Most of us hope to lead a long and productive life. How about your company? The odds are that it is far less likely to live to a ripe old age. Less than .1% of U.S. companies make it to age 40. Even large companies, seemingly well established, may disappear or be sold within the next 10 years. General Electric is the last survivor of the original Dow Jones Industrial Average. And, it has reinvented itself several times in the last 130 years. To survive, authors Charles O’Reilly III and Michael Tushman say that a company has to be ambidextrous. They outline their thesis in a marvelous new book entitled, LEAD AND DISRUPT (Stanford University Press, 2016).
The authors state that company failure is “often due to the incumbent’s inability to play two distinctly different games at once.” Put simply, you need to use your current cash cow business to fund exploration in areas that are growing quickly or may significantly make your current business obsolete. Their advice to all is “innovate beyond your core.”
The book is full of statements that struck me as absolute gems. A favorite was “management is about preserving and improving the status quo. It is about avoiding the many “bad” ideas that surface in an organization. But leadership done well is about seeing around corners and running experiments that help destabilize the status quo.”
Another was “faced with changes in technology, competition, and regulations, incumbents need to compete in a mature business where the exploitation of existing capabilities is key and to simultaneously use existing assets to compete in more exploratory businesses.”
All of this, of course, is easier said than done. The book provides a fairly detailed case study of Havas in 2013, then the sixth largest ad agency holding company in the world. The CEO David Jones had the idea of transforming his assortment of agencies from a creative and media star to one that coupled crowd sourcing technologies in to the mix in a big way as well. Sadly, operators around the globe appeared to worry only about their “sandbox” and continued to sharpen their creative and traditional media strengths. So, the individual country managers did not try to implement the new focus and in some cases ignored the directive from the HQ. This kind of transformative goal could not be delegated. Senior management and the CEO needed to be more active and engaged in the process of change. After a year of frustration the talented Mr. Jones move on to, I hope, better things.
One thing I noticed reading the book was that it was easy or relatively easy for a major company to be ambidextrous--working equally well from either hand. Google, Apple, Microsoft and now Facebook and old stalwart Exxon Mobil are all loaded with cash. They can be ambidextrous as a failure in a new venture or even a disappointment will not hurt them much.
The harsh discipline of the market, however, is not so kind to smaller firms. Think of all the mid-sized and small ad shops that are struggling these days. As things change and sometimes very quickly, they will have to “bet the ranch” on a single experiment with a new speciality. A WPP, Omnicom, Interpublic or Publicis or even a large second tier player such as Havas can fail at a new venture and get bruised but not mortally wounded. And, if they do fail, the deep pocketed mega-shops can simply buy a leading player in an emerging discipline. So, like it or not, the big will likely only get bigger.
The book is provocative. Can you as a leader look around corners? Can you maintain the status quo but embrace change and a new way of doing business? If you can, then you are ambidextrous, too.
Also, do not be put off by O’Reilly being a professor at Stanford and Tushman at Harvard. They did not write a dense, scholarly tome. This book is easy to read and it has great clarity.
If you would like to contact Don Cole directly, you may reach him at firstname.lastname@example.org