Lead and Disrupt

Charles A. O'Reilly III is Frank E. Buck Professor of Management at Stanford Graduate School of Business. He is also the co-director of Leading Change and Organizational Renewal. He is the recipient of multiple awards, including the Distinguished Scholar Award by the Academy of Management and the Organizational Behavior Division Lifetime Achievement Award in 2010.Michael L. Tushman is Baker Foundation Professor, Paul R. Lawrence MBA Class of 1942 Professor of Business Administration, Emeritus, and Charles B. (Tex) Thorton Chair of the Advanced Management Program at Harvard Business School. He is also the co-director of Leading Change and Organizational Renewal. He is the recipient of multiple awards, including the Distinguished Scholar Award by the Academy of Management and the Organization and Management Theory Division Lifetime Achievement Award.

• Contents and Abstracts1Today's Innovation Puzzle chapter abstractIn the past few years we've seen a number of well-known firms fail or go bankrupt (e.g., Blockbuster, Kodak, Sears) and more failures are on the horizon. This book describes what it takes for leaders to succeed in the face of accelerating change. It describes how some leaders and their organizations have been able to compete successfully in mature technologies and markets and transform their organizations by exploring in new domains (e.g., Amazon, IBM) while others have been trapped by their own success. Although this perspective is based on a substantial body of empirical research, the material described here is highly applied and moves well beyond the typical exhortations offered in most books on leadership and change.2Explore and Exploit chapter abstractThis chapter offers two simple frameworks (the congruence model and the success syndrome) that illustrate the power of organizational alignment in driving organizational performance. It also describes how the alignment needed for success in a mature business can make it difficult to succeed in the face of change and why successful organizations, faced with disruptive change, sometimes fail. We illustrate this dynamic with a story of organizational success (Amazon) and one of organizational failure (SAP).3Achieving Balance with Innovation Streams chapter abstractWhy do successful organizations fail? This chapter uses rich descriptions of two old companies (Sears and the Ball Corporation) to show how some leaders are able to help their organizations evolve and adapt to disruptive innovation. We elaborate on the innovation streams framework introduced in Chapter 1 to show how different types of change can require leaders to manage different types of alignments.4Culture as Competitive (Dis)Advantage chapter abstractOrganizational culture can be a competitive advantage or a disadvantage. The term culture is often identified by senior executives as a critical element in organizational success. But what is it and how can leaders change it? This chapter shows how culture can operate as a social control system in organizations that can be a critical element in helping or hindering strategy execution. We show how the cultures needed for exploitation are different in important ways from those needed for exploration—and how leaders can align their cultures to fit the needed strategy. Using firms such as Microsoft and General Motors as examples, we show how leaders can change their organization's culture and how ambidexterity requires leaders to manage multiple cultures within the same firm.5Seven Innovation Stories chapter abstractUsing the frameworks developed in the first three chapters, here we provide a set of detailed examples for how ambidexterity can operate. We describe how the leaders of seven different organizations (e.g., a newspaper, a manufacturing company, a high-tech firm, etc.) were able to meet the challenge of disruptive change. On the basis of these insights we identify three essential elements necessary for leaders to design ambidextrous organizations.6Getting It Right Versus Almost Right chapter abstractHere we expand on the insights from Chapter 5 and describe in detail a process that IBM uses to generate organic growth—the Emerging Business Opportunity (EBO) process—which enabled them to increase revenues by more than $15 billion during the period of 2000–2006. We also show how Cisco attempted and failed at a similar effort.7The Three Disciplines of Organizational Ambidexterity: Ideation, Incubation, and Scaling chapter abstractFacing the threat of disruption, many large, established firms have embraced innovation as a way to develop new growth businesses. Approaches such as open innovation, design thinking, corporate venture capital, the lean start-up methodology, and the business model canvas have been enthusiastically embraced—with mixed success. This chapter shows that while each approach has its merits, successful innovation requires large firms to be ambidextrous—to compete in mature and new markets simultaneously. Ambidexterity can best be understood as consisting of three distinct disciplines: (1)ideationto generate potential new business ideas, (2)incubationto validate these ideas in the market, and (3)scalingto reallocate the assets and capabilities needed to grow the new business. We show how many popular innovation approaches solve for only one or two of these three disciplines, which can lead to failure to innovate. To be successful at developing new-growth businesses requires all three.8What It Takes to Become Ambidextrous chapter abstractIn this chapter we identify four major elements associated with more versus less successful efforts at ambidexterity. These are practical guidelines that can be used to help managers think about how to apply these lessons in their own contexts. We focus here on the question of what needs to be done to design an ambidextrous organization. What are the elements that leaders need to consider when implementing ambidexterity? What are the cardinal sins to be avoided?9Leaders (and Their Teams) as Linchpins chapter abstractWhereas the previous chapter focused on what needs to be done to implement an ambidextrous design, this chapter focuses on how leaders can do this. We provide examples of two leadership failures and three successes and, drawing on previous examples, conclude by suggesting five leadership principles that undergird the successful implementation of ambidexterity.10Leading Change and Strategic Renewal chapter abstractIn this chapter we first provide some guidelines for managers to consider in determining whether ambidexterity is needed for organizational renewal. We then describe how the leaders of two organizations (IBM and Haier) successfully led organizational change and renewal that transformed their companies. Based on these, we conclude with six suggestions for leaders to consider when leading organizational renewal.

"In an unprecedented way Lead and Disrupt unveils the secrets of ambidextrous leadership and the power of company culture as competitive advantage. A must-read for every leader aiming to build an enduring enterprise."—Erik Ceuppens, CEO, Marlink Group "This book will do for companies what the Lean Methodology did for startups—give its leaders the essential playbook for how to transform your organization to meet the future."—Steve Blank, author of The Four Steps to the Epiphany: Successful Strategies for Products that Win "Lead and Disrupt is a must-read for any legacy company or startup. Disruption is a constant, and companies must have a passion for growth in a volatile world. This book gives you a framework. The concepts around ideation, incubation and scaling are fresh and well documented. More importantly, I have seen them work in companies large and small."—Jeff Immelt, former Chairman and CEO, General Electric "The concepts and ideas in Lead and Disrupt provided valuable guidance for how we approached the transformation of AGC. It helped us understand how to implement ambidexterity and deal with the disruption our business is facing."—Takuya Shimamura, Former CEO and Chairman, AGC (Asahi Glass Company) "O'Reilly and Tushman address eloquently and practically the universal problem leadersof mature organizations face—of how to maximize an established business while simultaneouslyembracing disruptiveinnovation to buildthe future business. This book will be your wisdom-filled companion as you re-shape your business."—Alex Freudmann, Managing Director, Dan Murphy's, Melbourne, Australia