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Disruption Is The New Constant: How Do You Reinvent Your Business For Success?

Updated: 3 days ago

Read the full version of this article in Survival of The Fittest on Medium

Disruption is a new constant, and transformation has proven to be the key to business success. Moving from laggards to leaders takes a bold strategic shift towards reinvention in the age of AI and major market shifts. Business transformation has become the strategy for the best performing companies. Surviving and striving for sustained success by growing their vision, committing to a journey of change and adopting purpose-driven missions.

The process of transformation, while often challenging and resource-intensive, offers substantial rewards for businesses. When executed successfully, reinventions and major transformations can lead to market leadership, market leading sustainable growth and significant economic value.

The examples and case stories highlighted in this chapter illustrate the transformative power of strategic leadership and the importance of break-through innovation and market disruption. As businesses continue to navigate the complexities of a new reality -the strategic transformation will remain a critical determinant of success.

Why Transformation is the Best Way to Business Success

Business transformation is a holistic, strategic approach that organizations undertake to radically change their business models, operations, and overall direction. The impact is achieving significant improvements in performance, competitiveness and ultimately economic value creation. Transformation has proven to be not just an option but a necessity for survival and growth.

Creating economic value in a profitable transformation is on the top of the strategic agenda in this decade. Especially in the dynamic world of venture-backed startups, survival hinges on the ability to refit your strategy and transform for profits and long-term growth. In 2023, the venture-backed startup landscape faced unprecedented challenges, with many companies struggling to maintain growth and meet investor expectations. This reality is illustrated by the case of Pitch, a collaborative presentation software company. Faced with sky-high expectations and an unsustainable growth trajectory, Pitch made a bold decision to reinvent itself. By stepping down as CEO, Christian Reber enabled a leadership transition that saw co-founder and CTO Adam Renklint take the lead. Concurrently, the company laid off two-thirds of its workforce and shifted its focus from hyper-growth fueled by venture funding to a strategy centered on achieving profitability and organic growth. This strategic pivot not only preserved the company’s viability but also realigned its objectives with sustainable, long-term success. The example of Pitch underscores that in times of crisis, reinvention and transformation are not just survival tactics — they are pathways to economic and market success.

Transformation as a key to business success is backed by compelling economic data. A study by McKinsey & Company found that companies that actively pursue digital transformation achieve, on average, a 20–30% increase in customer satisfaction and economic gains ranging from 20% to 50% in EBITDA. Another report by the World Economic Forum estimated that digital transformation could generate $100 trillion in value for business and society over the next decade. These figures underscore the significant economic benefits and enhanced market leadership resulting from strategic business transformation.

The world biggest transformers are also the best performers. illustrated by the HBR top 20 Transformation companies ranked. These S&P500 and ForbesGlobal 2000 companies are the highest in growth transformation measured in new business share of overall revenues in correlation to revenue and stock CAGR.

This table provides a clear correlation between new growth revenue and stock CAGR for each company, highlighting the companies with the highest transformation impacts.

These examples highlight how transformation fuels growth, competitiveness, and long-term success. Number one on the list is Netflix which went through a transformational shift from digital content distribution to producing original content. Their revenue tripled, profits multiplied 32-fold, and stock CAGR increased 57% annually​​.

Transformation as the best pathway to business success is evidenced by numerous examples across industries. For instance, Amazon’s transformative approach from the traditional bookstore to a global e-commerce and cloud computing giant showcases how embracing innovation and market adaptation leads to immense economic value creation and sustained category leadership.

Tencent in China went through a transformation expanding into fintech, transportation, and other digital services, achieved 25% of revenue from new growth areas and became the first Asian company to surpass $500 billion in market valuation​​.

In Denmark, Ørsted’s transformation is a powerful example of how a company can successfully navigate a financial crisis by fundamentally rethinking its business model and embracing a higher-purpose mission. In 2012 the Danish Oil and Natural Gas (DONG) faced a crisis with plummeting natural gas prices and a negative credit rating. Under the leadership of Henrik Poulsen, the company underwent a radical transformation, rebranding as Ørsted and shifting its focus from fossil fuels to renewable energy. This strategic pivot involved significant investments in offshore wind farms and a comprehensive cost-out program. The result was a remarkable turnaround, positioning Ørsted as the world’s leading offshore wind company and a model for sustainable energy transformation. By focusing on renewable energy and combating climate change, Ørsted not only recovered financially but also positioned itself as a global leader in green energy. This strategic transformation highlights the importance of visionary leadership and a commitment to sustainable new growth. Ørsted also reduced the cost of offshore wind by more than 60% and became the world’s largest offshore wind company​​.

The Imperative for Transformation

Transformation is not merely a buzzword; it is an imperative for survival and growth. Companies that embrace transformation can reposition themselves, create new growth avenues, and stay ahead of competitors.

In the new age of AI , disruption is constant, and transformation is the key to success. According to the Accenture Pulse of Change: 2024 Index, many organizations are eager to reinvent themselves. Disruption is up with a staggering 33% year-on-year. But only a small number have truly excelled. These “Reinventors,” comprising just 9% of companies, have built the capability for continuous reinvention, making swift progress in executing their strategies and redefining performance with technology at the core. Notably, among the largest companies with revenues over US$50 billion, the number of Reinventors has quadrupled in the past year, underscoring the growing imperative for ongoing transformation.

The key drivers of transformation include:

Reinvention Leadership. Reinvention is the most ambitious path for companies aiming to shift from laggards to leaders. This strategic transformation focuses on redefining where and how to compete for market leadership, moving beyond incremental changes to adopting entirely new business models. It requires not only a shift in strategy but also significant organizational and cultural readiness for change. Companies must transition from a short-term to a long-term management perspective, fostering an environment that embraces continuous innovation and adaptability. By committing to this comprehensive approach, businesses can ensure sustained success, staying ahead of the curve and positioning themselves at the forefront of their industries. This transformation is not just about keeping up but about setting new standards and leading the market.

Technological Advancements: Innovations in technology compel businesses to evolve. The rise of digital platforms, AI, and automation necessitates a rethinking of business models and processes. Under CEO Steve Balmer and later Satya Nadella, Microsoft undertook a major transformation, pivoting from its traditional software business to a cloud-first strategy followed by the AI transformation. The company’s intelligent cloud segment, led by Azure, has been the centerpiece of this transformation. This shift has revitalized Microsoft’s growth, with cloud services now representing a substantial portion of its revenue. Microsoft’s transformation showcases the power of strategic leadership and a clear vision in driving business success with a +10x stock value creation.

Innovation disruptors: Disruptive innovators drive companies to adapt or risk obsolescence. Transformations enable businesses to pivot in response to these changes. Kodak, once a leader in film photography, was disrupted by the advent of digital imaging and smartphone disruptors. Despite pioneering the first digital camera in 1975, Kodak was slow to embrace the digital revolution, fearing it would cannibalize its lucrative film business. Meanwhile, competitors like Sony, Canon and Apple rapidly advanced digital technology, offering consumers greater convenience, better quality and new features. As digital cameras and smartphones with high-quality imaging capabilities became mainstream, demand for film plummeted. Kodak’s failure to pivot and fully commit to digital transformation led to its bankruptcy in 2012. This disruption illustrates how embracing innovation is crucial for survival, as businesses must adapt to remain competitive.

Customer Behaviors: Enhancing the customer journey through digital touchpoints and personalized interactions. Today’s consumers demand more personalized, efficient, and innovative products and services. Transformation helps businesses meet and exceed these expectations. Singapore’s DBS Group transformed from a traditional bank to a digital banking leader. By embracing digital platforms, DBS streamlined its operations and enhanced customer experience. The bank’s digital transformation has been so successful that digital customers now generate twice the income of traditional ones. This shift has driven significant growth and positioned DBS as a model for digital banking transformation..

Social behavioral change: Environmental, Social, and Governance (ESG) criteria are transforming the way companies operate and how society views corporate responsibility. ESG factors are increasingly integrated into business strategies, investment decisions, and consumer preferences, leading to significant changes in corporate behavior and societal expectations. Unilever, a global consumer goods company, embarked on a transformative journey in 2010 under the leadership of then-CEO Paul Polman to integrate the ESG principles deeply into its business strategy. Recognizing the growing consumer demand for sustainable products and responsible corporate behavior. Unilever aimed to lead in sustainability while driving long-term growth and the commitment to ESG principles translated into strong financial performance. The company experienced major growth in market share, particularly among environmentally and socially conscious consumers. Sustainable product lines, such as those under the brands Dove and Ben & Jerry’s, saw significant sales increases

Digital Transformation: involves integrating digital technology into all areas of a business, fundamentally changing how companies operate and deliver value to customers. Siemens’ Vision 2020 initiative marked a significant transformation, focusing on digitalization and the Internet of Things (IoT). The company reoriented its business towards digital industries and smart infrastructure, divesting from its traditional core businesses such as oil and gas. This transformation has enabled Siemens to leverage new technologies, improve efficiency, and create innovative solutions for its customers.

AI transformation is a subset of digital transformation that focuses on the integration of artificial intelligence technologies to automate processes, gain insights, and enhance decision-making. Reducing manual tasks and increasing efficiency through AI-powered automation. Delivering personalized experiences and recommendations to customers and enabling the creation of new products and services that leverage AI capabilities.

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