Dealing with digital disruption
Innosight managing partner Scott Anthony on how large organizations can successfully reinvent themselves and counter challenges from digitally enabled start-ups.
What does it feel like to be a senior executive inside a large business today with disruptive threats coming at your organization from all sides? Threatened? Confused? Frustrated?
Not necessarily, says Scott Anthony, business author and managing partner of Innosight, the renowned consultancy set up by Harvard Business School management guru Clayton Christensen. In advising some of the world’s largest companies on innovation and transformation, Anthony has observed how a growing number have been able to hatch strategies — and, crucially, new structures to realize those — to not only repel digitally enabled challengers but also make themselves disruptors rather than the disrupted.
The starting point, according to Anthony, is to appreciate the opportunity for disruptive change and how an organization’s fundamentals can support that. “Executives need to understand that, even if disruption sounds like a dirty word to them, it can be a fantastic growth opportunity. They also have to understand the advantages of a large organization — the unique assets or capabilities, built over many years, that enable the company to do things that no start-up could dream of.”
But ambition is not enough when you’re seeking to deflect disruptive threats and seize disruptive opportunities. To transform themselves, enterprises need to dramatically change their operational structure as well as act very differently. “All companies of scale are designed to do what they are currently doing better, faster and cheaper. They’re not designed to create tomorrow — it’s not the natural course for a large entity to do that,” he says.
The answer, as Anthony details in his book Dual Transformation, is to reposition the business to maximize its resilience and revenue-generating powers while, in parallel, creating and running a separate new growth engine (see article, A blueprint for successful transformation).
The difficulty with this approach is that many companies fall into one of two “mindset traps” as they start transforming. “The first is where they think that doing what they are currently doing in a more efficient, effective way — often by using digital technology — is sufficient,” Anthony says. “But those are merely the table stakes for any business today. You need to do that just to start doing everything else.”
He continues: “The second trap is where they don’t pay enough attention to all the resources required by this dual transformation. Strategy, after all, isn’t what you say you’re going to do; it’s what you actually do. So having great words on paper and a great 10-year vision will be utterly meaningless if you don’t have the funds and the people in place to make that vision a reality.”
The time to forge that new reality is now, Anthony argues. “Look at the ever-increasing rate at which technology is advancing. Look at the pace at which people are adopting new technologies with new ideas spreading around the world in an instant. And look at the impact this has on markets: long-term research by Innosight indicates that half of the companies on the S&P 500 today will not be there in 10 short years. The time to act was actually years ago. So if you haven’t already done so, you need to begin your dual transformation now.”
• Portrait photography: Scott Woodward