Making innovation happen: how to organize for disruptive growth?

video-screenshot

One of our new intrapreneurs is building a marketplace for fashionista’s.

Following excellent performances at the bootcamp of the #contentaccelerator in June, two of our top talents have taken new roles as intrapreneurs at Sanoma this week. Making it happen!  This innovative burst immediately caused temperatures to sky-rocket to a sweltering 33°C at the office. Respect to them for showing the courage of their convictions and going for it. And thanks especially to the local organisation for supporting a speedy transition.

Creativity and customer-focus sit deep in Sanoma’s character.  However, we have deliberately organized these and other new ventures separately from the core business, yet cooperative with it.  We wanted to establish a model which gave the accelerators and new ventures the liberty to exploit their disruptive opportunity unrestricted by the core, yet in a way which supported both the new venture and the core. In my view, the process of the accelerator (ideation and competence development for hundreds of people from the core) and the sharing of various capabilities in the operation (mainly marketing, technology and expertise) achieve that.

Dual Transformation

I recently came across an excellent article by Gilbert, Eyring & Foster, in the Harvard Business Review called Two Routes to Resilience which clearly articulates the case for developing disruptive and core businesses separately yet under one umbrella. How to organize for new growth?

The authors make the case that when your industry is undergoing disruptive change, companies should respond by making two distinct transformations in parallel. Transformation A focuses on repositioning the core business to its altered circumstances. Transformation B should create disruptive innovations that will eventually bring new growth. And the structure should work for both through a “capabilities exchange” that allow the sharing of select resources for the benefit of both parties, without changing the mission of either. Each transformation needs a leader fully convinced of the future success of their mission. Both pillars of the transformation have to act in the market as if the future of the company depended on it alone.

“Capabilities Exchange”

The “capabilities exchange” should in principle bring competitive advantage to each pillar in the transformation. In the case of our accelerators and new ventures, some important shared resources come to mind. The Sanoma brand helps us to build connections to consumers, advertisers and schools.  Easy access to media and traffic help support existing brands and build new brands. Expertise in content, advertising, learning and other capabilities required in managing a company, such as finance and HR can support each transformation. The re-use of content and technology can reduce unit costs and bring speed to innovation. An international network can bring scale. Access to a skilled talent pool and methods of developing new skills on innovation are required in both tracks. And a dual transformation can support the financing of the respective pillars. That’s quite an exchange when you come to think of it!

Boosting Transformation B

For the sake of good order, Sanoma has many growing, successful and disruptive business lines and I would not for one moment say that the ventures born from the accelerators are the only seeds of the next generation of our products and services and everything else is legacy. That’s clearly not the case. The new ventures are just one of the pockets of innovation and digital disruption in the company. And we have many other business lines which would not count as digital disruptions but are far from legacy status.

Yet the argumentation in the HBR article is good and sharp. I believe it’s a credible approach and our actions and investments in new ventures are for their part consistent with it. Bringing additional relative scale to what the HBR article refers to as transformation B (the new growth businesses) would help to support the dual transformation. Increasing the pipeline of new ventures would be one way to achieve that.

I’m interested to know your opinion about this.  Feel free to leave a comment or send me an email.

Advertisements

2 thoughts on “Making innovation happen: how to organize for disruptive growth?

  1. Matt Chapmant

    John, interesting approach you are taking. Companies are typically designed to advance and protect their current structures and not easily innovate themselves organisationally to support or sometimes even tolerate new ventures. Most companies typically work from within, making the expected advancements or look to an M&A strategy for disruptive innovations. So combining the 2 surely has some economies of scale as you highlight. It is also probably important to you that your employees are getting a kick from being part of making that change, which can only attract and retain innovative talent. With a dual approach, and I have even seen some companies run multiple teams on new innovations to spread bet even more on the future, you are supporting the nearer-term developments you need to keep pace with the current markets whilst stretching for new disruptions that could ultimately disrupt you but instead you are positioning to be that disruptor so as not to loose but potentially gain market share.

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s