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Two Routes to Resilience

By Clark G. Gilbert, Matthew J. Eyring, Richard N. Foster

TwoRoutesResilience

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Sooner or later, most companies will need to reinvent themselves in response to disruptive market shifts, technologies, or start-ups. But can a new business model quickly replace all the revenue an incumbent has lost to market upheaval? Only in rare instances, say the authors. That's why they 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. That 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.

Read this article to learn:

  • How to develop and manage two separate transformation efforts
  • The five-step process to establishing a "capabilities exchange," which allows both efforts to share resources without interfering with the mission or operations of either
  • Real-life dual transformation stories from three companies that were facing massive disruption: the Deseret News, Xerox, and Barnes & Nobles

 


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After a successful turnaround, we needed to focus on innovation and growth. Not only did the managers get a chance to develop new skills, they generated a set of high-potential ideas, some of which we ended up commercializing.

Joyce Petrella
Head of Executive Education, Aetna

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