How Legacy Companies Can Disrupt And Win In The Digital Age

As start-ups emerge with bold ideas and high-tech investments, conventional thinking dictates that established companies are struggling to keep up with the pace of innovation. But the story is changing. Established companies with scale and incumbent strengths, including a powerful brand, a broad customer base and data-driven customer insights, are proving to have the real advantage in the digital era.

In “Goliath’s Revenge: How Established Companies Turn the Tables on Digital Disruptors,” my co-author Todd Hewlin and I examine how legacy companies — such as Cisco, General Motors, Mastercard and others — have used their incumbent advantages to reinvent their businesses, get ahead of disruption and thrive. In the book, we provide six new rules that give organizations a framework to embark on their digital innovation journey, with leadership, talent and culture at the center of that digital disruption strategy.

Understand and deliver your step-change outcomes: Doing a little bit better than yesterday is not going to be good enough. Companies need to identify opportunities to leverage their incumbent advantages and deliver 10X more improvements in their customer experiences and operating models to stay ahead of disruption.

Pursue “Big I” and “little i” innovation simultaneously: Management teams must engage their employees to continually innovate (“little i”) to play the current game better and build a culture of innovation, while also providing protection for breakthroughs (“Big I”) to reinvent themselves in the future.

Tap into your data pool: Large, established companies have a wealth of data because of their longevity as companies. These companies need to make their data and data analytics integral to their business. For example, Netflix used viewing data from 100 million subscribers consuming 250 million hours of video daily to help produce successful shows that are more appealing to its audiences.

Accelerate by using your innovation networks: It is critical to put sourcing innovation on equal footing with everything else your business aims to do. Less than one third of large companies we spoke to embrace this, but we also saw that for those who do this, the payoff from orchestrating an ecosystem of innovators can be a huge multiplier for enterprises.

Value talent over technology: Despite the fact we are living in a tech-centric, AI-driven era, leaders and teams will be the true competitive differentiators for companies. Like in sports, having the right number of the right people with the right skills at the right time is likely to be one of the most important reasons why your company will succeed. This goes beyond the digital or “3D” roles of design, development, data science, and extends into emerging roles that drive new ways of working like product incubation managers, behavioral scientists, and AI specialists.

Reframe your purpose: Open up the range of growth options your company is willing to consider. Raise your sights from your current industry position to allow you to chase opportunities that are the natural consequence of digital disruption. Reframing your purpose with a mission and vision that shape the culture and define a broader aspirational goals will help you attract the next generation of innovators as employees.

Transformation is never an easy journey, but by putting the right leadership, talent, and culture in place and staying true to the overarching purpose, companies can become two-speed organizations and thrive in the digital future. Organizations that commit to transforming their leadership, organization and culture will build a long-term advantage from their incumbent assets.

Scott Snyder is a partner for digital and innovation at Heidrick & Struggles and co-author of “Goliath’s Revenge: How Established Companies Turn the Tables on Digital Disruptors.”