1. Zone to Win Organizing to Compete in An Age of Disruption Workiva Management Meeting January 29, 2016 Las Vegas

2. The Challenge Competing in an Age of Disruption 2

3. The Impact of Disruptive Innovation When the Marginal Cost Approaches Zero 3 Data Science Social Networks Cloud Computing Smart Phones Internet of Things The marginal cost of onboarding a new software application The marginal cost of connecting 1-on-1 with a constituent The marginal cost of adding a resource in a sharing economy The marginal cost of real-time decision-making The marginal cost of optimizing a physical system Each wave releases billions of dollars worth of trapped value

4. Technology Disruptions How Technology Enters the Mainstream 4 Innovators Early Adopters (Visionaries) Early Majority (Pragmatists) Late Majority (Conservatives) Laggards CHASM EARLY MARKET TORNADO BOWLING ALLEY MAIN STREET

5. Time Revenue Growth Growth Market Mature Market Declining Market Indefinitely elastic middle End of Life Fault Line! E DCBA Technology Adoption Life Cycle 5 The Power of Category The Category Maturity Life Cycle Emerging Market Secular Growth (Grow market share) Cyclical Growth (Grow wallet share) Secular Decline (Exit) Catch Next Wave Except most companies don’t

6. Burroughs – Sperry Univac – Honeywell – Control Data MSA – McCormick & Dodge – Cullinet – Cincom – ADR DEC – Data General – Wang – Prime – Tandem Daisy – Calma – Valid – Apollo – Silicon Graphics – Sun Atari – Osborne – Commodore – Casio – Palm – Sega WordPerfect – Lotus – Ashton Tate – Borland Informix – Ingres – Sybase – BEA– Seibel – PeopleSoft Nortel – Lucent – 3Com – Banyan – Novell Quest – America West – Nynex – Bell South Netscape – MySpace – Inktomi – Ask Jeeves – Yahoo! Blackberry – Motorola – Nokia – Sony 6 Leaders Who Missed Their Next Wave

7. Three Investment Horizons Where Established Enterprises Get Stuck 7 Horizon 1 ROI in 0 to 12 mos Horizon 2 ROI in 12 to 36 mos Horizon 3 ROI in 36 to 72 mos Current Categories Meet Performance Commitments Break-Out Categories On-board next generation for future growth Future Category Options Develop options for future growth Do well here Do well here too Sticking point

8. The Horizon 2 Challenge Why Disruptive Innovations are Not Welcome J-curves undermine current fiscal year’s performance Require overlay sales forces and supply chain adjustments Produce little revenue, typically with very negative cash flow Very distracting to manage Unclear plan of attack, continually being revised Not aligned with the current relationships Compete directly with Horizon 1 for scarce resources “A” players in Sales, Marketing, and Professional Services Need these people to make the Horizon 1 commitments 8 This is not an R&D innovation challenge This is a Go-to-Market challenge

9. Disruptive Innovation Model It’s Not a Funnel. It’s an Hourglass! 9 Horizon 3 Horizon 2 Horizon 1 Sustaining Innovations Disruptive Innovations

10. The Four Zones Organizing to Engage with Disruptive Innovations 10

11. The Four Zones A Playbook for Managing in an Age of Disruption Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments Horizon 3 Horizon 2 Horizon 1 Horizon 1 11 Each zone has a different mission Each needs its own playbook

12. The Four Zones Each Zone Has a Unique Funding Charter 12 Performance Zone Deliver material bookings, revenues, and contribution margins in Horizon 1 Productivity Zone Deliver programs and systems for compliance, efficiency, and effectiveness in Horizon 1 Incubation Zone Deliver viable business options to catch new technology waves in Horizon 3 Transformation Zone Scale a disruptive option to material revenue (greater than 10% of total enterprise revenue) in Horizon 2

13. Performance Zone Playbook: Horizon 1 The Performance Matrix 13 TOTAL Sources of Revenue (Products & Services) Channels of Bookings (Direct & Indirect Sales)

14. Performance Zone Playbook: Horizon 1 Getting the Performance Matrix Right 14 TOTAL Row Owners Sources of Revenue (BUs) Column Owners Channels of Bookings (Sales) Rows & Columns interlock at the cell level for joint accountability Every row and column has a unique owner Operating cadence: Weekly commits Monthly status reports Quarterly business reviews No row or column subtotal can be less than 10% of total Performance Metrics: Revenue, contribution margin, churn/renewals, growth rate Performance Metrics

15. Productivity Zone Playbook: Horizon 1 Cost Centers Providing Shared Services 15 Finance Central Engineering Enterprise IT Customer Support Marketing Human Resources 1.Create and deliver productivity programs—Effectiveness! 2.Own and operate productivity systems—Efficiency! 3.Monitor and verify regulatory controls—Compliance! Legal Procurement Quality Control Supply Chain Facilities Administration

16. Productivity Zone Playbook: Horizon 1 The Architecture of Programs & Systems Programs Customized services User funded Optimized for effectiveness Programs adapt to users’ needs Systems Standard infrastructure Centrally funded Optimized for efficiency Users adapt to system’s rules 16 Systems Interface Systems and programs are mutually incompatible Manage them separately—do not blend Programs Systems

17. 17 Incubation Fund CEO + Board Venture-style Funding IOU #1 IOU #2 IOU #3 IOU #4 Finance Human Resources Administration Zone-wide: Shared Services dedicated to the Incubation Zone IOU-specific: GM, sales, marketing, engineering, services, and support resources Incubation Zone Playbook: Horizon 3 Venture-Style Independent Operating Units

18. 18 All functions report into GM (No shared resources with Performance Matrix) Each IOU run by a dedicated General Manager Funding & reviews outboard of the Annual Operating Plan Venture-Based Metrics Seed: Technology POC Series A: MVP + first customers Series B: Win beachhead market Series C: Exit to scale Incubation Fund CEO + Board IOU #1 IOU #2 IOU #3 IOU #4 Finance Human Resources Administration 1.Transition to Transformation Zone 2.Transition to Performance Zone 3.Transition to Productivity Zone 4.Spin out 5.Get bought 6.Shut down SIX EXIT PATHS

19. Transformation Zone Playbook: Horizon 2 Transformational Initiatives 19 * H2 TI H3 IOU * * * * Incubation Set Insert a new row into the Performance Matrix TOTAL H1 Navigate the bottleneck in the hour glass

20. Transformation Zone Playbook: Horizon 2 Why Only One Transformation at a Time Performance Zone Must “donate” ten percent of its resources to the transformation Must “make the number” with the other 90 percent Productivity Zone Must develop new programs to backfill the donated 10 percent Must keep all its systems and compliance commitments Incubation Zone Must redirect all mature IOUs to another exit Must slow roll earlier stage IOUs to align with next window 20 Cannot do two transformations in parallel

21. Zone to Win Organizing to Compete in an Age of Disruption 21

22. The Four Zones in Action Zone Offense Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments 4 2 3 22 1 Enlist everyone in scaling the new business

23. The Four Zones in Action Zone Defense Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments 2 4 23 Enlist everyone in stabilizing the current business 1 3

24. The Four Zones in Action Between Waves (No Disruption in Play) Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments 3 4 1 2 24 Harvest your rewards, build up your reserves

25. Recap Age of disruption Convergence of waves Massive opportunity Can’t stand still Four zones Different missions Different playbooks Zone to win Zone Offense Zone Defense Between Waves 25

26. gmoore@geoffreyamoore.com twitter.com/geoffreyamoore http://linkd.in/YnBwig 26 Thank You