enough to matter, yet small enough to win decisively?
Pay attention to your fish-to-pond ratio
Are our market-specific commitments sufficiently focused and intense to assure we will win market power?
Your whole product must blow away the competing alternatives
Are we winning market power fast enough?
Normally a sign either your target market or whole product is not sufficiently focused
Are we capturing a price premium commensurate with the unique value proposition we provide?
Same problem as above. Discounting means you have not cleared the bar
Do we have a clear line of sight to expansion growth opportunities in adjacent market segments?
Market segments must also be pathways to future growth

50. Understanding Market Segments Think of the Dynamics of Presidential Elections!

51. The Logic of Market Power
Markets are self-referencing communities
People buy what their peers buy
People are loyal to what their segment is loyal to
Clear winners are a must
In the absence of a clear winner, people hesitate
If the situation persists, the market fragments with no winner
Winning is contagious
People in adjacent segments are influenced
Partners want to get on the winning bandwagon

52. 9-Point Market Strategy Framework Capturing the Target Market
Key sponsor
1. Target Customer
2. Compelling Reason to Buy
3. Whole Product
4. Partners and Allies
5. Sales Channel
6. Pricing
7. Competition
8. Positioning
9. Next Target
Core problem
Complete solution
Needed for whole product
Function of whole product complexity
Value based
Legitimate alternatives
Differentiation
Next growth segment

53. Target Market Initiatives
What are TMIs?
Massive attacks on highly focused targets
A separate playbook based on Crossing the Chasm and Inside the Tornado
Taught by the Chasm Institute, facilitated by CI, The Chasm Group, and TCG Advisors
Not covered in this material
Why invest in a TMI?
Ensures early wins
Dramatically accelerates initial adoption
Jump-starts broader adoption from a position of power

54. Eight Great Reasons for a TMI
Gaining market adoption for a disruptive technology
Penetrating a new geography
Getting out from behind the market leader
Anchoring a turnaround
Solving for the “stuck in neutral” problem
Capitalizing on a great niche opportunity
Exploiting the “granularity of growth”
Capitalizing on a market in transition

55. Additional Frameworks
Target Market Initiatives are the core curriculum of The Chasm Institute ( There are currently over 300 slides in library illustrating frameworks that pertain to this topic. Please contact them for further information.

56. Offer Power Allocating Resources Asymmetrically

57. Offer Power Diagnostic
Is this offer a proven hit, a potential hit (escape velocity candidate), or more of a product-line filler?
This establishes the basis for the type of innovation investment (see following)
For proven hits, have we neutralized our reference competitors’ innovations sufficiently to keep them in our competitive set?
This is all about getting to “good enough” fast enough
For escape velocity initiatives, is this offer sufficiently differentiated to gain escape velocity from its competitive set? What can we do to amplify its differentiation further?
This is all about being beyond compare
For product line fillers, have we optimized these to the maximum for gains in resource utilization and cost reduction?
This is all about spending the minimum to fill a space in a product line
Where are we wasting resources chasing a competitor’s tail, going beyond good enough but falling short of beyond compare?
This is where established enterprises waste the preponderance of their innovation

58. Offer Power Getting a Return from Innovation
Differentiation
Neutralization
Productivity

59. Offer Power for Escape Velocity Three Mandates to Execute in Parallel
Differentiate
Separate from your competitive set
Neutralize
Catch up to your competition
Optimize
Reduce the drag of legacy

60. Differentiate Separate From Your Competitive Set*
Competitor 1 *
Leverage your unmatchable capabilities to create an
unmatchable offer *
YOU
Competitor 2 *
Competitor 3 *
Failure to separate means more of the same
battling day to day on price and execution
Competitive Set

61. Cases Examples & Cautionary Tales Innovating to Differentiate
Case Examples
Cautionary Tales
Google
Sun Workstation
Amazon Kindle
Apple iPhone
Cisco Telepresence
AskJeeves
IBM PS2
Sony Reader
Palm Treo
HP Halo
Separate yourself from the pack
Sustain the gap

62. Leverage Crown Jewels for a 10X Effect
Salesforce.com
SaaS for a 10X reduction in installation and operating costs
Skype
Peer-to-peer IP telephony for a 10X reduction in long distance charges
Wikipedia
Open source collaboration for a 10X increase in speed and a 100X reduction in cost for encyclopedia development and maintenance
VMWare
Cross-platform virtualization technology for a 10X reduction in IT capital equipment purchase and maintenance
Akamai
Internet overlay network for a 10X improvement in content delivery latency reduction

63. Neutralize Catch Up to Your Competition
Competitor 2 *
Competitor 1
Competitor 3
Competitive Set
Neutralize a competitor’s differentiating innovation by reaching “good enough” quickly * *
Refocus the market back on your differentiation
YOU *
Failure to neutralize quickly can result in market leaving you behind

64. Cases Examples & Cautionary Tales Innovating to Neutralize
Case Examples
Cautionary Tales
Microsoft & the Mac
Microsoft & the Web
Netflix & the Web
Google Apps & MSFT Office
Apple & Kindle
Nokia & the iPhone
Lotus Notes & the Web
Blockbuster & Netflix
Yahoo & Google Search
Borders & Kindle
Catch up fast
Assimilate the innovation

65. Price/Benefit Sensitivity Focus Neutralization Where it Matters Most
Operational Excellence HI
COST
PERFORMANCE
Product Leadership
Price Sensitivity
Customer Intimacy LO
CONVENIENCE
PREMIUM LO HI
Benefit Sensitivity

66. Optimize Cut Yourself Free from the Long Tail
Attack the bottom 10% of your workload:
Centralize this population under a single manager
Freeze maintenance
Install a “no surprises” end of life program

67. Freeing Resources Trapped in Context The Six Levers Model
Centralize. Bring operations under a single authority to reduce overhead costs and create a single decision-making authority to manage risk
Standardize. Reduce the variety and variability of processes delivering similar outputs to further reduce costs and minimize risks.
Core
Context

68. Optimize Tighten Up Your Flabby Middle
Engage the “flabby middle” of your workload:
Target the big pockets of resource waste
Isolate them through API-like process firewalls
Reengineer to streamline
Reintegrate

69. Freeing Resources Trapped in Context The Six Levers Model
Centralize. Bring operations under a single authority to reduce overhead costs and create a single decision-making authority to manage risk
Standardize. Reduce the variety and variability of processes delivering similar outputs to further reduce costs and minimize risks.
Modularize. Deconstruct the system into its component subsystems and standardize interfaces for future cost reductions.
Optimize. Eliminate redundant steps, automate standard sequences, streamline remaining operations, substitute lower-cost components, or otherwise cost- and resource-reduce
Core
Context

70. Optimize Redraw the Core/Context Boundary
Recharter. Rearchitect. Reallocate.
Redefine the boundaries
Transfer the investment responsibilities
Focus on risk management & agile responsiveness

71. Freeing Resources Trapped in Context The Six Levers Model
Centralize. Bring operations under a single authority to reduce overhead costs and create a single decision-making authority to manage risk
Standardize. Reduce the variety and variability of processes delivering similar outputs to further reduce costs and minimize risks.
Modularize. Deconstruct the system into its component subsystems and standardize interfaces for future cost reductions.
Optimize. Eliminate redundant steps, automate standard sequences, streamline remaining operations, substitute lower-cost components, or otherwise cost- and resource-reduce.
Instrument. Characterize the remaining processes in terms of the variability of key parameters and develop monitor-and-control systems to manage their performance.
Outsource. Drive processes out of the enterprise entirely to further reduce overhead, variabilize costs, and minimize future investment. Incorporate vendor use of monitor-and-control systems into Service Level Agreement.
Core
Context

72. Three Innovation “Playbooks”
Differentiate
Neutralize
Optimize
Core Value
Separation
Time
Cost
Focal Point
Unmatchable
Good enough
Systemic
Challenge
How far?
How fast?
How deep?
Mixing Modes of Innovation Creates Waste
One Playbook per Project! 72

73. Return on Innovation Differentiation Neutralization Failed Attempts
Optimization
Waste
Sources of Waste:
Differentiation projects that don’t achieve unmatchable results
Neutralization projects that try to differentiate at the same time
Optimization projects that don’t attack the critical costs

74. The Good News About Waste
Waste is money that is in your budget today
If you stop wasting it, there is no downside
If you spend it on better things, there is upside
What are you waiting for?

75. Execution Power Getting to the Tipping Point

76. Execution Power Diagnostic
Are we clear about the state of each of our lines of business and the corresponding execution mode that should be emphasized?
Organizations tend to emphasize what they are best at, not necessarily what is required. To a man with a hammer, everything looks like a nail.
Do we have the right kinds of leaders in charge, given the execution discipline that is required?
Again, organizations tend to leave the same people in place for the life of a line of business, which is often not good either for the business or the people.
Have we highlighted the lines of business that are in transition, either from invention to deployment (the escape velocity transition) or from deployment to optimization (the maturation transition)?
These are the times of greatest risk to lose power, and it is critical that everyone pay close attention until the transitions are complete.
With respect to the transition programs, do we have clear milestones and metrics and visibility to ensure we know when they have reached their tipping points?
The answer here is almost certainly “not today,” as this is a novel idea. But it is essential to install these disciplines if your enterprise is to achieve its highest ambitions.

77. The Arc of Execution Complex Systems Enterprises
Playbooks
Deploy
Profitability
Scalability
Projects
Products
Invent
Optimize

78. From Projects to Playbooks Scaling the Complex Systems Model
Communication
From rolodex relationships to referrals into target market
Distribution
From founder led to target market expert driven
Adoption
From technological possibilities to target use cases
Whole Product
From customer bespoke to partner friendly
Monetization
Solution-based, calibrated by amount of cost and risk relief

79. The Arc of Execution Volume Operations Enterprises
Partners
Deploy
Profitability
Scalability
Products
Processes
Invent
Optimize

80. From Products to Partners Scaling the Volume Operations Model
Communication
Pushed , personalized, and pulled
Distribution
Physical or virtual as convenient for consumer
Adoption
Viral word-of-mouth referencing
Whole Product
Self-organizing ecosystem pursuing its own gains
Monetization
Frictionless, far-reaching, and fair

81. Catalyzing Escape Velocity The “Tipping Point” Role of Programs
Transition
for Scale
Transition
For Yield
Deploy  
Tipping
Point
Tipping
Point
Invent
Optimize

82. Catalytic Programs Mini-TALCs Different from business as usual
Early adopters
Chasms
Beachheads and bowling alleys
Tornadoes
Main Streets
Different from business as usual
Not best efforts
Not pay as you go
Not what you see is what you get
Committed to create persistent change in state
Measured and evaluated against that commitment

83. Four Modes of Execution
Execution Mode
Invention
Deployment
Optimization
Transitions
Type of Leader
Visionary Inventor
Pragmatic Deployer
Conservative Optimizer
Pragmatic Orchestrator
Core Competence
Creativity
Competitiveness
Control
Collaboration
Core Attribute
Original
Tough-minded
Prepared
Empathetic
Decision Style
Intuition
Test-&-Adjust
Deliberation
Consensus
Organizational Preference
Integrated
Teams
Line
Functions
Hierarchical
Organizations
Cross-Functional

84. Staffing Leadership Roles
Let category growth be the guide
Adjust management dynamics to market dynamics
Transition the offerings through the modes
Follow the arc of execution
Maintain the modes
Most people excel at one mode—play to their strengths
Adjust the mechanisms to the mode
Organization, compensation, metrics

85. Transformation Initiatives Playbook Headlines for Transforming Vision, Strategy, & Execution

86. Transformation Zones Category Power Company Power Market Power
Offer Power
Execution Power
Vision
Strategy
Execution

87. Transforming Vision Playbook Headlines
Category Power Review
Category Maturity Landscape Overview
Growth/Materiality Matrix Assessment
Three Horizons Opportunity Scan
Company Power Review
Crown Jewels
Vector of Sustainable Differentiation
Relevant Mega-trends
Reference Competitor
Market Power Review
Market Segmentation
Target Market Segments

88. Transforming Strategy Playbook Headlines
Company Power Review
Crown Jewels
Vector of Sustainable Differentiation
Relevant Mega-trends
Reference Competitor
Market Power Review
Market Segmentation
Target Market Segments
Offer Power Review
Differentiation Priorities
Neutralization Priorities
Productivity Optimization Priorities

89. Transforming Execution Playbook Headlines
Market Power Review
Market Segmentation
Target Market Segments
Offer Power Review
Differentiation Priorities
Neutralization Priorities
Productivity Optimization Priorities
Execution Power Review
Arc of Execution Status Check
Transition Program Assessment
Leadership Staffing Review