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Strategic breakthrough: the courage to change everything when everything is going well


The choice to pivot radically can pay off to get your structure up and running even before the technological shift affects your market.

In the 1990s, an internal report warned Kodak executives that digital photography would supplant film in the short term. The group, which had a good lead over its competitors, nevertheless continued to invest in film and even started to manufacture consumer cameras. Ten years later, when the digital industry took off, the leader in photography still refused to take the turn. In 2003, it is too late: the silver camera is definitively buried, Kodak too.

This is what experts call “the innovator’s dilemma”: when a new market appears, one must either take the turn very early by sacrificing the main and remunerative activity, or make a hasty exit when the new market is already developed, at the risk of missing its entry. Very often, the fear of making a mistake prevails, and the manager prefers the status quo. While digitalization is taking hold in all sectors of activity, it can be risky to be blind to technological breakthroughs.

Adapt before the threat arrives

Top executives are not immune to such errors of judgment. For example, Steve Ballmer, the former CEO of Microsoft, admitted in 2013 that he had completely missed the turn to smartphones in the early 2000s: “We were so focused on Windows that we weren’t able to redeploy talent to a new device called the phone. That’s the thing I regret the most,” he explained at the time. It took years for Microsoft to get back in the game against Apple in particular.

Now, successful companies are those that know how to adapt before the threat arrives, that show themselves capable of leaving their comfort zone to “pivot” when everything is going well. Some charismatic CEOs have shone in the art of pivoting, starting of course with Steve Jobs, who, after the success of the Macintosh, managed to take Apple on several technological trains to launch the iPod, the iPhone, the iPad and finally the iTunes online service distribution system.

Learn from the way startups learn

Drawing conclusions from its interactions with the market to constantly reinvent itself, and to launch itself before others in promising new activities: this trial-and-error strategy is common among startups. This form of learning by trial and error is theorized in the “lean” start-up strategy. This method is also a source of lessons for captains of industry who wish to develop their power of innovation and boost their organizational learning methods.

In France, the emblem of this ability to pivot is certainly the company Criteo. Founded in 2005, the startup has used it three times in just two years. “Since our beginnings, we have gone through several iterations, on the product, on the market, as well as on the business model,” explained Romain Niccoli, one of the founders, recently. This has allowed Criteo to become a Nasdaq-listed leader in online advertising, now valued at $2.5 billion.

In a large group, change can be undertaken at the level of a single subsidiary, conceived as a company in its own right. Large companies in a healthy financial situation have an advantage over startups: the ability to grow externally. The acquisition of a well-chosen target company can thus allow them to quickly acquire skills, innovative technologies or new distribution channels, and thus diversify their business without having to invest heavily in R&D. For example, in 2015, when French banks wanted to enter the participatory finance market, Crédit Mutuel Arkéa bought the online kitty platform Leetchi and BPCE invested in the similar platform Pot Commun.

Project your business five, ten or twenty years ahead

Starting a pivot means making choices that seem illogical today but that will prove to be profitable tomorrow. What seems like a dizzying leap into the void can become an unstoppable strategy, provided that you are able to project your business five, ten or twenty years ahead, and plan the necessary steps to get there.

Vision is undoubtedly what allowed Jeff Bezos, the founder of Amazon, to develop the online sales behemoth that we know today. After being number one in the sale of books, computer products or home equipment, Amazon has taken several strategic turns by developing its own products and services (Kindle, Alexa, video games, VOD). Even the idea considered completely crazy to deliver by drones that emerged in 2013 and was tested in 2017, ended up being developed in the US last year. At Amazon anticipation-disruption has become a management mode.

The art of change lies, of course, in the ability to take an entire team with you in an essentially uncomfortable challenge. When well managed, this collective adventure can be profitable on several levels: decision-making processes are shortened, management styles become more flexible and agile, and internally, change is no longer perceived as an imbalance but as a driving force. The benefits of the pivot are profound. To change when everything is going well is to equip oneself sustainably to face a world of disruptions.