Pivot to the Future

Pivot to the Future Plot Summary

Introduction

In a world defined by relentless technological disruption, how can established companies not merely survive but thrive? This question confronts business leaders across industries as they witness digital innovations upending traditional business models at an accelerating pace. The wise pivot framework presented offers a revolutionary approach to strategy, challenging conventional wisdom about innovation and corporate transformation. At its core, this framework introduces a new paradigm for managing business across three distinct lifecycle stages: the old (mature offerings approaching obsolescence), the now (today's profitable core), and the new (emerging opportunities). Rather than abandoning legacy businesses prematurely or chasing every innovation indiscriminately, organizations must learn to release "trapped value" - potential revenue and capabilities locked away by market inefficiencies or outdated thinking. By simultaneously releasing value across all three lifecycle stages and pivoting continuously around core assets, companies can achieve sustainable growth even as disruptive waves repeatedly crash against their shores.

Chapter 1: The Trapped Value Gap: Uncovering Hidden Opportunities

The trapped value gap represents the growing disparity between what is technologically possible and what companies actually deliver. As technologies become relentlessly better, cheaper, and smaller, they create opportunities to unlock untapped sources of revenue - potential value that remains hidden or "trapped" by market inefficiencies, outdated business models, or technological limitations. This trapped value attracts entrepreneurs and innovators like honey to bears, drawing investments and new entrants eager to release it. Understanding where trapped value accumulates is crucial for any organization hoping to capture it. Our research identifies four interconnected sources: enterprise-level value (trapped within your own operations and processes), industry-level value (confined by outdated infrastructure serving multiple companies), consumer-level value (hidden in excessive costs or poor experiences customers bear), and societal-level value (benefits that could aid everyone, from reduced pollution to improved education). Companies that successfully release trapped value typically give away much more of it to others than they keep - sometimes by a ratio of ten to one - while still capturing enough to fuel their own growth. The retail industry provides a compelling illustration of trapped value dynamics. Traditional brick-and-mortar retailers long claimed immunity to disruption from web-based competitors, only to witness their business models crumble when e-commerce companies released enormous trapped value for consumers through personalization, convenience, and lower prices. The survivors weren't those who denied change but those who embraced technology to transform their operations and customer experiences. This pattern of disruption takes two forms: "big bang disruption" where better and cheaper alternatives appear suddenly, and "compressive disruption" where change happens more gradually in asset-heavy industries. Identifying trapped value requires challenging conventional thinking about competition. Rather than viewing industry profits as a zero-sum game where companies fight over small gains in market share, value releasers expand the overall market by targeting previously unmet needs. They approach business through collaboration rather than pure competition, creating platforms and ecosystems that benefit multiple stakeholders. While this may seem counterintuitive to traditional strategic thinking, our research shows that companies who consistently release trapped value outperform peers on both current and future growth metrics. By developing the capability to identify and release trapped value at all four levels, organizations position themselves to pivot wisely amid constant disruption. The challenge isn't simply spotting potential value, but building the organizational muscle to capture it before competitors - a capability that becomes increasingly crucial as technological change accelerates and disruption cycles shorten.

Chapter 2: Avoiding the Seven Strategic Mistakes in Disruptive Times

Traditional management practices that once served businesses well can become fatal liabilities in an era of constant disruption. The seven wrong turns represent common strategic mistakes that prevent companies from releasing trapped value and pivoting successfully to the future. Understanding these pitfalls is essential for avoiding the fate of once-dominant businesses that failed to adapt. The first wrong turn is making your company too lean. While efficiency matters, dedicating all resources to a single product or pursuing cost-cutting to extremes leaves organizations vulnerable when markets change. Companies following the lean startup methodology often focus exclusively on iterating their initial product, missing opportunities to develop entirely new offerings as customer preferences evolve. When markets reach saturation faster than ever before, the ability to generate multiple innovations becomes more important than perfecting just one. Creating a capital structure built to fail represents another dangerous misstep. Companies that take on excessive debt or long-term financial commitments lose flexibility precisely when they need it most. When markets contract, heavily leveraged businesses face pressure from creditors at the exact moment they should be investing in innovation. Similarly, premature IPOs expose companies to Wall Street's quarterly expectations, forcing leaders to prioritize short-term results over long-term reinvention. The most successful value releasers maintain financial flexibility, preserving their ability to pivot when needed. Leadership mistakes also derail potential pivots. Many companies push visionary founders out of leadership roles too quickly once a successful product launches, replacing them with professional managers focused on optimizing the existing business rather than inventing the future. Without founders' innovative spirit, companies struggle to identify new opportunities as markets evolve. Equally dangerous is relying on luck - mistaking a single success for strategic genius and failing to invest in systematic innovation capabilities. When executives believe their intuition is infallible, they stop listening to customers and learning from mistakes. Perhaps most insidious is the tendency to serve regulators rather than customers. When threatened by disruptive competitors, incumbents often lobby for restrictive regulations rather than improving their offerings. While this may temporarily shield them from competition, it ultimately traps more value and creates opportunities for future disruption. Finally, companies frequently misread market signals, anticipating gradual adoption curves when today's informed consumers either adopt new products immediately or never at all - a pattern we call the "shark fin" rather than the traditional bell curve. These wrong turns help explain why so few companies successfully navigate disruption, despite having the resources and capabilities to do so. By recognizing these pitfalls, leaders can avoid the false comfort of conventional wisdom and develop the strategic agility required to thrive in constantly changing environments. The most dangerous strategic error may be assuming that practices that worked in the past will continue to work in a fundamentally transformed competitive landscape.

Chapter 3: Seven Winning Strategies for Value Release

To successfully release trapped value and navigate disruption, forward-thinking organizations employ seven distinct but complementary strategies. These approaches replace outdated thinking about competitive advantage with digital-first methodologies that directly target trapped value across enterprise, industry, consumer, and societal levels. The technology-propelled strategy positions organizations to harness leading-edge technologies that enable business innovation. Senior leaders personally advocate for and drive technology adoption, investing in tools that improve the innovation process itself. This requires addressing accumulated "technology debt" - the inefficiencies created by outdated or patchwork IT systems - and building flexible, cloud-based infrastructure that facilitates external collaboration. UK insurance broker Towergate exemplifies this approach, transforming its fragmented IT environment into an integrated cloud platform that reduced costs by 30% while enabling new service delivery. Hyper-relevant organizations maintain intense focus on evolving customer needs. Rather than "buying" loyalty through rewards or discounts, they deliver personalized experiences precisely when and where customers need them. This requires deep data collection, predictive analytics, and the ability to form lasting relationships with customers. CVS Pharmacy demonstrates this strategy by evolving from merely filling prescriptions to working collaboratively with patients to improve health outcomes through personalized interventions and medication management. Data-driven companies harness information to predict future demand and derive behavioral insights that influence customer choices. They balance data collection with responsible security practices, treating information as a uniquely renewable asset. South African insurer AllLife exemplifies this approach, using algorithms to deliver cost-effective life insurance to HIV-positive people - a previously "uninsurable" population - while monitoring health metrics and providing personalized interventions that improve outcomes. Asset-smart businesses optimize infrastructure ownership, balancing fixed assets with the ability to scale operations rapidly. They deploy digital tools to increase asset utilization and minimize costs, creating value through efficiency. Jio, India's fastest-growing mobile network, pursued this strategy by building a state-of-the-art 4G LTE network from scratch, correctly anticipating that trapped value in India's telecommunications market could be released through affordable high-speed data access. The remaining strategies - inclusive, talent-rich, and network-powered - complete the toolkit for value release. Inclusive companies develop services addressing broader stakeholder aspirations, creating platforms that enable collaboration. Talent-rich organizations build workforce advantages through flexible, augmented, and adaptive approaches to human capital. Network-powered businesses leverage ecosystems of partners to deliver innovations through connected products and services. The most successful value releasers combine multiple strategies, as exemplified by Haier Group Corporation. After CEO Zhang Ruimin famously destroyed defective refrigerators with a sledgehammer to demonstrate commitment to quality, the company systematically released trapped value by reorganizing into microenterprises, engaging directly with consumers through social media, and developing a platform business model. By applying all seven winning strategies simultaneously, Haier transformed from a failing appliance factory into the world's largest home appliance manufacturer. These winning strategies provide a comprehensive toolkit for identifying and releasing trapped value. While few companies need to employ all seven simultaneously, the most successful value releasers continuously adjust their strategic mix as market conditions and technologies evolve, creating sustainable competitive advantage in an age of constant disruption.

Chapter 4: The Wise Pivot: Balancing Old, Now, and New

The wise pivot represents a revolutionary approach to business strategy in an age of continuous technological disruption. Rather than executing a single large-scale transformation, organizations must pivot repeatedly, managing their portfolio across three distinct lifecycle stages: the old (mature products approaching obsolescence), the now (today's profitable core), and the new (emerging opportunities). This balanced approach enables companies to release trapped value in all three stages simultaneously. Traditional strategy assumes products and services follow an S-curve pattern, with adoption rising slowly at first, then accelerating through mainstream acceptance before eventually flattening. The wise pivot recognizes that in today's business environment, companies must manage multiple S-curves simultaneously, investing strategically to alter the shape of each curve. By applying new technologies to older offerings, organizations can restart growth in mature businesses. Simultaneously accelerating innovation in current profitable segments generates additional resources to scale emerging businesses more rapidly. This approach requires abandoning conventional wisdom about how to manage each lifecycle stage. Rather than exiting mature businesses prematurely, wise pivoting companies reinvest in them with new technologies, releasing trapped value others overlook. Instead of simply milking "cash cows" in the middle of their lifecycle, they look for opportunities to extend their lifespan and expand revenues. And rather than adopting me-too strategies for emerging markets, they experiment aggressively across a range of future options, creating a balanced portfolio that maximizes opportunities to scale rapidly when markets take off. Accenture's own pivot illustrates this approach in action. Facing disruption from both low-cost outsourcing providers and technology giants, the company reimagined its strategy across all three lifecycle stages. It renewed investment in mature consulting and outsourcing services by adding automation and digital capabilities. It accelerated growth in newer digital marketing and cloud businesses. And it scaled emerging practices in artificial intelligence, blockchain, and other technologies through both organic development and strategic acquisitions. The result was not just survival but transformation into a digital-first enterprise with double the market capitalization. Executing a wise pivot requires balancing investments and focus across all three lifecycle stages - something that demands both discipline and courage. Leaders must resist the natural tendency to focus exclusively on either preserving the core or chasing the new. Instead, they must manage the business as an integrated portfolio, continuously rotating resources and attention between the three stages as market conditions evolve. This allows organizations to surf waves of disruption rather than being overwhelmed by them, turning existential threats into opportunities for sustained growth.

Chapter 5: Innovation, Financial, and People Pivots

Successfully executing a wise pivot requires fundamental adjustments to three core organizational assets: your innovation capabilities, your financial resources, and your people. Each domain involves critical strategic levers that must be calibrated according to the specific disruption challenges facing your industry and the opportunities for releasing trapped value. The innovation pivot centers on three key decisions: how centralized innovation should be, how much autonomy innovators should receive, and how ambitious your innovation targets should be. Companies that successfully release trapped value find the right balance for their specific context. Too much centralization stifles creativity, while complete decentralization prevents strategic alignment. Too much control smothers experimentation, while too little leads to scattered efforts with minimal impact. And while moonshot thinking can yield breakthroughs, an innovation portfolio too heavily weighted toward distant possibilities risks neglecting immediate opportunities. PepsiCo's innovation pivot under former CEO Indra Nooyi demonstrates this balancing act. Facing changing consumer preferences toward healthier options, the company tripled R&D spending and created both centralized research facilities and external accelerators to support emerging brands. It recruited talent from adjacent industries to bring fresh perspectives and encouraged employees to approach innovation from deep understanding of consumer needs. This multi-faceted approach allowed PepsiCo to release trapped value through both improvement of existing products and development of entirely new categories. The financial pivot similarly requires strategic decisions about fixed assets, working capital, and human capital. Companies must determine when infrastructure becomes a liability rather than an asset, how to optimize inventory management, and how much to invest in employee skills. Uniqlo's pivot from "made for all" to "made for you" exemplifies strategic financial rebalancing. Rather than abandoning retail locations as competitors did, the company invested in transforming them into digital-enabled spaces supported by advanced manufacturing technology and integrated supply chains. Perhaps most challenging is the people pivot, which encompasses leadership approaches, workforce composition, and organizational culture. In an era of constant disruption, companies must balance the skills of operators (who run the business) with those of entrepreneurs (who create new businesses). They must rethink the relationship between humans and machines, finding the "missing middle" where technology augments rather than replaces human capabilities. And they must evolve their corporate culture while maintaining core values that distinguish their brand. AT&T's massive reskilling initiative demonstrates the scale of the people pivot required in disrupted industries. Recognizing that only 5% of its workforce would have the necessary skills for a digital-first future, the company invested $1 billion in retraining programs, collaborating with universities and online platforms to develop new capabilities. This approach has allowed AT&T to fill 40% of new positions with internal candidates rather than replacing its workforce wholesale. Together, these three pivots provide the infrastructure for continuous reinvention. By adjusting the nine strategic levers across innovation, finance, and people, organizations can build the capabilities needed to release trapped value and pivot wisely as technologies and markets evolve. The specific settings will differ by industry and company, but the need to actively manage all three domains remains constant in an age of disruption.

Chapter 6: Executing the Wise Pivot Across Your Organization

Bringing the wise pivot to life requires coordinated action across the entire enterprise. This isn't a strategy that can be delegated to a transformation office or innovation lab - it demands engagement from every function and level of the organization, guided by leadership with both vision and pragmatism. The most successful companies develop specific capabilities to execute their pivot across the old, the now, and the new simultaneously. At the heart of effective execution lies portfolio management - the disciplined allocation of resources across the three lifecycle stages. This means constantly evaluating which businesses and initiatives deserve investment, which should be maintained at current levels, and which should be scaled back. Alphabet exemplifies this approach, with a governance structure that evaluates every investment regularly, accelerating or decelerating them based on actual performance. The company's "other bets" division houses speculative investments in autonomous vehicles, healthcare, and other emerging fields, each with its own CEO, budget, and defined path to profitability. Executing a wise pivot also requires new approaches to innovation management. Companies must create formal structures and processes that nurture experimentation while maintaining alignment with strategic priorities. Walmart's Store No. 8 incubator illustrates this balance, operating with startup-like freedom to develop disruptive innovations while remaining connected to the parent company's retail expertise. By separating incubation from day-to-day operations but maintaining strategic alignment, Walmart has accelerated its pivot toward digital commerce. Financial execution demands equal attention. Organizations must develop mechanisms to free up capital from mature businesses and reallocate it to emerging opportunities. Zero-based budgeting, employed successfully by companies like Anheuser-Busch InBev, provides one powerful tool for this purpose. Rather than using last year's budget as a starting point, every expense must be justified based on its strategic contribution, forcing rigorous evaluation of how resources are deployed across the portfolio. Perhaps most challenging is executing the people dimension of the wise pivot. This requires not only reskilling employees as technologies evolve, but also integrating different work cultures and leadership styles across the three lifecycle stages. Deutsche Telekom's approach demonstrates this balance, allowing T-Mobile USA CEO John Legere's maverick leadership style to flourish while maintaining the parent company's disciplined culture in its core European markets. This "culture of cultures" recognizes that different businesses require different approaches to innovation, decision-making, and customer engagement. Technology plays a crucial role in execution, serving both as an enabler of the pivot and a source of disruption that necessitates it. Companies must embrace digital-first operations, using data and analytics to inform portfolio decisions and measure progress. Cloud platforms, automation, and collaborative tools enable faster experimentation and scaling, while artificial intelligence increasingly augments human capabilities across the organization. Estonia's digital transformation of government services demonstrates how technology can fundamentally reshape operations, creating new forms of value through transparency, efficiency, and inclusion. Ultimately, executing a wise pivot requires courage - the willingness to challenge conventional wisdom, make difficult trade-offs, and pursue long-term value creation even when short-term pressures mount. As LEGO Group CEO Niels B. Christiansen observed while steering his company's digital transformation: "The brick is at the heart of what we do, but we are, to an increasing amount, using digital to enhance it." This balance between preserving core strengths and embracing new possibilities defines successful execution of the wise pivot.

Chapter 7: Finding Your Brick: Courage for Continuous Reinvention

Continuous reinvention requires finding your organization's metaphorical "brick" - the enduring core that provides stability amid constant change. Like LEGO's physical brick that remains central to its identity even as the company embraces digital technologies, every organization needs to identify its foundational elements while developing the courage to continuously transform around them. This balancing act defines the essence of the wise pivot. The journey begins with patience - recognizing that timing matters as much as technology. Being early to market can be just as problematic as being late, as pioneers often discover when they launch innovations before supporting ecosystems are mature. Toyota's hybrid vehicles succeeded because the company patiently developed the technology until market conditions aligned, while earlier attempts by other manufacturers failed despite technical merit. Patience doesn't mean inaction, but rather thoughtful experimentation that builds capabilities while waiting for the right moment to scale. Generosity represents another essential principle for continuous reinvention. Value releasers understand that trapped value, once unlocked, flows in multiple directions - benefiting customers, partners, and sometimes even competitors. Rather than attempting to capture all value created, successful companies focus on growing the overall pie while accepting a reasonable portion for themselves. Our research consistently shows that organizations giving away the most value often grow the fastest, becoming valuable by making others more valuable. This mindset shift from value capture to value creation enables collaboration essential for addressing complex challenges. Realism completes the foundation for continuous reinvention. Not every pivot will succeed wildly, and some investments will generate minimal returns. By managing innovation as a portfolio across the three lifecycle stages, organizations develop resilience against individual failures. They can afford to stumble, redirect, and pivot again without facing existential crises. This realistic approach recognizes that even the most successful companies experience setbacks, but maintains the courage to continue experimenting and evolving despite them. The wise pivot represents a fundamental reimagining of strategy for an age of continuous disruption. Rather than viewing change as a discrete event to be managed through occasional transformations, it embraces reinvention as an ongoing process essential to sustained growth. By balancing investments across the old, the now, and the new - and continuously adjusting that balance as technologies and markets evolve - organizations develop the ability to surf waves of disruption rather than being overwhelmed by them.

Summary

The wise pivot offers a powerful framework for thriving amid relentless technological disruption by systematically releasing trapped value across three lifecycle stages simultaneously. The essential insight is that successful innovation requires balancing investments between mature offerings, today's profit centers, and emerging opportunities - not abandoning the old prematurely nor clinging to it desperately. By applying the seven winning strategies and avoiding common pitfalls, organizations can transform from reactive victims of disruption into proactive orchestrators of change. The future belongs to companies that develop the capacity for continuous reinvention. In a world where technology advances exponentially while business adoption lags linearly, trapped value accumulates at an accelerating pace. Those who can identify and release this value - at the enterprise, industry, consumer, and societal levels - will define the next generation of market leaders. The wise pivot isn't merely a strategy for survival; it's a methodology for perpetual renewal and sustained growth that turns the existential threat of disruption into the catalyst for unprecedented opportunity.

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Larry Downes

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