Disrupt My Business!
- by Matthew Brodsky
Two alumni returned to campus to discuss how their companies have made it a practice of generating disruptive innovations.
The solution for a large company like Cisco Systems is to strive for disruptive innovations while sustaining the innovations that have become the bread and butter of their business.
Said Inder Sidhu, WG’91, senior vice president of strategy and planning for worldwide operations at Cisco, “We’re trying to use all the settings of the dial.”
They include develop, incubate, spin-in and acquire. The first is the Cisco core business of building the infrastructure of the Internet and involves upward of 20,000 engineers. Cisco has also incubated nine companies to date. It has encouraged 23 spin-ins, whereby it partners and funds entrepreneurs and acquires their company during the startup process. The final step has resulted in more than 100 acquisitions through more traditional means.
The strategy has resulted in $1 billion in profits monthly from sustaining innovation, and $1 billion in monthly top-line growth from disruptive innovations.
Roy Rosin, chief innovation officer at the Penn Medicine Center for Innovation and former vice president of innovation at Intuit, was at the software firm as it disrupted three industries to create three billion-dollar businesses. The company’s innovation framework allowed them to increase annual new products six-fold while time-to-market fell dramatically. As this approach filtered back into core businesses, Intuit delivered shareholder returns of 33 times the S&P 500 over a five-year period.
He shared his belief, gleaned from his own experiences and from talking with top Wharton innovators, that disruptive innovations can be found by observing what people are actually doing—where they’re struggling and what they’re trying to achieve based on observable behaviors—and not necessarily by asking them.
His other major point: the old style of “command and control” innovation does not work any longer. The key is to embrace cheap, fast failure. Entrepreneurs and companies no longer have time for endless cycles of development, market testing and more testing before something gets to market.
“ideas are pretty worthless unless they’re quickly made tangible, turned into actions and validated,” Rosin said.
Both gentlemen spoke at the Annual Wharton Mack Center Fall Conference on Nov. 9. The Mack Center creates and provides research-based guidance on managing the risks and rewards of technological innovations that offer new value for customers and firms.