Goliath's Revenge

How Established Companies Turn the Tables on Digital Disruptors

Todd Hewlin, Scott A. Snyder

• Publisher: Wiley
• Year: 2019
• Print ISBN: 9781119541875
• eBook ISBN: 9781119541912
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Harness your company's incumbent advantages to win the digital disruption game

Goliath's Revenge is the practical guide for how executives and aspiring leaders of established companies can run the Silicon Valley playbook for themselves and capitalize on digital disruption. Technologies like artificial intelligence, robotics, internet of things, blockchain, and immersive experiences are changing the basis of competition in every industry. New competitors are emerging while traditional ones are falling behind.

Periods of intense change provide remarkable opportunities. Goliath's Revenge delivers an insider's view of how industry leaders like General Motors, NASA, The Weather Channel, Hitachi, Mastercard, Proctor & Gamble, Penn Medicine, Discovery, and Cisco are accelerating innovation, building new skills, and disrupting themselves to come out stronger in this post-digital age. Learn how to leverage your company's scale, reach, data, and expertise to launch breakthrough offerings that fend off attackers and secure your position as a future industry leader.

Using real success cases and recommendations, this invaluable resource shows how to realign your business model, reset your talent development priorities, and retake market share lost to digital-ready competitors. Drawing from extensive experience in digital transformation, leadership development, and strategic planning, the authors show how established companies can switch from defense to offense to thrive in this new digital environment.

• Learn the six new rules that separate winners from losers in the age of digital disruption
• Prioritize your innovation investments to rebuild your competitive moat
• Employ smart cannibalization to defend your core business
• Deliver step-change customer outcomes to grow into adjacent markets
• Reframe your purpose and make talent the centerpiece of your digital innovation strategy

Goliath's Revenge is a must-read for business leaders and innovators in small, mid-sized, and large organizations trying to win the digital disruption game. This book helps you reset both your company strategy and professional development priorities for long-term success.

Chapter 1
How Much Time Do You Have?

How did you go bankrupt?

Two ways. Gradually, then suddenly.

—Ernest Hemingway, author

What company is this? Early private investor in a major ride-sharing leader. Licensed to test more fully autonomous cars on California roads than any other company. Builder of a business model that can prosper in a future where many people own cars but do not drive and others don’t want to own a car at all. Recognized as the first company delivering a long-range, sporty electric car that the average person can afford. Willing to pay a massive premium to acquire Silicon Valley–based talent in order to win the long game of digital disruption in the automotive industry. Just received an investment of $2.25 billion from famed dealmaker Masayoshi Son at SoftBank.

Google? Apple? Tesla? Amazon? Uber? Those would all be excellent guesses. The company is actually General Motors. A company that just 10 years ago required a US government bailout to survive the global financial crisis. Today GM is thriving in spite of the global automotive industry being rapidly transformed by the trifecta of digital innovation: electrification, autonomy, and sharing.

Rewriting David versus Goliath

If the business world actually reflected the biblical story of David versus Goliath, established companies built over generations would struggle valiantly against the digital upstarts but would be so visually impaired and unimaginative that they would not be able to see the rock coming. Unicorn private companies from San Francisco, Shanghai, Berlin, and Tel Aviv would upend the status quo in industry after industry, leading to bankruptcy for established companies and unemployment for their workforces. In this updated version of the historic story, David’s sling would be an artificially intelligent robot. We would all know how the story ends but still enjoy reading about the heroic struggle these established companies mustered before their eventual demise.

For some established companies, that is actually how the business version of David versus Goliath is playing out. Digital disruptors such as the companies listed above are well funded, well staffed, and heavily armed. They are not to be taken lightly. This is true whether the established Goliath is a global industrial titan with 100,000 employees or a local company that has been the lifeblood of a family for years with 10 employees. We’ve all seen that Blockbuster was destroyed by Netflix, Nokia was beaten by Apple, and that thousands of retail entrepreneurs “retire early” as Amazon gradually takes their customers away. This outcome is predictable if the news articles you read are to be taken at face value.

We think something much more interesting is afoot. We call it “Goliath’s Revenge.” Established companies are getting wise to David’s strategy, tactics, and tools. They have seen some of their traditional competitors succumb to the digital attackers that are resetting the rules for their industries. Instead of waiting for their businesses to be disrupted by some Silicon Valley whiz kid, they are saying, Why can’t we use those same strategies, tactics, and tools for ourselves? Some are setting their sights even higher. They are simultaneously protecting their core businesses from digital disruption while also running the disruptors’ playbook to expand into high-growth adjacent markets.

Goliath’s Revenge is not just playing out within these established companies; the script is also being rewritten for the people who work in them. Senior executives, managers, and front-line staff alike are proactively reinventing themselves to ensure that they have lifetime employment, even in this period of disconcerting and rapid change. These employees are offloading routine tasks to computers instead of clinging to them. That mindset shift is allowing them to finally take on the higher-value activities that they’ve never had the time to get to. These enlightened employees are stretching themselves to build the new skills their companies will require for a digital future but may not even know to ask for yet.

Before we jump into the new rules that govern how these established companies and their workforces are achieving Goliath’s Revenge, let’s dig deeper into how GM has been able to pull off the remarkable comeback referred to earlier.

The Resurgence of General Motors

There is no substitute for making mistakes early to build the breadth and depth of institutional knowledge required for long-term market leadership. Think about the Newton that was designed by Apple Computer and launched to much fanfare in 1993. It was both an unmitigated failure and the ancestor of what would become one of the most important products ever made: the iPhone. Apple has gone on to sell over one billion iPhones. That business now represents almost two-thirds of the company’s revenue. The second time really was the charm. Steve Jobs was so confident that the iPhone would be a hit that he dropped “Computer” from the company name on the day the iPhone launched.

Around the same time Apple was working on the Newton, GM was developing the EV1—the world’s first modern electric car built by a major automotive manufacturer. It was a bold bet that came to market in 1996, seven years before Tesla was founded and 16 years before Tesla’s first internally developed car, the Model S. The EV1 proved to be GM’s Newton—unsuccessful in the near term, quickly discontinued, and essential to the long-term success of the company.

Detroit’s history with electric cars actually goes back to the early part of the twentieth century. Samuel Clemens, better known by his pen name Mark Twain, once observed, “History doesn’t repeat itself, but it does rhyme.” This is still the case today. Figure 1.1 shows a 1917 advertisement for a car called the Detroit Electric that uses the rising price of gas and moderate price of electricity to promote Detroit-built electric cars.

Figure 1.1 Detroit Electric Ad from 1917

GM did not realize it at the time, but the EV1 was an essential step on the path to achieving Goliath’s Revenge. The automotive industry is beset with digital Davids—Tesla, Google, Uber, Lyft, Apple, Zipcar, and BYD Auto, along with many lesser-known players—all trying to shape the future of the automotive industry through electrification, autonomy, and sharing. You can likely name an equivalent set of digital disruptors in your industry and country.

What the EV1 did was whet GM’s appetite for how electrification could reshape the automotive industry. It inspired the gas-and-electric Chevy Volt in late 2010 and the wholly electric Chevy Bolt in late 2016. The Bolt was recognized as Car of the Year by Motor Trend in 2017 and beat Tesla’s Model 3 to market by nearly a year. In short, GM’s credibility with end customers, dealers, and shareholders with respect to electrification is well earned.

In terms of autonomous vehicles, GM did not have the luxury of such long-term, institutional knowledge. This required the company to make a bold bet through the acquisition of Cruise Automation in early 2016. Headquartered in San Francisco, Cruise was just three years old when GM acquired it. More shocking was the price—a reported $1 billion—valuing the startup at nearly $25 million for each of its roughly 40 employees. For context, GM itself is valued at just $0.3 million per employee. Bets don’t get a lot bigger than that. GM had the confidence to make such a major acquisition—what we will refer to as a “Big I” bet—as its own customer research demonstrated that self-driving capabilities were crossing the chasm from science project to key differentiator. Getting autonomy right was declared a must-win battle and an area in which entirely new skills would be critical to GM’s long-term success.

The final shift—sharing—was the most difficult one. Every traditional automaker wanted to believe that consumers would always value owning and driving their own cars. It felt like a core tenet of the American Dream and a foundational basis of GM’s brand, culture, and values. Again, GM had some early efforts to draw on. GM acquired the Hertz Drive-Ur-Self System all the way back in 1926 as its entry into the rental car market. That was 83 years before Uber was founded. The rental car business taught GM important lessons about which jobs customers wanted their cars to do and which of those required car ownership versus temporary vehicle access.

This history gave GM the confidence and experience to make two additional big bets—one around car sharing and one around ride sharing. For its car-sharing bet, GM acquired the assets and select staff from failed ride-sharing company Sidecar in January 2016. GM immediately relaunched that business as a new car-sharing platform called Maven that provided access to select GM vehicles on an hour-by-hour basis through a mobile app. Think simple, hourly car rentals and you’re not far off—GM’s version of Zipcar. Perfect for people who want to drive themselves but only need a car for a limited time period. Maven was also ideally suited to the growing ranks of gig economy workers driving in scheduled shifts for companies such as Uber, Instacart, and Door Dash.

Two months later GM took the bold step of investing $500 million in ride-sharing company Lyft, which then had a private market valuation of $5.5 billion. This gave GM a front-row seat for the millennial-powered transition from buying cars to purchasing rides. To GM shareholders, that investment looked expensive until Google put an additional $1 billion into Lyft, which was valued at $11 billion just 21 months later. On paper, GM had doubled its money in under two years.

There are obvious synergies between the Maven and Lyft investments. One of the critical gating factors in Lyft’s growth has been its contract drivers’ access to reliable, late-model cars like the ones Maven now rents on an hourly basis. GM’s balanced portfolio of adjacent internal innovation initiatives and external acquisitions and investment has the company best positioned of the major automotive companies for a digital future.

GM’s company-wide commitment to achieving Goliath’s Revenge comes straight from the top. In an interview late in 2016 with Business Insider, GM CEO Mary Barra said, “We are in the midst of seeing more change in the next five years than we’ve seen in the last 50 years.” GM is augmenting its decades of institutional knowledge of electrification, autonomy, and sharing with bold bets to bring in entirely new domain-specific skills, business models, technology platforms, supplier ecosystems, routes to market, and customer segments.

GM shareholders have been amply rewarded. Since the beginning of 2016, GM’s stock price has increased by nearly 50% and the company now has an enterprise value of over $140 billion. While much remains to be done, GM’s progress was recently rewarded by a $2.25 billion vote of confidence from the SoftBank Vision Fund.

But this is not a story about any one company. In industry after industry, a similar trend is unfolding. Established companies of all sizes, and the people who work for them, are taking bold steps to shift from being disrupted to becoming disruptors. They are shifting from a mind-set of “Defend the way we do things for as long a...

Table of contents

• Cover
• Additional Praise for Goliath's Revenge
• Foreword
• Chapter 1 How Much Time Do You Have?
• Chapter 2 The Incumbent’s Advantage
• Chapter 3 Winner Takes Most
• Chapter 4 Rule 1: Deliver Step-Change Customer Outcomes
• Chapter 5 Rule 2: Pursue Big I and Little I Innovation
• Chapter 6 Rule 3: Use Your Data as Currency
• Chapter 7 Rule 4: Accelerate through Innovation Networks
• Chapter 8 Rule 5: Value Talent over Technology
• Chapter 9 Rule 6: Reframe Your Purpose
• Chapter 10 Company View: Your Disruptor’s Playbook
• Chapter 11 Career View: Disrupt Yourself
• Appendix: Goliath’s Revenge Rule Templates
• About the Authors
• Index
• Wiley End User License Agreement