Strategists at every organization worry about keeping their companies’ products and services relevant for the twenty first century. With new electronics brought to market before you can say the word “i-phone,” its no wonder companies are finding it harder to compete and maintain market share, yet alone dominate their industries. What’s the secret to not just staying afloat, but flourishing in this economy? Authors (Gilbert, Eyring, & Foster, 2012) provide the answer in Harvard Business Review.
THE DUAL-TRANSFORMATION APPROACH
Organizations need to take a dual-transformation approach and come at their competitors from both sides. “Transformation A” should focus on the presently existing core business, and strategies that allow for adjustment to the current business model and accommodate shifting markets, technological advancements, and an ever-changing business environment. “Transformation B” should create a separate business that feeds and thrives off of disruptions to the business environment. The trick to creating synergy and a competitive advantage for both businesses is a “capabilities exchange” through which the parallel businesses share resources without infringing upon the mission or operations of either company.
EXAMPLE OF SUCCESS
For example, take the chain bookstore Barnes & Noble, which saw a dramatic drop in sales with the rising popularity of Amazon. Barnes & Noble responded by redesigning their business model and concentrating less on lower-margin high-selling books and more on higher margin children’s books and gifts. Stores were no longer merely places that sold books, but they now sell an experience; they became a place where parents could spend time with their children and customers could browse through gifts for their loved ones (Transformation A). Barnes & Noble also became relevant for the 21st century with its release of the ‘Nook,’ which had an advantage over Amazon’s ‘Kindle’ because consumers could touch it in their hands and try it out before buying it (Transformation B). These transformations benefited from a number of shared resources including common branding and publishing relationships.
Gilbert, C., Eyring, M. & Foster, R. N. (2012). Two Routes to Resilience. Harvard Business Review, 90(12),65-73.