Leading disruption in a legacy business

Leading disruption in a legacy business

Magazine spring issue 2022 limits

A compelling growth objective is a crucial factor for new ventures.

Andy Binns, Michael L. Tushman, and Charles O’Reilly III

Reading time: 9 minutes

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A MY SMR Initiative examining how technology is transforming the practice of management.

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Gary Waters/theispot.com

Few would doubt that something extraordinary has happened at Nvidia, as its stock price has soared more than 8,000% over the past decade. Thanks to its transformation from the world leader in graphics processing units to a leading provider of computers for artificial intelligence and autonomous driving, it is now one of the top 10 most valuable companies in the world.1 CEO Jensen Huang has managed to confound the conventional wisdom that founded companies not reinvent themselves and their industries through radical innovations.

Nvidia isn’t an outlier – we tend to see it as one of the more striking examples of the emerging trend of large companies driving radical innovation. Among them is LexisNexis, which became an early leader in big data analytics by creating a multibillion-dollar business larger than the original legal information company. Another company, Deloitte Consulting, is challenging the century-old management consulting model with Deloitte Pixel, a new open talent model. Best Buy has broken out of its pure retail box to create a health technology and services company for the elderly. And MasterCard has shifted from processing credit card transactions to developing new digital payment solutions.

A new cadre of leaders is driving disruptive ventures within large corporations. These business researchers are ambitious, purpose-driven managers who are ready to champion disruptive new businesses within stable, successful organizations. They innovate, incubate and scale, much like an entrepreneur does. However, innovation within an existing company differs from conventional entrepreneurship in important respects. These leaders need an enabling context that authorizes and encourages them. This is the role of what we call a strategic ambition.

define ambition

CEOs like Nvidia’s Huang, Analog Devices’ Vincent Roche, MasterCard’s Ajay Banga, and Best Buy’s Hubert Joly have given their organizations a strategic ambition that inspires aspiration and hope, not fear.

At its most basic, executives articulate an emotionally appealing higher purpose for their companies — like Joly’s claim that Best Buy must “enrich people’s lives through technology and contribute to the common good.” Many companies have mission and vision statements that articulate a commitment to a higher goal. You can tell us where the company stands on important social issues like climate change and the Black Lives Matter movement.

subjects

limits

A MY SMR Initiative examining how technology is transforming the practice of management.

More in this series

references

1. As of December 22, 2021, Nvidia posted a 10-year stock appreciation of 8,736.68% according to data on https://seekingalpha.com.

2. N. Furr, A. Shipilov and A. Duvauchelle, “How is the digital transformation happening? The MasterCard Case (A)”, INSEAD Case Study No. 6348 (Fontainebleau, France: INSEAD, 26 February 2018); and N Furr, A Shipilov, and A Duvauchelle, How Does Digital Transformation Happen? The MasterCard Case (B)”, INSEAD Case Study No. 6348 (Fontainebleau, France: INSEAD, 1 December 2020).

3. S. Pangambam, “MasterCard CEO Ajay Banga on Taking Risks in Your Life and Career (Full Transcript)”, The Singju Post, 7 December 2015, https://singjupost.com.

4. Jensen Huang, Interview with Authors, February 27, 2016.

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