Brace for a revolution

Revolution by nature is messy and violent. People die and institutions get toppled. Most people prefer calm and don’t want to get caught in the crossfire.

It’s an analogy that many firms can relate to. Stability, calmness and incremental evolution of your existing offerings may form a core part of your business development strategy.

However, if immense value creation is what you seek, then embracing revolution rather than worrying about whether initiatives are aligned with ‘the way we do things’, might be the best strategy.

Learn lessons from history

Perhaps the best way to illustrate the importance of abandoning incremental evolution is to look at how badly it turns out when companies ignore the opportunity to lead revolutions.

A famous example would be when Blockbuster passed on the chance to radically alter their business model when they turned down the opportunity to buy Netflix for $50 million in 2000. Now Netflix is worth over $40 billion and Blockbuster is a corpse.

Hilton, worth $22 billion over nearly 100 years is still focusing on real estate management and leases. Meanwhile, 8-year-old AirBnB was recently valued at $24 billion, realising that the industry’s future was not in managing properties, but providing a platform for anyone to do so using their own homes. Why didn’t the traditional hotel industry invent AirBnB? At least partly because it was too challenging to the current business model.

If building shareholder value is the ultimate goal of an organisation, there is a clear benefit in aligning business directives with broad stroke disruptive themes — but it requires real bravery to face down the short-term incentives to stay the course.

Swim with the sharks in the deep end

The venture capital industry makes ambitious investments under the assumption that most of them are going to fail. They don’t worry about things not working out, and instead focus on the small percentage of their investments that instigate revolutionary change and generate massive shareholder value.

You should adopt a similar operational model in your business, more efficiently allocate your resources and innovation will thrive. Don’t be scared, take some moon shots! By definition, they will probably look like competitors to your current model.