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I’m Andy Binns. I run a consulting firm called Change Logic and authored this book, Corporate Explorer, which I’m going to talk to you about. And I should say that Change Logic’s a firm that’s been around 15 years working with many different corporations and I’ve co-founded it with these two eminent academics. Professor Charles O’Reilly from Stanford University and Professor Michael Tushman from Harvard Business School, and together over many years, they have researched and written about this issue of how is it that corporations can manage to create their future. And part of their message is a tough one, a challenging one. And I’m going to start my remarks today by using a chart that Mike Tushman has been using for the 20 plus years that I’ve known him, which may be a comment on the, the standard of academic innovation. But he starts his presentations with this chart and a single question, which is, “What do these companies have in common? Many different industries, many time periods, many geographies, and all of these differences there are a few key similarities. And the similarities are to do with this question of disruption. So I’m going to give you the answer should you find yourself at Harvard in the coming years…write down the answer so that you are ready for when he asks.
And what he’s talking about is that these firms have all either disappeared completely or have managed to reinvent themselves from a point of near bankruptcy, and that in each of these cases, they are companies that go up and up and up in their product class. Sometimes their names are synonymous with the product class itself–like Levi Strauss and jeans or Polaroid cameras. And then they hit this moment at which all of the rules in the industry changes, either because of a technological change, a business model shift, a shift in consumer preferences, and they go down.
And the question is, well, why does that happen? One popular explanation is it’s because they don’t see disruption coming. The thing is that doesn’t hold up to very much scrutiny. Empirically, Polaroid had the first megapixel digital camera in the market. There’s the Swiss watch industry that actually created the quartz movement that then 10 years later, Japanese companies commercialized and destroyed their franchise. And it’s only that they survived today having come out of bankruptcy. And indeed, Nokia had all of the assets to defend itself and lead in the smartphone market, but we’re unable to understand the nature of the opportunity that was ahead of them. So this explanation that this is to do with the technology and not seeing disruption coming is just not persuadable because of the facts.
The other explanation is that it’s something to do with the organization. It’s something to do with how well they execute against their intention to innovate. And because that seems so difficult to overcome, there’s a view which is that we should leave innovation to startups. That the sort of inertia of the large corporate organization is so difficult that we should just deal with it in these different garages, not in the damp garages of Nuremberg, but in the sunny uplands of Silicon Valley, and just leave it with these guys and they will sort out the problem of, innovation.
So this is a reasonable hypothesis that many people subscribe to. And if I go and give this same talk to a hundred audiences, I will find a majority of the people in the audience will start with the assumption that this is the way to go forward.
So it’s odd that I should be here talking to you today, having written this book Corporate Explorer with the outrageous subtitle of “how corporations beat startups at the innovation game.” And of course, there are many possible explanations. It could be marijuana is legal in the state of Massachusetts, so it could be a hallucination that leads to this. I could just simply be trying to sell books, which to some degree is true. But fortunately for you, it’s, it’s based on fact. And the research that we have shows that a number of corporations actually are moving ahead of the market and locking in new franchises, new areas of business. And in doing so, they do move ahead of startups.
Now, what’s important is that these are companies that don’t get the attention of a new unicorn. There’s no announcement in the Wall Street Journal to tell us that these companies have listed on the NASDAQ or some other such exchange. Take for instance, Microsoft, one of the big tech firms, and here they have made this move from desktop installed software to software as a service. Beating out the threat of Google as they did. And this doesn’t get very much attention that they managed this inside the organization very deliberately as a disruption. Take also Relx, this is a London headquartered company and in their Lexus Nexus unit they managed to move from online legal information, to creating a big data analytics business that is larger now than the original business. And that’s all achieved within a 20-year period–a multi-billion-dollar business created out of an existing unit, and all of these other ones I will touch on over the next 30 minutes.
And so, what we’re left with is these two stories. One story which is entirely valid of the difficulty that corporations face in responding to innovation, staying ahead. And then the other story of examples of firms that are really successful. And this leads us to this critical question. How do we explain the difference?
Different companies are right now busy building new businesses and scaling them to a considerable extent. They’ve managed to do this balancing of their core business. They’ve sustained the franchises that generate profits today, but they’ve managed to explore, find new sources of profit, new possibilities, and new areas. And a good deal of why they’ve been successful at doing this is the story of the Corporate Explorer.
Now this is the individual who leads the innovation from inside the corporation. They play the role that the entrepreneur plays in a startup such as Krisztian Kurtisz CEO of Cherrisk at UNIQA and Balaji Bondili , at Deloitte, and Jim Peck who built that Lexus Nexus risk analytics business that I mentioned, and some others that we will talk about.
And so the message of the Corporate Explorer is the key message that I want to leave you with.
When we go in and talk about how innovation happens in organizations, we very easily move towards talking about processes and systems and validation engines and so on. And in no way wish to minimize the importance of this or the significance. But I want to get your attention to how, in all of the examples that I see and we have in our research of really successful corporate innovation, there are characters who drive it with their personal leadership and commitment. And their commitment is to solving a customer problem, right? They have a passion for addressing a need that they see in the world and doing something productive about it.
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