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Strategy & Innovation

December, 2012, Volume 10, Number 4

Dual Transformation: Rebuild Your Core While You Reinvent Your Business Model

By Clark Gilbert, Matthew Eyring and Richard N. Foster

dual-transformation-strategy-innovationSooner or later, most companies will need to reinvent themselves in response to disruptive market shifts, technologies, or start-ups. But how? Can a new business model quickly replace all the revenue an incumbent has lost to market upheaval?

Only in rare instances, says our article in the new issue of Harvard Business Review. That's why we propose that companies under assault pursue two distinct but parallel efforts: "Transformation A" should reposition the core business, adapting it to the altered environment. "Transformation B" should launch a separate, disruptive business that will be the source of future growth.

This dual approach allows the company to realize the most value from its current assets and advantages, while giving the new initiative the time it needs to grow. This article walks readers through the dual transformations of three companies that were facing massive disruption: the Deseret News, which was losing advertising to online upstarts; Xerox, whose copier business had been eroded by Asian rivals; and Barnes & Noble, which was threatened by e-books.

In each instance, a key to making the dual transformations work was the establishment of a "capabilities exchange," which allowed both efforts to share resources without interfering with the mission or operations of either. The results to date are promising: At all three firms, the core business is back on track, and the innovative initiative is demonstrating strong growth.

Download a complimentary copy of the article

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