Dual Transformation: How to Reposition Today’s Business While Creating the Future
Scott D. Anthony, Clark G. Gilbert, and Mark W. Johnson
Harvard Business Review Press (April 2017)
How and why combining the assets and benefits of scale and entrepreneurial spirit will drive massive impact
In an article written by Scott Anthony for Harvard Business Review, he observes, “Today’s corporate watchword is transformation, and for good reason. One study suggests that 75% of the S&P 500 will turn over in the next 15 years. Another says that one in three companies will delist in the next five years. A third shows that the “topple rate” of industry leaders falling from their perch has doubled in a generation. Software is eating the world. Unicorns are prancing unabated. Executives at large companies rightly recognize that they need to respond in turn.
“When executives say transformation what do they really mean? Often, the word confuses three fundamentally different categories of effort.
“The first is operational, or doing what you are currently doing, better, faster, or cheaper. Many companies that are ‘going digital’ fit in this category — they are using new technologies to solve old problems…The next category of usage focuses on the operational model. Also called ‘core transformation,’ this involves doing what you are currently doing in a fundamentally different way. Netflix is an excellent example of this type of effort…The final usage, and the one that has the most promise and peril, is strategic. This is transformation with a capital ’T’ because it involves changing the very essence of a company. Liquid to gas, lead to gold, Apple from computers to consumer gadgets, Google from advertising to driverless cars, Amazon.com from retail to cloud computing, Walgreens from pharmacy retailing to treating chronic illnesses, and so on. Executed successfully, strategic transformation reinvigorates a company’s growth engine. Poor execution leads naysayers to pounce and complain that a company should have ‘stuck to its knitting.’”
All this helps to create a context for a discussion of recently published Dual Transformation, a book Anthony co-authored with Clark Gilbert and Mark Johnson. To what does the book’s title refer? They explain how and why combining the assets and benefits of scale and entrepreneurial spirit will drive massive impact for almost any organization, whatever its size or nature may be.
They observe: “When you take your first algebra class, you’re introduced to the Greek letter delta. The capital form of the fourth letter in the Greek alphabet, Δ also serves as shorthand in math equations for change. The kind of change we’re talking about here is indeed a very large delta. Achieving that change requires following this formula:
A + B + C = Δ
“Here’s how it breaks down:
A = Transformation A: Reposition today‘s business to maximize its resilience.
B = Transformation B: Create a separate growth engine.
C = The Capabilities link. Fight unfairly by taking advantage of difficult-to replicate assets without succumbing to the sucking sound of the core.
“The formula’s simplicity belies the complexity of its execution.”
This formula can guide and inform the transformation of almost any organization, whatever its size and nature may be. Leaders in most organizations most pose and then determine the appropriate answers to the same key questions. In this context, I am reminded of an incident years ago when one of Albert Einstein’s faculty colleagues playfully chided him that he always asked the same questions on his final examinations. “Quite true. Each year, the answers are different.”
Here is a covey of such questions:
1. Which disruptive trends have the potential to change our competitive landscape?
2. What is the new way we will compete in today’s core? [Indeed, what is today’s core?] What old metrics are no longer relevant? Which new ones are?
3. What are the most exciting growth opportunities that are now options for us?
4. Who will be our new competitors? What new capabilities will allow us to win?
5. How will we sharpen current capabilities and build new ones?
6. If we successfully execute, who will we become? What will be different? What will be the same?
7. What organizational changes will maximize our chances of success? What things, if we don’t change, will inhibit success?
Scott Anthony, Clark Gilbert, and Mark Johnson help those who read this book to answer these and other key questions, then to apply the answers to the given situation.
Those who share my high regard for this book are urged to check out The Three-Box Solution: A Strategy for Leading Innovation in which Vijay Govindarajan provides what he characterizes as “a simple framework that recognizes all three competing challenges face that managers face when leading innovation.” That is, simultaneously managing today’s business while creating tomorrow’s and letting go of yesterday’s values and beliefs that could keep the company stuck in the past.