Page 178 - HBR Leader's Handbook: Make an Impact, Inspire Your Organization, and Get to the Next Level

Innovating for the Future 167

In addition to setting up new, more independent entities, you also can
spin off parts of your business as a way of separating the traditional core
(with its sustaining innovations) from the more revolutionary areas that
are more likely to create disruption. A recent example of this is Hewlett-
Packard’s split into HP Inc. and HP Enterprise. HP Inc. focuses on the core
printer business, which has lower margins and innovates incremen- tally.
HP Enterprise, on the other hand, focuses on creating value for large
corporate and governmental customers by developing new technology
platforms and computing approaches. By separating into two firms, each
could develop processes and prioritization rules more suited to the type of
innovation needed. (Two years later, HP Enterprise doubled down on the
strategy, dividing itself again by spinning off the lower-margin IT services
included in the original partition.)
Even if you don’t go through a full process of disrupting your organiza-
tion, engaging in a what-if thought exercise can be useful. For example, in
2001, Jack Welch issued a challenge to all of the GE businesses to “destroy
your business.com.” The challenge of this iconic CEO was for each busi-
ness—big and small—to actively consider how an unforeseen competitor,
perhaps a startup in a garage, could compete and win against each estab-
lished GE business. This was an eye-opener for many GE executives and
leaders, who had become somewhat complacent in thinking that the only
threats to their businesses would come from large competitors. As a result,
many of them began to experiment with the disruptive ideas themselves—
for example, the use of remote sensors for customer service, or mechanisms
for self-service sales.

Corporate venturing and partnering
Another way to deal with potentially disruptive competitors is “don’t beat
’em, join ’em” (or have them join you). Many large companies, for exam-
ple, have venture or acquisition teams that actively look for startups, path-
breaking tech entrepreneurs, and university partners, and then in- vest in
them, buy them, or partner with them as they develop their innova- tions
and business models. We described how Thomson Reuters built these kinds
of partnerships earlier in this chapter.