Three key challenges in building breakthrough businesses within established organizations are forgetting, borrowing, and learning. Forgetting requires challenging the status quo, borrowing requires managing tensions between new and existing businesses over cannibalization and obsolescence, and learning requires establishing reliable forecasts through an iterative process instead of rigid planning. Effective growth requires addressing all three challenges through proactive management and flexibility instead of aggressive assumptions or duplication of models.

1. Building Breakthrough Businesses
Within Established Organizations
• Emphasis must shift: From
ideas to execution and from
leadership excellence to
organizational excellence.
• A new business with high
growth potential (NewCo)
rarely coexists gracefully with
the most closely related
established business unit
within the company (CoreCo).

2. • In the new business
example, the best practices
were examined for managing
strategic experiments.
• According to the HBS, trends have now changed. Business
growth must take a new directions in terms of models and
procedures used.
Building Breakthrough Businesses
Within Established Organizations

3. •Review
•Reinvigorate
•Refresh
•Refocus
Review
Reinvigorate
Refresh
Refocus Customer Needs
STRATEGIC ISSUES
To stay ahead of your competitors you need to:

4. Innovation
New ProductsNew Service Customer Needs
Servicing Customer needs requires innovation – you can achieve this by:
• Adding a new service
• Adding a new product
• Modifying existing services / products
Modify Existing
Services / Products
STRATEGIC ISSUES

5. When planning growth from within organizations will face 3
challenges:
3 ) Learning: The faster the new venture learns from
critical unknowns the better.
2) Borrowing: The new venture cannot ignore the resources in
use so the correct things must be borrowed.
Building Breakthrough Businesses
Within Established Organizations:
3 Challenges
1) Forgetting: The new venture must forget the business model
in use.

6. Three challenges: forgetting,
borrowing and learning.
• In building NewCo, the CEO must be willing to
challenge status quo on a range of issues
including shared values and budgeting.
• Many firms make the mistake of duplicating
organizational designs.

7. Warning signs that forgetting will be an
uphill battle:
• The company has only one business
model.
• All business units within the company
are at similar points in their business
life.

8. Borrowing:
• Warning signs that borrowing will be an uphill battle:
• CoreCo perceives that NewCo will cannibalize their
revenues.
• CoreCo perceives that NewCo could render their
competence obsolete.
• CoreCo perceives that NewCo
might damage their assets.

9. Borrowing example:
The New York Times digital version on the internet
came into problems with the paper format The Times.
The Times accused digital version of stealing
subscriptions along with other accusations.
These problems were tackled effectively due to
cooperation between senior management
acknowledging and proactively managing tensions.

10. • Reliable forecasts are best indicators that a business is
learning.
Wild
Guesses
Informed
Estimates
Reliable
Forecasts
Time
Prediction
Is NewCo Learning?

11. Learning:
• Warning signs that learning will be an uphill battle:
• NewCo’s leader perceives that they are in a rush to get to
market first.
• The company has a tradition
of detailed planning.
• The company has a history
of common planning
approaches on every business
unit.

12. Learning example:
The learning challenge is most difficult of the three.
Hasbro’s traditional games Scrabble and Monopoly were
under threat by the Hasbro interactive version.
Hasbro Interactive eventually collapsed as it did not engage in
the learning process effectively. They did not establish if they
had there capabilities before proceeding.
Hasbro did not set any predictions;
too rigid. Hasbro’s planning
cycle yearly; should have been
quarterly. Too aggressive.

13. The Key Learnings:The Key Learnings:
• For effective growth; planning is a fundamental
requirement.
• Senior Management have to play a crucial role
in managing tensions.
• The 3 challenging stages have to well managed.