Whether it’s cloud computing in the IT industry, over-the-top (OTT) content in media, mobil digital payments in finance, or data science just about everywhere, industry after industry continues to be radically transformed by technology-based disruptive innovations. This is all part of what Joseph Schumpeter called creative destruction over 70 years ago, - the powerful force that rejuvenates the economy by replacing declining businesses with fast-growing startups.
For a startup a disruptive innovation is all upside, an opportunity to take-on established companies with new products that offer significantly better capabilities and/or lower costs. Startups hope that their compelling new offerings will help them establish a foothold in the marketplace and, over time, become leaders in their industry.
It’s different for established companies. Over the years, they’ve amassed a number of valuable assets and extensive organizations. Change is often difficult for such companies. Already consumed with managing their existing operations, - e.g., products and services; supply chain and channel partners; sales and marketing; revenues, profits and cash; - they may see a new innovation as more of a threat or distraction than an opportunity.
How should established companies deal with complex, company-wide transformative initiatives? This is a subject I’ve thought long and hard over the years, given my personal experiences with such initiatives through my long career at IBM as well as my subsequent teaching and consulting activities. Let me share some of the key lessons I’ve learned through the years.