In 2010, Scott Anthony moved to Singapore to leave consulting behind because he believed the best way to change the world was to participate in the entrepreneurial ecosystem.

He joined Innosight’s sister organization, Innosight Ventures to do just that. However, a set of paired experiences that year shifted his paradigm and changed his mind. He realized he had framed the problem incorrectly and, in fact, the best way to change the world is from within a large company.

The Power of Incumbency

Plunify was a startup that pitched their business to Innosight Ventures. It was the first time they’d been pitched not just a business plan, but a full-fledged business. The two kids behind Plunify had launched this business, spending virtually nothing.

A few weeks later, Scott saw a very different creature in the form of “Healthy Heart for All” a new venture created by Medtronic, the world’s largest medical device manufacturer. As manufacturers of the pacemaker, they had an eye on increasing their sales in India, but they’d run into hurdles due to India’s poor healthcare system and extensive poverty.

This new business model had three key components: 1 -Direct to consumer advertising. 2- Rural diagnostic camps where hundreds of people could be diagnosed in a day. 3- The world’s first loan program for an implantable medical device. Eight years later, thousands of lives have been saved and changed with virtually no defaults.

Stories like Plunify tend to scare large enterprise corporations because of the potential for disruption.

However, as Scott points out, while it’s never been easier to start a business, it’s also never been easier to copy a business. That means that startups face intense competition from copycats and scaling a business is incredibly difficult.

Contrast that with Medtronic and Healthy Heart for All’s story – Medtronic was uniquely positioned to do what they did. They had the patented pacemaker technology, access to the Indian healthcare market, and all the other pieces necessary to make it happen. Virtually no other business in the world was positioned to do the same.

Large companies are bringing together assets of scale with entrepreneurial energy and at that intersection, unleashing massive impact in markets that matter to them. This is the innovator’s opportunity.

And this is also what led Scott to commit to working with large organizations to help them unleash, harness, and amplify that energy that lies within. Here’s what Scott shared with our tribe on stage at our recent Sydney event.

The Challenge: Inertia

At an event in Singapore, Scott did a real-time word cloud with the audience. He posed the question: “What single word best describes the biggest barrier to innovation in your organization?” – Predictably, he saw the words “Fear”, “Bureaucracy”, “Mindset”, and others – but the word that he stuck on was “Inertia.”

Every organization is full of people who were once creative and curious; people who know the benefits of innovation. These people, however, have been through life and learned that in most institutions, their job included, there’s a right way and a wrong way to do things.

They might dream of being an innovation superhero but the biggest enemy they face is institutional inertia that borders on an addiction to business as usual.

The Response: Dual Transformation

Transformation is a fundamental change in form or substance; not just doing what you’ve already been doing, better/faster/cheaper. For innovators, dual is the key word. The transformation equation has two main parts: transformation A deals with where your business is at and transformation B deals with where your business is headed.

Transformation A: Repositioning Today

Part one is repositioning today’s business to make it more resilient. The clearest, global example of this is Netflix. They were able to transition their business model from mailing DVD’s to a streaming service. They stayed within their industry but fundamentally changed their business to meet consumer needs with wildly successful results.

Transformation B: Creating Tomorrow

Part two is where you go outside of your market and create a new growth business. The clearest global example of this is Amazon. Twelve years ago, as an e-tailer Amazon had a problem with its internal IT projects taking too long. So Jeff Bezos commissioned a team to attack that problem. The team succeeded and in so doing, stumbled upon an idea they felt had far greater growth potential: renting computing capacity on demand. Today that business is Amazon web services and cloud computing and accounts for more than 20 billion dollars in revenue.

Capabilities Link: Catalyze Core Assets

This is not unrelated diversification. This is careful, conscious diversification. You are flipping the innovator’s dilemma into an opportunity by building and carefully managing a capabilities link. Take your unique, difficult to replicate assets and catalyze them to create new growth businesses.

The Leadership Implications

To successfully implement transformation in large companies, you need dedicated leadership with these four characteristics.

Characteristic One: The Courage to Choose.

This means recognizing that the best time to change is before you are forced to do so. A great example of this is Mark Bertolini, the CEO of Aetna, an American health insurance company. He became the CEO in late 2010 when the Affordable Care Act had just been passed and 50 million Americans needed insurance.

It would have been easy for Aetna to continue with business as usual. Instead, he chose to follow the John F. Kennedy line, “The best time to fix your roof is when the sun is shining.” He launched an aggressive, dual transformation strategy in recognition of the fact that the insurance industry is ultimately going to die in the United States. He described his decision thusly: “You can be like the steel industry and go into the fetal position and hope to be the last one standing. Or you can systematically look at your whole value chain. The CEO’s responsibility is to create a stark reality of what the future holds, and then to begin to build the plans for the organization to meet those realities.”

Aetna has since merged with CVS Caremark, a leading pharmacy retailer in the United States, to create a very different kind of healthcare company.

Characteristic Two: The Clarity to Focus

It’s not enough to have a vision; you need the strategy and tactics to follow. When Kennedy went before Congress with the Moonshot, he didn’t just go with a vision. He presented a clear plan on all the components that would be needed to get there.
Developing a clear plan also means knowing how and where to edit. The most important word in the strategy lexicon has two letters: N.O.
When Mark Parker took over as the CEO of Nike, Steve Jobs called to congratulate him and ended up offering some sage advice, “just get rid of the crappy stuff and focus on the good stuff.” But how do you know which ones are the good ideas?

It’s easy to get caught up in the flood of ideas that are generated in the infancy of any innovation effort. In the beginning, all ideas are partially right and partially wrong. So how do you sort out which part is which in the first mile of innovation?

Characteristic Three: The Curiosity to Explore

In a large organization you seek truth through analysis. So, in trying to sort out the good ideas from the bad ones, the traditional model is to go through endless experts, meetings, spreadsheets, and analyses in the hope that a data driven approach will be give you a perfect approach. This will almost inevitably fail, and you will find yourself facing one of the biggest problems in innovation, what Google calls “the HIPPO” problem, where decisions are made by the highest paid person’s opinion.

Transformation is never a straight-shot. There will be bumps and crises along the road to successful innovation. You overcome these with exploration, experiments, and prototyping.

Characteristic Four: The Conviction to Persevere

The conviction to persevere is rooted in the story of the future that is grounded in purpose. At Johnson & Johnson, this all comes back to their credo which puts their customers first, then their employees, then the communities where they live and work, and lastly, to their stockholders. If they persevere and serve their clients, their people, and the global community, then the stockholders will benefit as well and realize a fair return.

Janssen’s Success Story

The pharmaceutical arm of Johnson & Johnson, Janssen makes up about $30 billion of J&J’s 70 billion US dollars in annual revenue. Ten years ago, the business was in trouble; sales were declining, and a number of drugs were coming off patent. Their new leader, Joaquin Duato, implemented an aggressive, Dual Transformation strategy.

Transformation A: Fundamentally change the way Janssen discovers drugs. Instead of just getting the smartest scientists in the world together and praying, Janssen embraced open innovation and started working with scientists wherever they might be. They took their R&D department, which was lagging, and have taken it to a place where it now laps the industry.

Transformation B: Janssen has moved from treating diseases to intercepting them. As we understand the genome better, Janssen is working to create the equivalent of a “check engine light” for a person. Recognizing a risk factor and offering the patient a program to intercept and arrest the disease instead of a pill. This is obviously a very bold departure from Janssen’s previous strategy.

Your Call To Action

We all enter the world as curious, creative people with the desire to grow. Our biggest untapped resource is people inside large organizations with all of these capabilities. To bring that out in people here are five questions you can ask yourself, and seven specific things you can pledge to do:

Thought Starter Questions to Takeaway

  • What disruptions are occurring in our environment and what does our post-disruption model look like?
  • How is our culture going to help us or stand in the way of success?
  • What does our world look like in 5+ years if we don’t transform?
  • What is our story of the future? How will we write it? How will we communicate it?
  • What exciting new opportunities do today’s disruptions open up to us?

Your To-Do List

  1. Triple the time you spend with the customers.
  2. Triple the time you spend at the periphery; not just the biggest customers.
  3. Make a habit of asking “Why?” “Why not?” and “What if?”
  4. Run at least one experiment a day.
  5. Look for ways to learn more without spending money.
  6. Read a magazine in a field where you are a novice and find other ways to get to intersections.
  7. Call up the weirdest person you know and ask them to introduce you to the weirdest person they know.

We have big problems in the world and we need our institutions to rise to the challenge. Archimedes once said, “Give me a lever long enough and a platform on which to place it and I can move the world.” You have the platform; it is within all the organizations of the world.

Meet and work with Scott D. Anthony at Innov8rs Bangkok.

Scott will be delivering a keynote on Dual Transformation on Day 1 of the conference, and a workshop on Launching and Landing Moonshots on Day 2. More info via