Page 172 - HBR Leader's Handbook: Make an Impact, Inspire Your Organization, and Get to the Next Level

Innovating for the Future 161

What’s difficult about this is not identifying which areas are ready for the
chopping block, but rather setting aside your and others’ emotional invest-
ment in an area that was at one time important for the business (or in for-
mer days was its own pioneering breakthrough; once again, the problem
of the innovator’s dilemma). But when the time comes, making the break
is critical, as a way of freeing up both funds and other resources and your
own attention.
For example, when Satya Nadella became CEO of Microsoft in 2015,
he sold off the company’s failing acquisition of Nokia’s mobile handset di-
vision, realizing that it was not going to catch Apple or Google in smart
phones. The money from the sale helped support Nadella’s future growth
strategy of moving Microsoft into more applications and services and be-
coming a more major player in cloud-based computing. Similarly, Smith
at Thomson Reuters sold a health-care business and later the larger Intel-
lectual Property and Science business because they were no longer at the
core of the enterprise growth strategy. He also sold a major stake in the
Financial & Risk business as a further way to build capital for the future.

Scan the horizon for breakthrough innovation
As you generate the cash, you also must be continually considering how to
invest it, based on both potential opportunities and threats on the hori-
zon. Your work in setting a vision and a strategy should give you a sense of
this, but even apart from those specific practices, your understanding of a
bigger picture for your business can help you identify particular areas for
innovation. While some of the areas might be in the adjacency boxes de-
picted in figure 5-1, others might be in the upper-right quadrant—so-called
breakthrough innovation, depicted in figure 5-2. Let’s consider that now.
So-called breakthrough innovation involves a bigger leap (and usually
a bigger risk-return profile) toward the future. As a leader, you must ex-
pand your awareness of new and more ambitious possibilities. Do so by
scanning externally for new technologies, emerging new social or eco-
nomic paradigms, or cutting-edge ideas in other industries that you could
adapt. Be bold and creative in your investigations: start by engaging with
customers, partners, and industry experts to find out what they are see-