Leading disruptions in legacy business

Leading disruptions in legacy business

Magazine Spring 2022 Issue Borders

A compelling ambition for growth is a critical factor for new ventures.

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

Reading time: 9 min

Themes

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Ann MY SMR initiative exploring how technology is changing the practice of management.

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Gary Waters/theispot.com

Few doubt that something extraordinary has happened at Nvidia, as its stock price has risen more than 8,000% over the past decade. It now ranks in the top 10 most valuable companies globally, thanks to its transformation from a leading global provider of graphics processors to a leader in computing technologies for artificial intelligence and autonomous driving.1 CEO Jensen Huang confounded the conventional wisdom that established companies cannot reinvent themselves and their industries through radical innovation.

Nvidia is not an outlier – rather, we see it as one of the most eye-catching examples of the emerging trend of large corporations leading radical innovation. Among them is LexisNexis, which became an early leader in big data analytics, creating a multibillion-dollar business that is larger than the original legal information firm. Another, Deloitte Consulting, is challenging the century-old management consulting model with the Deloitte Pixel, a new model for open talent. Best Buy broke out of its retail box to create a health technology and senior services company. And MasterCard has moved from a focus on processing credit card transactions to creating new digital payment solutions.

A new cadre of leaders is driving disruptive endeavors from within large corporations. These corporate explorers are ambitious, driven managers ready to agitate for disruptive new businesses from stable, successful organizations. They invent, incubate and scale innovations much like an entrepreneur. But innovation in an existing corporation differs in important ways from conventional entrepreneurship. These leaders need an enabling context that empowers and encourages them. This is the role of what we call a strategic ambition.

Setting an ambition

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

Most importantly, leaders articulate an emotionally engaging higher purpose for their companies—like Jolie’s aspiration that Best Buy should “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 purpose. They can tell us where the company stands on important social issues like climate change and the Black Lives Matter movement.

Themes

Borders

Ann MY SMR initiative exploring how technology is changing the practice of management.

More in this series

References

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

2. N. Fur, A. Shipilov and A. Duvochel, “How does digital transformation happen? The MasterCard Case (A),” INSEAD case study no. 6348 (Fontainebleau, France: INSEAD, 26 February 2018); and N. Furr, A. Shipilov, and A. Duvochel, “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, December 7, 2015, https://singjupost.com.

4. Jensen Huang, interview with authors, February 27, 2016.

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