Surviving Seismic Disruptions through "Dual Transformation"

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Harvard Business Review Article Provides Path for Reinvention Without Abandoning Company Core

With 75 percent of companies in the S&P 500 Index set to be replaced within the next 15 years , no industry, business or CEO is safe from the threats of market shifts, new technologies and disruptive start-ups. In the December issue of Harvard Business Review, authors from innovation consulting firm Innosight make the case that in order to survive and secure a healthy future in today’s business climate, companies must be able to transform from within. The article, “Two Routes to Resilience,” reveals an alternate path to growth – dual transformation – in which businesses rebuild their core while simultaneously reinventing their business model.

Corporate transformation is traditionally equated with abandoning the core business in favor of something new. According to co-authors Matthew Eyring, Clark Gilbert and Richard N. Foster, this narrow approach to transformation often fails because it can take years for new innovation initiatives to replace lost revenue, and companies end up throwing away any long-standing market advantages in the process. Instead, they contend that through dual transformation companies can execute a smooth and sustainable strategic makeover, resulting in greater competitive advantage.

Dual transformation is characterized by systematically reinventing a business along two parallel tracks. One track focuses on repositioning the core business, finding and exploiting the strongest competitive advantage the current business model can sustain in the disrupted marketplace. At the same time, another team works on a second track, creating a separate business to develop the innovations that will become the company’s future source of growth. To work, each team must operate as if the future of the company depended on it alone.

The article highlights businesses that have mastered dual transformation, including Barnes & Noble, Xerox, IBM and Apple. Co-author Gilbert, the president and CEO of Deseret News Publishing Company, writes from his own personal experience transforming the Salt Lake City-based organization. As internet upstarts began assaulting every part of Deseret News’ revenue base, Gilbert focused on rebuilding the operation’s core print business and entering the digital space. Circulation has doubled since 2008 and Deseret Digital now represents about a quarter of total corporate revenues. Through dual transformation, Deseret News weathered industry disruption to emerge stronger, and is one of the nation’s fastest-growing print newspapers.

The article also introduces a new corporate process called a “capabilities exchange,” through which the parallel efforts can share select resources such as R&D or distribution without interfering with the mission or operations of either effort.

The authors conclude that all organizations will eventually transform, but leaders need not be apprehensive about the process. Dual transformation can enable companies to shift gears without falling apart, ensuring the business’ long-term health and ability to survive changes today and in the future.

About Innosight
Innosight is a strategy and innovation consulting firm that helps clients achieve growth through innovation. It partners with organizations to help them devise growth strategies, build innovation capabilities, implement business model innovation and create breakthrough new products, business, and services. Innosight has offices in Boston, Singapore and India.


Editor’s Note: Clark Gilbert is available for media interviews. Please contact Cathy Olofson at 781.652.7217.

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