This document discusses how incumbents in industries facing disruption must navigate new tradeoffs to both fulfill current demand from their core business while also preparing for the future. It outlines five imperatives for incumbents to build strategic ambidexterity: 1) understand how change impacts their business; 2) choose the right strategic approach; 3) build an adaptive capability through experimentation; 4) become an orchestrator of change through new partnerships; and 5) create an organizational context that supports both existing and new businesses.
[talk with notes] Disruptive innovation is hard, and constitutes a different set of challenges and risks for all kinds of companies, regardless of size. To increase the likelihood of successful outcomes in moving from idea to execution, there are some strategies and lessons learned that Tamara, head of PARC’s global business development and commercial operations, will share. She will also share portfolio management as a framework for managing these challenges especially when you are considering multiple disruptive innovation investments.
Does Your Company Have an Innovation Strategy? What every Board Member should know.
In light of the changing competitive landscapes, the role of the Board in directing strategy and ensuring long term value growth and marketplace relevance has never been more important.
Strategic Success: Closing the Deal Isn't a StrategyTodd Antonelli
Executives involved in decision-making on key corporate acquisitions need to ask not “Are we doing things right?”
but instead “Are we doing the right things?”
Infosys Insights: Driving revenue through service innovationInfosys
“Servitization” (bundling of products with services) has become an imperative in today’s economy, especially in developed markets. Product companies that do not embrace this concept are bound to face stiff competition from low-cost manufacturers in emerging markets. Key among the risks they face is the prospect of being forced out of the market in the long term. Hence, the benefits of servitization are too compelling to ignore.
[talk with notes] Disruptive innovation is hard, and constitutes a different set of challenges and risks for all kinds of companies, regardless of size. To increase the likelihood of successful outcomes in moving from idea to execution, there are some strategies and lessons learned that Tamara, head of PARC’s global business development and commercial operations, will share. She will also share portfolio management as a framework for managing these challenges especially when you are considering multiple disruptive innovation investments.
Does Your Company Have an Innovation Strategy? What every Board Member should know.
In light of the changing competitive landscapes, the role of the Board in directing strategy and ensuring long term value growth and marketplace relevance has never been more important.
Strategic Success: Closing the Deal Isn't a StrategyTodd Antonelli
Executives involved in decision-making on key corporate acquisitions need to ask not “Are we doing things right?”
but instead “Are we doing the right things?”
Infosys Insights: Driving revenue through service innovationInfosys
“Servitization” (bundling of products with services) has become an imperative in today’s economy, especially in developed markets. Product companies that do not embrace this concept are bound to face stiff competition from low-cost manufacturers in emerging markets. Key among the risks they face is the prospect of being forced out of the market in the long term. Hence, the benefits of servitization are too compelling to ignore.
Sarah e Caterina!.
La customer co-creation è il coinvolgimento diretto dei clienti (user e rivenditori) nella progettazione di nuovi prodotti. Qui sono stati riportati gli effetti dell'impiego della Customer co-creation su indesit
Mergers & Acquisitions: What Winners Do to Beat the OddsL.E.K. Consulting
Activity in M&A often comes in bursts. As of the second quarter of 2013, the scent is in the air. Company management is flush with cash, bolstered by buoyant share prices, and face slow prospects for organic growth.
But capturing value by creating a whole that is greater than the sum of its parts is risky. Recently, L.E.K. Consulting analyzed the performance of more than 2,500 M&As between 1993 and 2010 – a period that included two boom and bust economic cycles. L.E.K. found that nearly 60% of companies destroyed shareholder value after the deal closed.
In this new Executive Insights, L.E.K. shares how management can overcome common pitfalls to beat the long odds of creating value through mergers and acquisitions. From identifying the right target to synergy valuation to post-merger integration, winners have shown that with the right approach, value through M&A can be found and captured.
The diffusion of decision rights across functions throughout a product’s life cycle can result in wasted customer insights, subpar innovation, and ineffective complexity management. Companies should adopt strong-form product management: giving responsibility for top-line growth and other financial outcomes to one person, who also has cross-functional decision-making authority.
The vast and crucial auto suppliers industry faces several competitive challenges -- rapid growth in emerging markets, pressure to meet clean air and mileage regulations, and the impact of technology and connectivity. Amid intense competition, suppliers will have to learn how to differentiate themselves and their products to preserve a profitable place in the automobile ecosystem and maintain high entry barriers for rivals. To do so, they must reexamine the profit potential of their products and portfolios, and focus on the innovation potential inherent in each of them.
How do you place a value on a business where there is no relevant historical data? This question regularly appears in startup ventures, or where there is a new development in an existing business - perhaps in response to a new technology or process. Without historical financial data - or where this is misleading - the SLC Matrix is an attempt to provide a systematic and objective framework - with flexibility - that enables some defensible logic and intellectual rigour to be used despite the lack of past data. It's free for you to use, or modify to fit your circumstances
According to this year's Global Innovation 1000 study -- an examination of the 1,000 public companies that spend the most on researching and developing products for their markets -- the world's major innovators are shifting more of their R&D to software and services. The shift is being driven by the supercharged pace of improvement in what software can do, the increasing use of embedded software and sensors in products as varied as power turbines and cars, and rising customer expectations. Between 2010 and 2015, the companies in the Global Innovation 1000 study increased their R&D spending on software offerings by 65 percent and their spending on service offerings by 36 percent. As this shift intensifies, companies are facing an array of managerial, organizational, and cultural challenges.
Etude PwC sur l'innovation du secteur Aéronautique, Défense & Sécurité (2014)PwC France
http://pwc.to/1owpVso
L’étude "The runway to growth : Using market understanding to drive efficient innovation in the aerospace, defence and security industry" est issue du rapport “Breakthrough innovation and growth”, réalisé auprès de 1757 dirigeants issus de 30 secteurs d’activité dans 25 pays. Ce focus Aéronautique et Défense est construit sur la base des réponses des 58 dirigeants du secteur, issus de 10 pays, ainsi que d’une vingtaine d’interviews et d’une recherche parallèle effectuée sur le marché américain.
Innovation's unsung hero in volatile times: Industrialized business operationsGenpact Ltd
Extreme market volatility has prompted companies across industries to build more effective business operations. 1. Leading innovators such as Apple, Amazon, GE, HSBC, and PayPal2 among others have addressed those challenges by harvesting the value of information – at scale - and harnessing the art of the possible in their business operations.This paper describes how product and business model innovation can be driven and enabled by smart business process operations, be they transaction or decision support. The evidence accumulated across hundreds of companies indicates that “industrialized operations” – thanks to scientific decoupling and consolidation of part of business processes run as an extended enterprise, utilizing data, metrics, as well as IT and HR practices in innovative ways - constitute a material yet relatively untapped lever.
Sarah e Caterina!.
La customer co-creation è il coinvolgimento diretto dei clienti (user e rivenditori) nella progettazione di nuovi prodotti. Qui sono stati riportati gli effetti dell'impiego della Customer co-creation su indesit
Mergers & Acquisitions: What Winners Do to Beat the OddsL.E.K. Consulting
Activity in M&A often comes in bursts. As of the second quarter of 2013, the scent is in the air. Company management is flush with cash, bolstered by buoyant share prices, and face slow prospects for organic growth.
But capturing value by creating a whole that is greater than the sum of its parts is risky. Recently, L.E.K. Consulting analyzed the performance of more than 2,500 M&As between 1993 and 2010 – a period that included two boom and bust economic cycles. L.E.K. found that nearly 60% of companies destroyed shareholder value after the deal closed.
In this new Executive Insights, L.E.K. shares how management can overcome common pitfalls to beat the long odds of creating value through mergers and acquisitions. From identifying the right target to synergy valuation to post-merger integration, winners have shown that with the right approach, value through M&A can be found and captured.
The diffusion of decision rights across functions throughout a product’s life cycle can result in wasted customer insights, subpar innovation, and ineffective complexity management. Companies should adopt strong-form product management: giving responsibility for top-line growth and other financial outcomes to one person, who also has cross-functional decision-making authority.
The vast and crucial auto suppliers industry faces several competitive challenges -- rapid growth in emerging markets, pressure to meet clean air and mileage regulations, and the impact of technology and connectivity. Amid intense competition, suppliers will have to learn how to differentiate themselves and their products to preserve a profitable place in the automobile ecosystem and maintain high entry barriers for rivals. To do so, they must reexamine the profit potential of their products and portfolios, and focus on the innovation potential inherent in each of them.
How do you place a value on a business where there is no relevant historical data? This question regularly appears in startup ventures, or where there is a new development in an existing business - perhaps in response to a new technology or process. Without historical financial data - or where this is misleading - the SLC Matrix is an attempt to provide a systematic and objective framework - with flexibility - that enables some defensible logic and intellectual rigour to be used despite the lack of past data. It's free for you to use, or modify to fit your circumstances
According to this year's Global Innovation 1000 study -- an examination of the 1,000 public companies that spend the most on researching and developing products for their markets -- the world's major innovators are shifting more of their R&D to software and services. The shift is being driven by the supercharged pace of improvement in what software can do, the increasing use of embedded software and sensors in products as varied as power turbines and cars, and rising customer expectations. Between 2010 and 2015, the companies in the Global Innovation 1000 study increased their R&D spending on software offerings by 65 percent and their spending on service offerings by 36 percent. As this shift intensifies, companies are facing an array of managerial, organizational, and cultural challenges.
Etude PwC sur l'innovation du secteur Aéronautique, Défense & Sécurité (2014)PwC France
http://pwc.to/1owpVso
L’étude "The runway to growth : Using market understanding to drive efficient innovation in the aerospace, defence and security industry" est issue du rapport “Breakthrough innovation and growth”, réalisé auprès de 1757 dirigeants issus de 30 secteurs d’activité dans 25 pays. Ce focus Aéronautique et Défense est construit sur la base des réponses des 58 dirigeants du secteur, issus de 10 pays, ainsi que d’une vingtaine d’interviews et d’une recherche parallèle effectuée sur le marché américain.
Innovation's unsung hero in volatile times: Industrialized business operationsGenpact Ltd
Extreme market volatility has prompted companies across industries to build more effective business operations. 1. Leading innovators such as Apple, Amazon, GE, HSBC, and PayPal2 among others have addressed those challenges by harvesting the value of information – at scale - and harnessing the art of the possible in their business operations.This paper describes how product and business model innovation can be driven and enabled by smart business process operations, be they transaction or decision support. The evidence accumulated across hundreds of companies indicates that “industrialized operations” – thanks to scientific decoupling and consolidation of part of business processes run as an extended enterprise, utilizing data, metrics, as well as IT and HR practices in innovative ways - constitute a material yet relatively untapped lever.
Extreme market volatility has prompted companies across industries to build more
effective business operations1
. Leading innovators such as Apple, Amazon, GE, HSBC,
and PayPal2 among others have addressed those challenges by harvesting the value of
information – at scale - and harnessing the art of the possible in their business operations.
This paper describes how product and business model innovation can be driven and
enabled by smart business process operations, be they transaction or decision support.
The evidence accumulated across hundreds of companies indicates that “industrialized
operations” – thanks to scientific decoupling and consolidation of part of business
processes run as an extended enterprise, utilizing data, metrics, as well as IT and HR
practices in innovative ways - constitute a material yet relatively untapped lever.
STRATEGY
58 BUSINESS STRATEGY REVIEW ISSUE 4 – 2010
STRATEGIC
ORCHESTRATION
Many companies seizing major
opportunities in emerging markets
are blazing a management path
also shared by companies such
as Apple, RyanAir and Nestlé.
Strategic orchestration allows
firms to get to market faster,
adapt to changing circumstances
and lower their invested capital,
thereby allowing them to pursue
less profitable opportunities such as
serving emerging market consumers.
Donald L Sull and Alejandro
Ruelas-Gossi tell how.
As the global economic crisis
recedes into the past, executives are
raising their heads from cost cutting
and looking for opportunities to
grow the top line. Unfortunately,
revenue growth is elusive. The
four horsemen of the new normal
— insecure employment, stagnant
wages, unsustainable credit and low
investment returns — cast a dark
shadow over consumers who cut
back on spending. At the same time,
governments are slashing investment
and public payrolls to reign in fiscal
deficits. Major savers, like China
and Germany, cannot shift from
exports to consumption fast enough
to offset declining demand elsewhere
in the world.
How, then, can executives grow
revenues despite tepid overall
demand? The standard answers
are corporate entrepreneurship and
innovation. To grow in stagnant
markets, managers need to spot novel
opportunities or envision breakthrough
products or services that will
differentiate them from competitors.
Unfortunately, established firms often
struggle to seize new opportunities,
losing out to more fleet-footed
start-ups. The failure of corporate
entrepreneurship is often blamed on
a lack of imagination. To stimulate
the necessary creativity, companies
send executives to workshops where
they use finger paints or pretend to be
jungle animals (real examples both) to
think more creatively.
These efforts to stimulate
creativity are misplaced. In most large
corporations, the primary impediment
to revenue growth is not a lack of
creativity, but an unhealthy addiction
to power. Pursuing new opportunities
often demands novel resources and
competencies not currently at a firm’s
disposal. In many cases, executives
reject out-of-hand any opportunity
that doesn’t leverage the firm’s
existing resources and competencies.
Like the proverbial boy with a
hammer, they reject any opportunity
that isn’t a nail. If internal champions
persist in pursuing the market gap,
they often draft detailed blueprints
to develop the necessary resources
in house. But senior executives
often turn down the proposal as too
expensive, time-consuming or risky.
There is an alternative, which we
call ‘strategic orchestration’, whereby
a firm pursues an opportunity —
not by controlling all the required
resources and competencies but by
assembling and managing a network
of partners. Strategic orchestration
allows firms to get to market faster,
adapt to changing circumstances and
.
Competing to Win in the Media & Entertainment IndustryCognizant
To outperform in tough times, media and entertainment companies must rejuvenate their business, operating and technology models by jettisoning nonvalue- adding activities and reinforcing core strengths that provide sustainable growth, despite funding challenges.
Enhancement in NDT inspection for operational effectiveness, efficiency and e...Innerspec Technologies
We intend to show that any change shall be linked, not only to improvement, but also to immediate cost reduction so that all management structure can conceive quick implementation as
part of its department strategy & enhancement in their budget cost.
For that, concepts such as effectiveness, efficiency and excellence must be approached. We will give clear saving cost ways which will follow the terminology.
In Financial terms and without a deep analysis, we can conrm cost savings above 30% from current prices are achieved.
Slides from a recent speech in front of 1500 people on:
- Why business model innovation is important
- What a business model is
- How to design and implement innovative business models using a design thinking approach.
Many cases illustrate how to do it in practice.
De nombreuses définitions existent au sujet du Cloud Computing et les fournisseurs les cadrent selon une perspective technique, faisant passer le concept à un mot à la mode (Buzz word) égarant ainsi les décideurs, hommes d'affaires et leur laissant une idée confuse de son importance concurrentielle pour l'entreprise.
Ce livre blanc interactif a pour intention d'expliquer le concept du "Cloud Computing", la définition du concept et les technologies principales sur lesquelles le Cloud Computing est fondé.
Il vous présentera les contraintes et les facteurs de l'environnement d'aujourd'hui qui peuvent motiver l'adoption réussie du Cloud Computing dans la stratégie d‘une entreprise.
Automotive companies have started to respond to changing customer buying behavior by piloting new online business models. However, most current initiatives are still removed from what customers expect.
Human drivers have always been an essential requirement in the operation of a motor vehicle. At the same
time, research has repeatedly demonstrated that driver error plays a role in more than 90% of road crashes
(NHTSA 2008; Blanco et al. 2016). As such, in the past two decades, vehicle manufacturers have designed new
and increasingly sophisticated features that provide more assistance to drivers to help mitigate such errors. Such
features are an important precursor to the development of automated vehicles and, currently, expectations are
high that the advent of semi- or fully- automated vehicles will dramatically reduce road crashes
The race is on
Clearly, Canadian executives are feeling that the race is on; but it remains to be seen whether they act quickly enough and with the right focus to effectively transform and evolve. Among our findings:
75 percent of CEOs agree that the next three years will be more critical to their industry than the previous 50 years;
74 percent of CEOs believe their company will remain largely the same in the next 3 years;
98 percent are concerned about the loyalty of customers;
13 percent feel confident that they are fully prepared for a cyber-event.
Why Is Your BMW X3 Hood Not Responding To Release CommandsDart Auto
Experiencing difficulty opening your BMW X3's hood? This guide explores potential issues like mechanical obstruction, hood release mechanism failure, electrical problems, and emergency release malfunctions. Troubleshooting tips include basic checks, clearing obstructions, applying pressure, and using the emergency release.
Ever been troubled by the blinking sign and didn’t know what to do?
Here’s a handy guide to dashboard symbols so that you’ll never be confused again!
Save them for later and save the trouble!
5 Warning Signs Your BMW's Intelligent Battery Sensor Needs AttentionBertini's German Motors
IBS monitors and manages your BMW’s battery performance. If it malfunctions, you will have to deal with an array of electrical issues in your vehicle. Recognize warning signs like dimming headlights, frequent battery replacements, and electrical malfunctions to address potential IBS issues promptly.
Fleet management these days is next to impossible without connected vehicle solutions. Why? Well, fleet trackers and accompanying connected vehicle management solutions tend to offer quite a few hard-to-ignore benefits to fleet managers and businesses alike. Let’s check them out!
Symptoms like intermittent starting and key recognition errors signal potential problems with your Mercedes’ EIS. Use diagnostic steps like error code checks and spare key tests. Professional diagnosis and solutions like EIS replacement ensure safe driving. Consult a qualified technician for accurate diagnosis and repair.
"Trans Failsafe Prog" on your BMW X5 indicates potential transmission issues requiring immediate action. This safety feature activates in response to abnormalities like low fluid levels, leaks, faulty sensors, electrical or mechanical failures, and overheating.
Comprehensive program for Agricultural Finance, the Automotive Sector, and Empowerment . We will define the full scope and provide a detailed two-week plan for identifying strategic partners in each area within Limpopo, including target areas.:
1. Agricultural : Supporting Primary and Secondary Agriculture
• Scope: Provide support solutions to enhance agricultural productivity and sustainability.
• Target Areas: Polokwane, Tzaneen, Thohoyandou, Makhado, and Giyani.
2. Automotive Sector: Partnerships with Mechanics and Panel Beater Shops
• Scope: Develop collaborations with automotive service providers to improve service quality and business operations.
• Target Areas: Polokwane, Lephalale, Mokopane, Phalaborwa, and Bela-Bela.
3. Empowerment : Focusing on Women Empowerment
• Scope: Provide business support support and training to women-owned businesses, promoting economic inclusion.
• Target Areas: Polokwane, Thohoyandou, Musina, Burgersfort, and Louis Trichardt.
We will also prioritize Industrial Economic Zone areas and their priorities.
Sign up on https://profilesmes.online/welcome/
To be eligible:
1. You must have a registered business and operate in Limpopo
2. Generate revenue
3. Sectors : Agriculture ( primary and secondary) and Automative
Women and Youth are encouraged to apply even if you don't fall in those sectors.
In this presentation, we have discussed a very important feature of BMW X5 cars… the Comfort Access. Things that can significantly limit its functionality. And things that you can try to restore the functionality of such a convenient feature of your vehicle.
Core technology of Hyundai Motor Group's EV platform 'E-GMP'Hyundai Motor Group
What’s the force behind Hyundai Motor Group's EV performance and quality?
Maximized driving performance and quick charging time through high-density battery pack and fast charging technology and applicable to various vehicle types!
Discover more about Hyundai Motor Group’s EV platform ‘E-GMP’!
Things to remember while upgrading the brakes of your carjennifermiller8137
Upgrading the brakes of your car? Keep these things in mind before doing so. Additionally, start using an OBD 2 GPS tracker so that you never miss a vehicle maintenance appointment. On top of this, a car GPS tracker will also let you master good driving habits that will let you increase the operational life of your car’s brakes.
What Exactly Is The Common Rail Direct Injection System & How Does It WorkMotor Cars International
Learn about Common Rail Direct Injection (CRDi) - the revolutionary technology that has made diesel engines more efficient. Explore its workings, advantages like enhanced fuel efficiency and increased power output, along with drawbacks such as complexity and higher initial cost. Compare CRDi with traditional diesel engines and discover why it's the preferred choice for modern engines.
What Does the PARKTRONIC Inoperative, See Owner's Manual Message Mean for You...Autohaus Service and Sales
Learn what "PARKTRONIC Inoperative, See Owner's Manual" means for your Mercedes-Benz. This message indicates a malfunction in the parking assistance system, potentially due to sensor issues or electrical faults. Prompt attention is crucial to ensure safety and functionality. Follow steps outlined for diagnosis and repair in the owner's manual.
What Does the PARKTRONIC Inoperative, See Owner's Manual Message Mean for You...
Forks In The Road
1. Forks in the Road
NAVIGATING INDUSTRY DISRUPTION
By Martin Reeves, Rachel Bergman, Antoine Gourévitch, and Miguel Ortiz
AT A GLANCE
In many industries, incumbents are under threat from new rivals with
new business models. In the auto industry, for example, nontraditional
competitors are entering with connected software, alternative fuels, and
shared mobility networks. Whether the shift in the industry is sudden or
gradual, one thing is certain: incumbents must adapt.
The Need for Strategic Ambidexterity
Incumbents in uncertain and dynamic environments must simultane-
ously run the business by exploiting existing opportunities and reinvent
the business by exploring new growth areas. This ambidexterity is
especially difficult for large, established companies, which tend to
overestimate the longevity of their business models. Those that do take
exploratory steps often don’t go far enough.
Five Imperatives
Incumbents in any industry ripe for disruption can survive by under-
standing how change affects each part of their business; choosing the
right approaches to strategy and execution for each part; experimenting
with new products and business models; becoming an orchestrator
rather than a victim of change; and adopting ambidextrous organization
structures that allow the business to adapt to changing markets.
2. Forks in the Road
2 | The Boston Consulting Group
2015 brought record sales and profitability to the global auto
industry. But current success is no guarantee of future success: it’s
clear to all that a new road lies ahead. Fueled by new technology and
consumer needs, nontraditional competitors are entering the auto
industry with connected software, artificial intelligence, alternative fuels,
and shared mobility networks. For those new entrants—such as Tesla
with electric vehicle technology, Uber with its collaborative consumption
model, and Google and Apple with autonomous vehicles—industry shifts
signal opportunities. But for incumbents, they represent uncertainty and
perhaps even an existential challenge.
Maybe we’re headed toward an upside-down world, where attackers
with deep pockets take control, offering vehicles that are electric, fully
autonomous, and not owned but shared through smartphone apps.
Upheaval in other industries reminds us how swiftly incumbents can
lose their advantage. Think back to 2007, when Nokia had record sales
and more than 50% of the global smartphone market. That same year,
Steve Jobs introduced the iPhone. The rest is history. Nokia had missed
a crucial inflection point in the smartphone business model—toward
connected software and a seamless user experience—and experienced
a swift and unstoppable decline.
Change in the auto industry could also be much less dramatic, consider-
ing the many factors that must fall into place for radical new futures to
unfold. For example, electric vehicle adoption is complicated by low oil
prices, uncertainty about future tax credits, and the challenging econom-
ics of electric charging stations; autonomous vehicle adoption requires
error-proof technology, regulatory clearance, and consumers’ willingness
to change how they think about mobility; and shared ownership models
must be customized for cities and suburbs, where people have very dif-
ferent mobility needs.
Whether the shift in the auto industry is sudden or gradual, profits will
continue to flow from the current business model in the near term. But
incumbents cannot bank on this continuing indefinitely. Nor can they
bank on any particular scenario. Preparing for the possibility of change
will require them to develop new capabilities and shift resources away
from their currently successful business models. Incumbent automakers
face a difficult balancing act. In an industry whose dominant model has
remained virtually the same for more than 75 years, they must navigate
new tradeoffs in resource deployment as they seek to fulfill current de-
mand for profitable core products while preparing for the future.
A Cross-Industry Predicament
This situation is not unique to the auto industry. In many industries, in-
cumbents can no longer count on stability from long-standing business
Auto incumbents
cannot bank on
the continuing
profitability of their
current business
model. Nor can they
bank on any
particular scenario.
3. Forks in the Road
3 | The Boston Consulting Group
Even if companies
know change is
coming, it is very hard
to recognize exactly
when and how to shift
business models.
models, oligopoly structures, and stable regulation. Consider banking,
where fully digital models are undermining branch networks; energy,
where smart grids, renewables, and upgraded battery technology are re-
shaping utilities’ revenues; and cable television, where content providers
are selling directly to consumers.
The traditional insurance business model is also on the brink of disrup-
tion. The industry has provided higher returns than most other sectors
since the financial crisis of 2007–2008—not because incumbents are
redefining the future but because they are increasing distributions to
investors.
Insurers’ management teams have recognized that many of their tradi-
tional approaches and products are mature, so maintaining the stock
price requires increasing dividends to investors and curtailing reinvest-
ment. Since the start of 2010, European insurers have reduced their in-
vestment in new policies by 15% and as a result have increased distribu-
tions to shareholders by more than 100%.
Incumbents cannot continue this pattern unless they deliver sustainable
growth in profits, but their innovation efforts have been modest, despite
the obvious opportunities: customers’ engagement with insurance prod-
ucts remains low, and the online experience insurers offer is inferior to
that of most other industries. Some mature insurers, such as Allianz,
AIG, and AXA, are trying to innovate at arm’s length from the core busi-
ness, but only a few nimble, smaller players, such as Discovery, and
younger emerging-market businesses, such as Ping An, are managing to
disrupt the industry from within.
The incumbents’ weakness has not gone unnoticed. Since 2008, venture
capitalists in Europe have invested more than $30 billion in startups that
are experimenting aggressively to find sustainable profit growth. New
business models are being introduced, such as using ubiquitous data to
identify and underwrite attractive customers; replacing expensive distri-
bution channels with highly customized digital propositions; and con-
necting motor and health insurance products to customers’ everyday
lives through the Internet of Things.
Traditional insurers, like incumbents in many industries, must innovate
and adapt or face losing their industry leadership. Doing so requires
switching from old to new business models and satisfying customers and
investors during the transition.
The Need for Strategic Ambidexterity
Even if companies know change is coming, it is very hard to recognize
exactly when to shift business models. And surviving the transition
4. Forks in the Road
4 | The Boston Consulting Group
Large, established
companies tend to
overestimate the
longevity of their
business models and
underinvest in new
ones.
is no easy feat. Switching from old to new often requires not only build-
ing new capabilities to support the journey but also cannibalizing
familiar models with new, untested ones.
Incumbents in uncertain and dynamic environments must straddle
multiple business models to succeed. That is, they must be ambidex-
trous: simultaneously running the business by exploiting existing oppor-
tunities and reinventing the business by exploring new growth areas.
Challenges for Large, Established Companies
Mastering ambidexterity is inherently difficult, because it requires
firms to embrace contradictions. Running the business involves opti-
mizing the known in order to deliver quarterly profits; success is often
achieved through standardization, scale, efficiency improvements,
and top-down management. Conversely, reinventing requires experi-
menting with the unknown; success depends on a culture of entrepre-
neurial risk taking, a flexible, decentralized structure, and a focus on the
long term.
Ambidexterity is especially difficult for large, established companies. We
found in recent research that they are prone to overexploiting the prod-
ucts and business models that were the foundation of past success. Mea-
suring firms’ propensity for exploration using the present value of
growth options (PVGO) as a percentage of market capitalization, we
found that large, established companies are about 20 percentage points
less exploratory than younger peers.1
(See “Tomorrow Never Dies: The
Art of Staying on Top,” BCG Perspectives, November 2015.)
It’s easy to understand why. Scale is often an advantage in stable
industries and can initially confer resilience in dynamic ones, but it also
leads to strategic inertia. Large, established companies are vulnerable
to what we call the success trap: they tend to overestimate the longevity
of their business models and underinvest in new ones, even when their
core business is threatened. Bound by complex structures and processes
and a change-averse culture, companies in the success trap find it hard
to respond effectively to change signals when faced with performance
pressure. Instead, they often respond by cutting costs and exploiting
more, leading to a downward spiral of diminishing sustainability.
To be fair, we see many incumbents grasping competitive threats and
taking exploratory steps. But they often don’t go far enough to prepare
for the future by moving from experiments and pilots to scalable busi-
ness models. Recall Kodak’s “death by pilot”: the company built the first
digital camera long before digitization fully took hold but missed the
critical opportunity to scale up the new offering, focusing instead on its
legacy film business.
5. Forks in the Road
5 | The Boston Consulting Group
In the auto industry, incumbents are certainly exploring, with nontra-
ditional partnerships (between GM and Lyft, and Baidu and BMW, for
instance), advanced software options (such as Ford’s SmartDeviceLink
and Nokia Here), and alternative-fuel vehicles. Time will tell if they
are exploring effectively or sufficiently. Will the first new scalable busi-
ness models come from auto industry incumbents or attackers?
What is clear is that incumbent automakers must step off the well-trod-
den path to overexploitation. We analyzed PVGO over the past ten
years for large automakers, the industry as a whole, and select challeng-
ers: non-auto companies that recently entered the space. The results
were striking. Whereas the industry’s and large automakers’ orientation
toward exploration has not increased, the challengers’ has steadily in-
creased, starting off about 5 percentage points higher than the indus-
try’s in 2004 and growing to a 10-point spread by 2014. (See Exhibit 1.)
Approximately 50% of large automakers are already in the success trap,
compared with less than 10% of smaller auto players. (See Exhibit 2.)
This suggests that the incumbents should not wait to experiment with
new business models.
Five Imperatives to Build Ambidexterity
Fortunately, succumbing to overexploitation is far from inevitable. For
incumbents in any industry ripe for disruption, we offer five steps.
20
40
60
80
2004 2006 2008 2010 2012 2014
All automakers Large automakers2
Non-auto challengers1
2004:
+5 points 2014:
+10 points
Three-year rolling average present
value of growth options (PVGO)
(% of market capitalization)
Source: BCG Henderson Institute.
1
Acer, Amazon, Apple, Baidu, Bosch, Google, LG, Mobileye, Nvidia, Qualcomm, Samsung, and
Tesla.
2
Automakers among the 2,500 largest companies worldwide (across all industries) by market
capitalization.
Exhibit 1 | Challengers Are Outexploring Automakers
6. Forks in the Road
6 | The Boston Consulting Group
1. Understand how change impacts each part of your business. The
Strategy Palette is useful in this regard. (See Exhibit 3.) Auto incum-
bents, like those in many industries, until recently faced a classical
environment, which is stable and predictable, and where scale is an
advantage. The industry now faces increasing unpredictability from
changes in technology, consumer trends, and regulations. Those
forces also increase malleability and the opportunity to shape indus-
try evolution by influencing technology, customer preferences, and
regulatory standards, often through collaboration with others.
2. Choose the right approaches to strategy and execution. Having
understood the strategic environments in which they operate, firms
must employ the appropriate approach to strategy and execution
for each. The classical approach, built on analysis and planning,
works well in stable environments, which are highly predictable.
But unpredictable or malleable environments require very different
approaches and capabilities. For example, auto incumbents may find
that the classical approach is still appropriate for their core business-
es. But new businesses such as autonomous and alternative-fuel
vehicles may require adaptive, visionary, or shaping approaches.
3. Build an adaptive capability. Firms in unpredictable environments
would be ill advised to set a strategic direction based on an unreli-
able “forecast.” Instead, they need to substitute experimentation for
prediction in order to place and manage bets on the future.
1 2
–1.5
–1.0
–0.5
0
0.5
1.0
1.5
2.0
2.5
–1 0–2
Success
trap
Exploring
50% of large
automakers
Non-auto challengers1
Large automakers2
All other automakers
Present value of growth options (PVGO)
(% of market capitalization, 2014)
Change in PVGO
(% points, 2012–2014)
Source: BCG Henderson Institute.
1
Acer, Amazon, Apple, Baidu, Bosch, Google, LG, Mobileye, Nvidia, Qualcomm, Samsung, and
Tesla.
2
Automakers among the 2,500 largest companies worldwide (across all industries) by market
capitalization.
Exhibit 2 | Large Automakers Are Vulnerable to the Success
Trap
7. Forks in the Road
7 | The Boston Consulting Group
A portfolio of experiments lets companies quickly test and refine
new products and business models and thus adjust rapidly to
changing market conditions. Success with such adaptive experimen-
tation requires switching from the classical mindset of “be big” to the
adaptive imperative to “be fast.”
To do that, companies must get better at exploiting change signals to
inform bets and challenge long-held assumptions to uncover blind
spots. Adaptive enterprises monitor experiments using metrics suited
to the “be fast” approach, such as time to market, cost per experi-
ment, and experimental yield. Firms must also capture and exploit
lessons from both successes and failures.
Telenor, the Norwegian telecom company, is a classical incumbent
that built an adaptive capability. As the industry evolved from
traditional voice to data and Internet, scale advantage diminished.
Telenor responded with adaptive experimentation, shortening its
planning cycle and focusing on innovation and speed to market. It
successfully navigated the industry transition, launching several
successful data-oriented offerings.2
4. Build a shaping capability. Incumbents can avoid being a victim of
change by using their reach and influence to become instead an
orchestrator of change. Orchestrators coordinate a diverse ecosystem
of players that share their capabilities, distribute risk, and accelerate
market development.
MALLEABILITY
HARSHNESS
Adaptive Shaping
Classical Visionary
Renewal
UNPREDICTABILITY
Sources: Henderson (1970); Lochridge (1981); Nadler and Tushman (1990, 1994); Abell
(1999); Wiltbank et al. (2006); Reeves et al. (2015).
Exhibit 3 | Match Your Strategic Approach to Your
Environment
8. Forks in the Road
8 | The Boston Consulting Group
Become an
orchestrator of
change by creating a
flexible network of
new partners.
Orchestration requires a shift in mindset for incumbents, from
exclusivity to openness and from control to flexibility. To build a
healthy network capable of adapting to change, orchestrators should
reach beyond industry bounds to find new partners that can make
unique contributions. They must also create mutual trust and allow
the free flow of ideas and information. This requires creating win-win
opportunities for participants and focusing on holistic metrics such
as the growth or profitability of the entire network.
We already see signs of this new mindset in the auto industry. For
example, Toyota followed Tesla’s lead by opening its hydrogen fuel
cell patents, sacrificing complete control over IP in order to bring
more participants into its ecosystem. And Ford recently communicat-
ed the need for nontraditional partners, such as Google. As Don
Butler, Ford’s executive director of connected vehicles and services,
said, “We compete but in other senses we are partners. It’s some-
thing we have to become accustomed to.”3
5. Create the organizational context for ambidexterity. The ability
to exploit the present while exploring the future calls for an organi-
zational context that supports both old and new businesses and
allows for adjustment as conditions change.
Firms should consider separating exploratory business units from
exploitative core activities and giving them differentiated “perfor-
mance contracts” with tailored goals, metrics, and incentives. A good
example is BMW’s Project i, which manufactures plug-in electric
vehicles as a sub-brand of BMW. As its chief, Ulrich Kranz, describes,
“I had the freedom to assemble a team the way I wanted. The project
was not tied to one of the company’s brands so it could tackle any
problem. We were allowed to completely break away from the
existing structures.”4
In especially fast-changing or uncertain situations, firms should avoid
rigid structural solutions and instead encourage free information
flow among employees and with customers and competitors. Alibaba
is a textbook example: it deals with industry turbulence using
self-steering teams. When a team member sees a new opportunity,
he or she can initiate a co-creation process, in which employees
develop new business ideas directly with customers.5
This fluidity
allows the business to continually match its approach to a changing
market.
The road ahead presents both tremendous opportunities and real
dangers for incumbents. In the many industries facing disruption
from creative and nimble players, incumbents can survive if they
9. Forks in the Road
9 | The Boston Consulting Group
become truly ambidextrous. That capability will help them not only
fend off attacks in the near term but also position themselves for future
growth and success.
Notes
1. PVGO is based on a methodology developed in Han T.J. Smit and Lenos Trigeorgis,
Strategic Investment: Real Options and Games, Princeton University Press, 2004. PVGO is
calculated as the residual from a company’s market capitalization and the perpetuity of
its current dividend stream (taking into account firm-specific beta, yearly US risk-free
rates, and an equity market premium derived from investor surveys) and expressed as a
proportion of the company’s market capitalization. We consider PVGO to be a useful
proxy for the true extent of exploration activities but by no means an exhaustive
measure. A more granular assessment requires internal company data.
2. For further discussion of Telenor, based on interviews with former CEO Jon Fredrik
Baksaas and other sources, see Your Strategy Needs a Strategy: How to Choose and Execute
the Right Approach, Harvard Business Review Press, 2015. 3. Arjun Kharpal, “We Need to
Think Like a Software Company: Ford,” CNBC, November 2015.
4. Eric Loveday, “How and Why the BMW Project i Team Grew from 7 Individuals in
2007 to Several Hundred Today,” Inside EVs, May 2013.
5. See Martin Reeves, Ming Zeng, and Amin Venjara, “The Self-Tuning Enterprise,”
Harvard Business Review, June 2015.
About the Authors
Martin Reeves is a senior partner and managing director in the New York office of
The Boston Consulting Group, the director of the BCG Henderson Institute, and a
coauthor of Your Strategy Needs a Strategy (Harvard Business Review Press, 2015). You
may contact him by e-mail at reeves.martin@bcg.com.
Rachel Bergman is a project leader in the firm’s New York office and an ambassa-
dor to the BCG Henderson Institute. You may contact her by e-mail at
bergman.rachel@bcg.com.
Antoine Gourévitch is a senior partner and managing director in BCG’s Paris office
and a member of the firm’s Automotive and Technology Advantage practices. You may
contact him by e-mail at gourevitch.antoine@bcg.com.
Miguel Ortiz is a senior partner and managing director in the firm’s London office
and the firm’s worldwide topic leader for insurance. You may contact him by e-mail at
ortiz.miguel@bcg.com.
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