To disrupt or not - thoughts on ambidexterity, blitzscaling and business model innovation

1. Antonio Fonduca Follow
Venture Catalyst (ex-entrepreneur turned investor, now CVC). Adventurer. Triathlete.
Kitesurfer. Curious. Passionate. Crafting outstanding ventures.
Nov 4, 2015 · 9 min read
To disrupt or not - thoughts on
ambidexterity, blitzscaling and business
model innovation
There is no generally accepted de2nition of innovation. Every industry and
every department perceive it di9erently. How do you de2ne innovation?
For me innovation is about letting go of the past and your so called “past
successes” for the bene9t of the future. It is a mindset and involves cu-
riosity – and has to do with your outlook on the world – innovation is
about exploring the unknown and daring to challenge the conventional
ways of doing things.
When speaking of innovations, I think it is useful to be clear about what
we are implying. In this regard I am very much fond of the terminology
introduced by Clayton Christensen, who makes the following
distinctions:
Sustaining innovations: innovations that create limited jobs/no
growth and make things a little better – hence replicative and re-
quiring limited capital
EIciency innovations: innovations that eliminate jobs and create
no growth – hence doing “more with less” and freeing up capital
Market creating innovations: innovations that create jobs and
growth – hence using capital
Generally when I think of innovations, I have the latter in mind – which
involves disruption. Disruption implies the creation of something new –
and to quote Schumpeter entails “creative destruction”. Disruptions cer-
tainly create new jobs, while also destroying old ones, as a natural part of
evolution.
Larger types of corporations generally tend to focus on the former two
types of innovations. Both are arguably necessary – we naturally wish to
sustain our previously gained competitive advantages. Larger corpora-
tions also tend to invest in something relatively known (which brings
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2. comfort) rather than venturing into the unknown. Disruptions, on the
other hand, challenge our comfort zones.
With this in mind, I would recommend maintaining a balanced portfolio
of innovation types, while creating customized nurturing environments
(ecosystems) for each type.
How do you identify, evaluate and prioritize relevant trends and technolo-
gies? How do you react to disruptive technologies and business models?
First of all, I see my role primarily as 9nding ways to disrupt BK before
someone else has the chance to. You could compare this to taking a vac-
cine shot if you will.
Second, we want to avoid falling into similar traps that other larger cor-
porations have historically fallen into – where innovations certainly were
being worked on, but where the corporation was not able to switch and
overcome their old business logic – hence failing to adapt and capitaliz-
ing on new technologies and trends.
How do you do this?
Well, I think you need to set up diWerent and customized nurturing
grounds (ecosystems) for the various types of innovations that you man-
age in your portfolio – as they all have diWerent requirements and bene9t
from diWerent setups. In this context: the culture, mindset and business
logic all play an important role. Therefore, consider to what extent you
are creating a supportive and exploratory culture where mistakes are not
only allowed but even encouraged (“failed” experiments and lessons
learned). This is also the reason I am a great believer in the following de-
9nition of competitive advantage: “the ability to learn faster than your
competitors”.
More speci9cally:
1. I identify technologies by using a combination of push and pull. On
the one hand, you need to inform the world what your mission is – what
you are trying to achieve and why. On the other hand, you also need to
9gure out and create systems to scout for interesting people and relevant
technologies that 9t your mission – by applying search areas, opportu-
nity 9lters and investment theses.
2. I evaluate technologies primarily by strategic 9t, i.e. “what are they
selling” vs “what are we interested in buying” and gauging how good the

3. 9t between the two is. It comes down to creating maximum alignment of
interest between the two over the longer term.
3. Finally, I prioritize technologies by processing the pipeline. If you have
done a solid job in the previous steps, then this becomes straightforward.
Ultimately, I react to disruptive technologies and business models with
curiosity, awe and inspiration. Disruption is simple, yet hard to attain. It
seems obvious once launched – yet so hard to come up with beforehand.
Most disruptions are elegant and mostly come down to re-bundling
(bundling and unbundling the past), i.e. connecting the dots in diWerent
ways. This type of work typically involves seeing the larger picture –
while capitalizing on market dynamics, consumer shifts and technology
advance. Some timing and luck are usually also required. To be able to
work on these things is truly a blessing in disguise.
Innovation needs a structured organization but if it’s too rigid, it can hinder
innovation. So how can it be managed without slowing things down?
Correct. This is why I believe in the concept of ambidexterity – in combi-
nation with a portfolio of diWerent types of innovation, as described
earlier.
So what do I mean by ambidexterity?
Well, similarly to how your right and left hands interact in co-existence,
so should your ability to manage your current and future businesses in
parallel. In other words, your left and right hands ful9ll complementary
roles for the bene9t of your whole – so should your old and future busi-
ness models for your organization. This relates to what we touched upon
earlier, i.e. the ability to switch and overcome old business logics – along
with the ability to disrupt yourself before someone else.
This is why you need to create an environment for ambidexterity
throughout your organization – something that starts with the Board of
Directors selecting the CEO for the long term – who also understands the
necessity of ambidexterity and creates an environment that enables it. So
yes, on the one hand you need to defend current market share and se-
cure steady growth quarter by quarter (your current business). On the
other hand you need to dare venturing into the unknown, i.e. testing
many experiments and failing plenty – to gain lessons learned and per-
haps even stumble upon scenarios where you directly or indirectly would
disrupt your old business model logic in the process (your future
business).

4. An immoderate example perhaps in big corporations today, yet some-
thing that might be applied sooner or later, is the introduction of a Chief
Entrepreneur – as described by Alexander Osterwalder in the Harvard
Business Review. According to him, the Chief Entrepreneur oversees the
future business (typically 9nanced by the current business), as rigorously
as the CEO manages the current business. Both report to the Board of Di-
rectors. It will be interesting to see any upcoming early adopters catching
onto this type of organizational design.
On a similar note, I recall Guy Kawasaki talking about the dynamics be-
tween the Apple 2 and Macintosh parts of the organization back in the
days. Apparently, the Apple 2 people (who were highly successful at the
time and 9nancing the Macintosh people) were not even allowed to enter
the Macintosh part of the building – or even 9nd out what the Macintosh
people were doing in their labs. This could certainly be regarded extreme
behavior, yet it serves to illuminate important aspects of truly ambidex-
trous organizations.
With this in mind, consider what steps you and your organization are
willing to take – to embrace ambidexterity.
What are the main criteria for developing an innovative corporate culture?
What are the main barriers?
Culture is an underlying and recurring theme in my work and I believe it
all starts with the vision and idea of the founder – via the Board and CEO
all the way through the organization, and most importantly – the people,
who choose to join the mission and quest for a brighter future. When an
organization has alignment all the way through the ranks – this shines
through. You can tell that the people are aligned and dedicated to the
mission of the organization. You can feel the culture “in the walls”, en-
forced by storytelling, rituals and heroes. The people all understand
what you are trying to achieve and why. There is no shilly-shallying. Rest
assured – this does not just happen by chance, rather it is something that
comes as a result of very dedicated, determined and congruent leader-
ship practice.
Consider what type of people you are repelling and attracting to your or-
ganization. People come and people go – this is quite natural in any orga-
nization. The key is to look for who is joining and who is leaving.
Consider what qualities you are looking for and understand what people
are looking for when considering you as an employer. I would say that it
mostly comes down to storytelling, rituals and empowerment.

5. Let me share an example with you that I discovered recently while listen-
ing to an interview between Reid HoWman and Eric Schmidt as part of
the ongoing “Blitzscaling” series at Stanford.
Eric Schmidt goes to the local Google cafeteria on a Friday afternoon to
grab some food after a long day at work. An employee sits nearby and
they begin to chat. The employee states that he has thought about a solu-
tion to solve general AI but needs 10 000 servers over the weekend to 9x
it (this was a big deal at the time). Mr Schmidt ultimately agrees after a
few minutes. Note that this decision involved a huge risk to the current
business – in order to serve an experiment and potentially bene9t the fu-
ture business of Google. Long story short, many years later, the employee
has not yet solved the conundrum, yet remains a faithful employee at
Google.
To me this story is very powerful and illuminates what I mean by culture,
storytelling and empowerment. This story is about daring to venture into
the unknown and believing in your people. It is about walking the talk
and nurturing the correct behavior. As Steve Jobs said, you hire smart
people, not to tell them what to do – but rather having them tell you
what to do.
Therefore, consider to what extent you give your people the right condi-
tions to create magic. Are you empowering and equipping your people
with the tools required to ful9ll their roles. Are you creating the right en-
vironment – as Simon Sinek would argue? Ultimately, it comes down to
cultural 9t, i.e. whether you have created alignment between the organi-
zational needs and the people who you have attracted and who joined
the organization to ful9ll its mission.
Product and service innovation are done by nearly every company. Recently,
2rms increasingly try to do business model innovation. What are the three
biggest risks of doing business model innovations and what are the success
factors in order to overcome these hurdles?
I think that most product and service type of innovations generally
match the two types of innovations described earlier (“eIciency” and
“sustaining” innovations), while business model innovations are gener-
ally more inclined towards “market creating” innovations.
In terms of managing the risks of business model innovations – to sum
up parts of what we have talked about earlier, you need to:
1. Be able to understand and manage ambidexterity

6. 2. Work with storytelling, rituals, and empowerment
3. Be able to overcome your old business logic while forgetting about
past successes
With these in place, you create a solid nurturing ground for future busi-
ness model innovation.
The greater risk would be not daring to do step out of your comfort zone,
and change your old business. Instead you play “wait and see” – staying
in your comfort zone, relying on old successes and making slight im-
provements over time. Suddenly, one day you wake up and realize that
someone stepped in and disrupted you, taking your customers away and
making you obsolete. There are plenty examples throughout corporate
history where this has been the case.
Amazon, on the other hand, constitutes a great example of a big corpora-
tion with a culture of chartering into unknown territories and challeng-
ing your old business logic – while capitalizing on new opportunities
(and forgetting about past successes). Amazon Prime is certainly a good
example of business model innovation and AWS an example of overcom-
ing your old business logic.
In this context, I would consider it as good practice to have a dedicated
team with the sole role of 9guring out ways to disrupting your current
business. Remember ambidexterity – you need the right hand to survive
today, and you need the left hand to feed you tomorrow. In other words,
both co-exist in an ambidextrous equilibrium.
With this in mind – what are you going to do next?