Disruption from within: seven lessons to build a more scalable enterprise
While “disruption” is often associated with agile start-ups, every company—big or small—can benefit from shaking up their own businesses from the inside out.
“I believed that the company couldn’t simultaneously be good at media, pet insurance, and making jet engines.” So said Jeff Immelt, the outgoing chief executive of General Electric (GE), in a recent article in Harvard Business Review, citing just one reason he decided to remake the organization he inherited from former chief executive Jack Welch. It’s a move that’s been called the most consequential makeover in GE’s history.
By fashioning a simpler organization focused on industrial businesses—the bread and butter of earlier incarnations of GE—Immelt wanted to build on the company’s traditional strengths, where the company’s enormous scale could drive organic growth. As a result of his leadership, GE took significant calculated risks on energy-efficient product development, the industrial Internet and additive manufacturing. These endeavours required big investments in new technological capabilities, particularly software development. At the same time, the company expanded its global presence, which gave local and regional managers far more power to drive growth in targeted countries.
Immelt knew that things needed to change, and he knew that, for the transformation to be successful, he needed to control it. He did so at a cost to his reputation and potentially, to the company’s financial results. Why? Ultimately, he was playing the long game, because, as he says, “If we don’t do it, it’s going to get done to us.”
Plenty of agile companies enter industries with the intention of disrupting the status quo. But moving forward, organizations need only look at their own workforces to find game-changers who are trying to unlock entirely new revenue streams from within tried-and-true business channels.
Another example is General Motors (GM), who is slowly but surely shifting its business model away from selling cars, into developing robo-taxis. It’s a risky move, but something the heritage automotive company believes is necessary to future-proof their business. And the pay-off? President Dan Amman argues it could take the lifetime revenue of a single car from around $30,000 to “several hundreds of thousands of dollars.”
Learning from large-scale “disruption from within” initiatives
If such long-established corporations like GE and GM are willing to launch their own internally disruptive initiatives, there must be something to the idea. So what lessons can other enterprises learn from them? Here are a few things to keep in mind:
Lesson 1: Sell the change. You must believe in the transformation and be able to make others believe in it, too. Research and outside support can be immensely helpful to back up your argument.
Lesson 2: Build discipline and maintain focus. You need an informed point of view, and that needs to permeate the organization, from senior leadership to the front-line staff and everyone in between. This requires discipline—to stay the course—and laser-sharp focus on your goals.
Lesson 3: Stay committed. Market factors, including a volatile economy and fickle funding, dictate that bumps and bruises will happen along the way, but it’s important to hold to your vision for the good of your company, its stakeholders and your customers.
Lesson 4: Stay flexible. Transformation takes time, and new information will arise that may make you rethink some of your processes or perspectives. It’s important to acknowledge that pivoting in the face of new information may be necessary in order to deliver the best possible results over time.
Lesson 5: Stay curious. You wouldn’t be changing the way you do business if you didn’t think there were better ways to do things. Continue to percolate new and different ideas, looking beyond your own sector or industry for innovative business models that may apply to your own organization.
Lesson 6: Leverage technology. Whether the services you provide are reliant on technology or not, today’s digital age requires more advanced business networking options. Take a page from GE’s playbook and leverage technological solutions that help you to achieve leaps in productivity over time: Improve your Internet connection to facilitate more reliable collaboration between offices; introduce new software that allows you to track and analyze your customer data more efficiently; enlist updated security measures to keep you and your clients safe from cyberattacks or other privacy issues.
Lesson 7: Invest in the right people. You’ll need thinkers, doers and dreamers, as well as agitators who ask the tough questions that instigate the biggest changes. PricewaterhouseCoopers’ global chief experience officer, David Clarke, calls this latter group “the iconoclasts” and believes that they’re best equipped to “work across silos to connect the best ideas and opportunities from all parts of the organization.”
Organizational transformation takes time and the willingness to invest in a vision over the long haul.
In the face of ever-increasing competition from agile market entrants, enterprises of all shapes and sizes have the opportunity to pave their own paths to success using lessons learned from the “disruption from within” movement. That way, they can build more sustainable and scalable businesses that flex to meet the changing demands of future customers.