Harnessing DisruptionHow Science and Technology Companies Endure

2 | Harnessing Disruption: How Science and Technology Companies Endure

Introduction

Uncertainty vs. Ambiguity

The Nuances of Ambiguity

The Characteristics of Enduring Companies

Conclusion

References

About the Authors

Table of Contents3

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Accenture’s experience with a vast number of science and technology companies has provided insights into companies that have endured many episodes of technology disruption as well as others that apparently fell short. In studying companies such as General Electric, Genentech, 3M, Novo Nordisk, and Apple, we have identified six attributes that are part of these companies’ anatomies, and that have helped enable them to excel in environments where technology disruption is the norm. In essence, they did so by recognizing, among other things, the need to undergo enterprise transformation—a multiyear metamorphosis that requires disrupting the prevailing business model and operating model of a company due to an increased pace of change in highly uncertain and ambiguous markets.

In 2013, companies globally are expected to invest nearly $1.5 trillion in R&D.1 A large portion of this investment will likely have funded organizations whose mission is breakthrough discoveries and inventions. These are a unique breed of companies, ones that seem to take massive risk to define new frontiers through groundbreaking medicines, revolutionary inventions and astonishing technology-enabled experiences that not long ago were considered science fiction. However, these companies also exist in volatile, hypercompetitive environments where technology disruption is a natural law and dominance is fleeting.

While companies in most industries operate in uncertain environments, science and technology companies operate in ambiguous environments. This distinction is an important one. When a company faces uncertainty, the past can be a reasonable predictor of the future with the right analysis. In ambiguous environments, however, the past can be a poor predictor because major disruptions in the present can often change the parameters that shape the future.

In this fog of ambiguity, the leaders of science and technology companies can face formidable challenges. Unlike companies in other industries, science and technology companies must continually invest in research and development and successfully convert those investments into value in the market. And they must do this typically in the midst of technology disruption.

Biopharmaceutical companies, for instance, appear to be in the midst of a significant technology convergence as medical technology and engineering disciplines converge with traditional drug discovery and development. Furthermore, their business models are under threat as low-priced generics are causing ever-increasing scrutiny on measurable outcomes to justify premium

prices. Electronics and high-tech companies also apparently confront an increasingly ambiguous environment as factors such as open source, the primacy of the customer experience, and highly dependent device and software ecosystems have given way to an epic struggle for leadership in mobile and the cloud.

Leaders of these companies must not only see the next disruption, they must make tough decisions about a potential enterprise transformation that often results in a binary outcome for their organization: life or death. Is the threat real? Should we board a new unfamiliar vessel and burn the ship that has gotten us this far? If so, when? On which new vessel and how do we make the transition? But perhaps metaphors do not do complete justice to the daunting challenge these executives face, with pressure from shareholders who expect sustained financial performance, employees who have dedicated careers to building the business, and ecosystem partners who have relied on the company.

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On the left side of the spectrum is what may be considered the most stable environment— analogous to an island in the South Pacific, where it’s easy to forecast the weather because meteorological patterns are largely known and consistent. Companies operating at this end of the spectrum typically enjoy relatively predictable market growth and business outlook, as was the case for many technology companies when PC sales and operating system sales were stable and could be counted on year after year to largely parallel GDP growth. For these companies, focusing on optimizing operations to “keep the engine going” is an overriding priority.

In the middle is an environment that may be characterized by a greater degree of uncertainty. Here, the situation is much like it is for weather forecasters in most climates. While they cannot predict with certainty whether or when they will get a major storm, historical records and sophisticated predictive models do help enable them to predict, with a high degree of certainty, the temperatures and precipitation the area likely can expect in any given year. From a business perspective, companies operating in the middle of the spectrum may face considerable challenges in predicting specific market and customer behavior, but known parameters combined with predictive modeling and historical data can provide a reasonable prediction of the overall business “climate” the companies can expect in the future.

Uncertainty vs. Ambiguity

The far right of the spectrum is what we might characterize as an ambiguous environment. This environment is like the Great Plains of the United States during tornado season. Although forecasters can recognize the conditions that make tornadoes likely, historical models cannot predict when, where or even if a tornado will strike. This is because many parameters and their interactions are unknown, and change rapidly and seemingly randomly. In these environments, early warning systems, well-defined and clearly understood response plans, and decisive execution can be critical to survival.

Businesses may operate at different points on the spectrum at different times. For example, as mentioned, the PC market was stable and predictable for many years. However, today, it is far less certain because the industry is in the midst of a step-change in technology, which is giving rise to a new set of customer behaviors, new constraints, and a new value chain. Where a company resides on the spectrum can be important because each point requires different strategies, perspectives, tools and approaches for the company to be in a position to protect itself—and even thrive—within the turmoil of abrupt change.

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The difference between uncertainty and ambiguity goes far beyond simple semantics. Consider the “volatility spectrum” as illustrated in Figure 1.

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Figure 1. The Volatility Spectrum

Source: Accenture 2013

• Highly predictable

• Parameters affecting the environment are few and known

• Low randomness

• Predictive with margin of error

• Parameters affecting the environment are many and the most important ones are known

• Some randomness

• Highly volatile and difficult to predict

• Unknown number of parameters affecting the environment

• Significant randomness

Description

STABLE UNCERTAIN AMBIGUOUS

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There are times when events are truly random and the ambiguity is real. Could past events have predicted that Steve Jobs’ personal journey from cofounding Apple Computers, to NeXT, to the unlikely owner of Pixar would have resulted in his leadership fueling the meteoric rise of Apple? These events were truly random and the ambiguity was real.

Often, however, ambiguity is perceived. Because companies sometimes lack the breadth of expertise required to understand the potential impact of convergence, they can perceive events as being random when, with the right intersection of data, reasonable predictions are possible. In the pharmaceutical industry, the convergence of therapeutics, diagnostics, mobile technology, medical devices and big data is seemingly having a significant impact on patient care. However, traditional biopharmaceutical companies may lack the in-house engineering expertise to fully understand and harness these technologies. So, for drug companies, what seems like random events might actually be only perceived ambiguity driven by gaps in information and expertise.

By broadening their scope of understanding, companies can potentially exert much greater control over their environment than they think. They can do so by infusing relevant knowledge and capabilities from adjacent and other industries into the organization

The Nuances of Ambiguity

to forecast the future. Some go as far as using this knowledge to cause disruption—as it seems Amazon has done by combining cloud and mobile technology with retail, and Novo Nordisk with pharmaceuticals and medical technology.2

In fact, science and technology companies that thrive often operate on the leading edge of innovation by challenging the prevailing paradigm without regard to the origin of invention. In other words, they often will challenge their own technology as fiercely as they challenge the technology of their competitors. Consider the experiences of two groups of companies, each of which has managed ambiguity to differing degrees (see Figure 2).

Enduring Companies Some companies seem to have been extremely adept at operating in a highly ambiguous environment and have endured through business cycles and countless disruptions.

Over the years, General Electric has evolved into many businesses, some of which have very little to do with GE’s genesis as an electricity company. But time and time again, through various stages of enterprise transformation, GE has been able to reinvent itself, enter new spaces, develop new science and new technology, and in many cases become a leader in the segments in which it competes.

When discussing ambiguity, we acknowledge two of the more critical nuances. First, understanding the distinction between perceived and real ambiguity is one key to effectively managing in highly volatile environments. Second, ambiguity can be viewed as a challenge that needs to be actively managed to defend against disruption or used offensively for a powerful competitive strategy.

Medtronic is one of the leading medical device companies in the United States—the firm has increased its revenue at a nearly 10 percent compound annual growth rate for the past decade by transforming itself, even if it meant threatening its core business.3 Says Bill George, former CEO of Medtronic: “As we grew, I knew it would be very difficult to continue to create the breakthrough innovations that had led to Medtronic’s high growth rate, which had exceeded 18 percent per annum for a decade.” Genentech was one of the first biotechnology companies, and was credited with the first companion diagnostic, which was Herceptin, Genentech’s drug for HER2 (human epidermal growth factor receptor 2—an aggressive form of breast cancer) that was approved in 1998.4 To this day, Genentech is considered to be one of the leading innovators in the field of life sciences.

3M has brought many innovations to market and appears able, on a sustainable basis, to disrupt the market and evolve its business accordingly. And Apple recovered from a near-death experience by transforming itself beyond just a computing company, becoming the most valuable firm in the world by market capitalization.5

Fading CompaniesContrast the preceding with other science and technology companies that, although successful in bringing to market great products that often created new industries, arguably failed to see the need for enterprise transformation and were thus not as adept at managing and adapting to ambiguity as it arose and, consequently, had far less staying power.

Palm popularized the PDA, the precursor to today’s ubiquitous mobile devices. Zenith was best known as an American television manufacturer, but prior to television the company was a leader in transistor radios and developed the first TV remote control.

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Figure 2. Companies’ Ability to Manage Ambiguity Can Dramatically Affect Their Fortunes

First home video gaming console and started the console market

• Created first-of-their-kind products and controlled their respective markets

• Myopically focused on core strategy during market disruption and resisted cannibalizing their existing business

• Rendered obsolete by technology changes and no longer exist

• Established market leadership positions

• Faced market and technology disruption and/or near-death experiences

• Adapted and reinvented themselves to maintain market leadership position and to continue to innovate amid evolving markets

Magnavox

Popularized the PDA and started the market for portable computing devices

Palm

Developed Lipitor, the highest-selling pharmaceutical product ever

Invented transistor radio and brought the first remote control to market

Zenith

Trailblazers who faded Innovators who endured

Pharmacia

Established by Thomas Edison in 1890 to commercialize his incandescent electric lamp

GE

Created first cardiac pacemaker and implantable defibrillator and remote monitoring/disease management service tied to an implantable device

Medtronic

Pioneered a new field called recombinant DNA technology

Created first personal computer with a GUI and nearly collapsed as a company before reinventing music players and mobile phones

Apple

Invented Scotch Tape, Post-it Notes and more than 55,000 products since 1902

3M

Genentech

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Pharmacia developed Lipitor, which holds the record as the highest-selling pharma-ceutical product in the history of the industry, but the company was bought by Pfizer, effectively missing an opportunity to capitalize on a winning product as a standalone company. In fact, none of these companies exist on their own today.

Companies at a CrossroadsAnd then there are the companies in the middle. Many of these firms operate in industries that are being disrupted in significant and profound ways. They are at a crossroads, facing the need to make some hard decisions about how they’re now going to deal with and respond to those disruptions, which often involves an enterprise transformation that will fundamentally challenge and necessitate change to their existing business model and operating model.

On this list are many life sciences companies, whose businesses are being disrupted by a multitude of factors, including changing competitive dynamics with generic entrants, the rise of smaller companies using drug discovery disruptions such as systems biology, predictive biomarkers and in silico modeling, and business model disruptions such as pay-for-performance instead of product-orientation. Many of the underlying economics of the industry are changing around these companies, yet because of “core rigidities”—or their overreliance on established rules and processes—some traditional life sciences companies struggle to transform their businesses even in the face of strong indicators that say they must. This is why many of the real innovations in life sciences today are being developed by what can viewed as more agile companies that are not handcuffed by an ingrained way of doing business.

Furthermore, life sciences companies seem to be grappling with a new emerging ecosystem defined by the convergence of medical devices, traditional pharmaceuticals, software and data, which will likely unveil entirely new approaches to patient care and the need for new business models. What is to stop a start-up enterprise from integrating existing therapeutic, diagnostic and care management “components” with world-class mobile and cloud technology to deliver compelling and measurable health outcomes?

Energy companies are seen to be in similar predicaments. As the world increasingly becomes more focused on “clean” sources of energy, the companies that have traditionally defined themselves as being in the business of oil and gas must fundamentally rethink what they are and what businesses they should be in. The underlying science and technology—carbon- based fuel sources—that have driven them in the past may not be successful for them in the future. For example, one of the near-term disruptions here is the emergence of nonconventional fuels (such as deep-water petroleum and “tight oil” derived from shale). However, costs to produce clean energy (such as solar and wind) are falling and innovative business models are taking shape to distribute the electricity generated from those sources.

Many high-tech companies, as well, appear to be facing critical crossroads. The Internet is maturing and giving rise to cloud technologies that are disrupting the traditional personal computing ecosystem, thus challenging every element of their business. The basis of competition in processors is shifting from high-performance CPUs to self-contained, efficient application processors with multiple capabilities bundled on a single chip. Dominant operating systems standards that large enterprises would dictate to consumers are being challenged by new mobile operating systems that are overtaking the enterprise and consumerizing IT. Multi-capacitor touch screens are enabling tablet computers that are evidently reshaping customer expectations and creating new-use cases, such as the ability to virtually simulate any musical instrument for less than the cost of a cup of coffee.

Furthermore, the blurring of the lines between hardware, software and network technologies is arguably resulting in a more tightly integrated “superstack”—which, in turn, is often rendering the typical electronics and high-tech company’s siloed approach to the market inadequate. And new markets are being created by continuous device interaction through the use of improved wireless technologies and mobile devices—which is disrupting the market structure and value chains and, consequently, can both threaten the existence of established companies and create new opportunities.

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The clear message is this: While most companies may view ambiguity and disruption as threats, enduring companies appear to master these powerful forces and use the challenge as a transformative opportunity to reinvigorate their enterprise—by differentiating between false and perceived ambiguity to anticipate, or better yet, cause disruption. Companies at the crossroads, while facing major challenges to their business, can learn much from these leaders, including the attributes that have helped them endure through years of ambiguity and remain at the top of their game.

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Predictive InsightEnduring companies are seen to excel in identifying impending trends and proactively investing in the right science and/or technology, with the right amount of investment, at the right time.

As mentioned earlier, much of the ambiguity companies experience may actually be perceived ambiguity due to a lack of the right information or knowledge. Companies that have succeeded have capabilities that enable them to deeply understand the ecosystem in which they operate—who the players, competitors and potential entrants are; these companies’ capabilities and strategic moves; and the implications for their own businesses. They also often have a set of well-articulated and broadly understood scenarios and an alert system to inform them which scenario is likely to materialize. Furthermore, successful companies often incorporate the thinking and key trends from other industries and adjacent markets that may converge with their own market, and are led by executives who keep a constant eye on market evolution in the near, medium and long terms and act objectively and decisively to navigate an ambiguous environment.

One of the best examples of a company with strong predictive insight capabilities is Shell. Shell has been extremely adept

The Characteristics of Enduring Companies

at identifying market drivers, points of uncertainty, potential future scenarios, and triggers or alerts. This ability has enabled it to transform its enterprise to prepare for the future and create an organization agile enough to respond as that future unfolded.6 Today, Shell sits atop the Fortune Global 500 list with more than $484 billion in revenues and $30.9 billion in profits.

Focus on Customer ValueEnduring companies tend to maintain an intense focus on the customer and how that company is solving a need from the customer’s point of view—where the customer need defines the solution, rather than the technology. Successful companies often have great clarity on the customers they serve, the customers they do not serve, and the problems they can uniquely address.

For example, it may seem counterintuitive for science and technology companies to forego the primacy of their technology. It’s easy for them to fall into the trap of seeing themselves in narrow, insular terms—as evidenced by such statements as “We are a software company. We don’t do hardware.” or “We’re a small molecules company. We don’t do large molecules or biotechnology.” In defining themselves this way, these companies are tying themselves to a specific technology or class of products, which history shows makes them vulnerable to disruption.

We have identified six attributes that we believe are significant elements of the core to the success of enduring science and technology companies (see Figure 3). We consider these attributes to be foundational, infused deeply into these companies’ business models and operations, and embedded in their anatomy. They are ingrained in how enduring companies do business.

But in defining themselves not by their science or their technology but rather by the customers they are trying to serve and the problems that they are trying to solve, successful science and technology companies can gain a sense of identity that is based on a customer need, helping them to transform their enterprise into being far more agile in how they embrace new innovations or disruptive maneuvers to address that market need—for example, “We enable children and their caretakers to treat diabetes.”

Amazon is another great example of a company that has undergone an enterprise transformation. Amazon’s mission is to be Earth’s most customer-centric company where people can find and discover anything they want to buy online.7

This means that if it wants to serve the retailing needs of customers, Amazon should be open to expanding into areas that position it to meet customers’ demands. For instance, Amazon realized that customers could benefit from digital books—they make it possible for people to easily carry around entire libraries, are searchable and shareable, are quick and easy and for the moment cheaper to buy, and can be easier to back up and access. But digital books required a portable reading device that would create a more seamless experience and allow customers to focus their time on browsing the bookstore and enjoying their books rather than figuring out file formats and how to link one device to another. So Amazon built the Kindle. Since the device’s release, Amazon has sold millions of Kindles (more than 17 million in 2011, according to IDC, a leading provider of global IT research and advice8). But more importantly, the Kindle is believed to have

Figure 3. Six Characteristics of Enduring Companies

Source: Accenture 2013

Routinely monitor the ecosystem and forecast potential disruptions

Predictive insight

Embracing the customer need as the primary focus with technology as secondary

Focus on customer value

A singular core model for creating value that is reinforced by supporting business model and aligned with the ecosystem

Methodical approach to make deliberate decisions to balance the short-term with long-term need to endure

Disciplined investment

Make decisions and get on with it and be prepared to adaptAgility

Create a culture that rewards risk-takingCourage

Coherent business model

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driven massive growth in Amazon’s e-books: Since May 2011, Amazon has sold more e-books than print books (hardcover and paperback combined).9

Another example is Novo Nordisk. This leading life sciences company early on made it clear that it was not a drug company, but rather a company that “treats diabetes.” Such a problem-centric definition made it easier for Novo Nordisk to pursue many different products, technologies and solutions to the diabetes problem, whether they included disposable insulin pens that enable patients to take insulin more easily, or social media-driven programs that provide information and support to help people live with the disease.

Highly customer-centric companies share a number of common characteristics. Among them is an adamant belief in maintaining a feature important to their customers despite their partners and suppliers wanting them to eliminate it (Amazon, for example, stood firm in its bid to offer customers space on its website to provide unfiltered, and often negative, reviews of products in the face of Amazon’s partners’ threats to stop selling products on the site if that feature were maintained).10 And rather than creating what their customers tell them they want, they try to determine what the customer truly needs but may be unable to articulate.

Coherent Business ModelOver time, most large companies develop an array of products and services aimed at different customers with varying needs. They typically find themselves operating a diverse set of business models—such as a subscription business, a hardware business, and a service business—all at the same time.

But optimizing on all of these business models simultaneously is simply not realistic for many companies, as internal competition among different parts of the organization can leave the firm vulnerable to competitive disruption. Do we make our margin on the hardware and give away the software? Do we give away the hardware to gain new subscribers? Are free services the way to gain website traffic and drive our advertising business?

Many enduring companies tend to avoid these conflicts by creating a coherent business model that reinforces a single outcome. Although these companies operate in multiple businesses, it is clear that one business has primacy. For Apple, it’s hardware that drives profits. For Amazon, it’s retail and content. When companies develop such a coherent business model, they can more easily understand their role in the industry and what businesses they should be in so they can more effectively focus on serving their customers and innovating on their behalf.

With the market-leading Kindle, Amazon introduced a device that essentially is a mobile bookstore. However, importantly, while the Kindle puts Amazon in the hardware business, the company is selling that hardware at a loss to optimize for its core content/retail business.11 It is not just another product it sells, it’s a core element of a larger ecosystem—including content, digital products, subscription services for media, social networking/sharing, and apps— that may be generally viewed as key to Amazon’s success. Without this ecosystem (especially the content), the Kindle might be just another of many e-readers on the market.

When companies develop such a coherent business model, they can more easily understand their role in the industry and what businesses they should be in so they can more effectively focus on serving their customers and innovating on their behalf.

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In the pharmaceutical industry, a coherent business model can help companies respond to a fundamental shift the industry is undergoing, from products or pills to outcomes. For instance, a pharmaceutical company focused only on controlling hypertension must often do more than just produce blood pressure drugs to be relevant. It now faces market pressure to provide a broader solution that delivers the ultimate outcome—for instance, by possibly adding a mobile device that monitors a person’s blood pressure in real time and then sends that data to a central service for analysis. If the analysis shows the drug is not working as well as it should, or that the person isn’t taking the drug according to prescription, the company can intervene accordingly. Achieving success in such an outcomes-focused environment may require fundamentally different business models that require an enterprise transformation.

Disciplined InvestmentManaging investments across the volatility spectrum can require a disciplined approach that augments the traditional approach in at least three ways.

First, many enduring science and technology companies tend to think broadly about their portfolio of R&D investments and consistently dedicate some portion of their portfolio to efforts that are in the ambiguous portion of the spectrum (through such mechanisms as dedicated research units, venture capital funds and incubators). When creating such R&D groups that are effectively detached from the rest of the business, companies may wish to establish mechanisms that both protect early-stage investments from heavy commercial pressures and keep those efforts aligned with the broader strategic roadmap.

Second, many enduring companies typically use distinct analytic techniques to inform investment decisions related to each part of the volatility spectrum. For instance, an ROI metric strictly based on future cash flows may be appropriate for informing investments in stable or uncertain environments; however, ROI might not be appropriate as the primary factor in making decisions on highly ambiguous early-stage efforts. In fact, relying solely on ROI can spell a death sentence for science and technology companies, as it could likely screen out the projects that may drive the next market disruption.

More sophisticated analytic approaches might be required to assess early-stage efforts, which brings us to the third way in which enduring science and technology companies augment their investment decisions. These companies generally recognize that R&D investments first result in intellectual assets that provide “optionality” that is later converted to cash. In other words, many enduring companies think about value in two parts. First, is the company investing in the right markets and technologies (are we doing the right things?), and second, is the company converting the output of its investments to value (are we doing things right?).

They then split the concept of value further into two different outcomes: intellectual assets, such as patents and know-how; and the money that intellectual assets have generated for the company. Splitting the value equation thusly, a company can assign value to something that may not directly contribute hard dollars to the top line (either immediately or ever) but may be a critical asset nonetheless that has value in terms other than financial (for instance, a patent that allows a company to defend a critical part of its business or a specific skill set that is unique and hard to find).

Relying solely on ROI can spell a death sentence for science and technology companies, as it could likely screen out the projects that may drive the next market disruption.

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Many less successful science and technology companies share a common experience: They “saw what was coming,” but may not have acted appropriately.

By taking a more sophisticated approach such as this to assessing value, enduring companies seem to have a more complete and accurate picture of the value they are capturing from their R&D investment (especially when it comes to more ambiguous pursuits that may not have monetary payoffs but whose contributions are valuable in less tangible ways).

AgilityMany less successful science and technology companies share a common experience: They “saw what was coming,” but may not have acted appropriately. These companies predicted disruptive changes in their industry that would dramatically alter their markets and the need for their existing products— and in some cases, were themselves the source of those changes. One of the problems was, their operating model may not have been sufficiently agile and, in fact, may have prevented them from acting on that knowledge to make the necessary changes through an enterprise transformation that could have reoriented their business toward capitalizing on the emerging trend or disruption.

Kodak invented digital photography, and the company seemed to have a good sense of who its customers were and the problems the company was trying to solve. But it has been asserted that, even though it knew digital imaging was the technology of the future, Kodak was generally thought to be hamstrung by its core rigidities. The company, it is argued, was unable to redirect itself from being a film company based on chemical engineering to a digital photography company based on electrical engineering in a timely fashion.12

Companies generally nowadays cannot afford to rest on their laurels, and should not only be cognizant of their core rigidities, but also challenge them regularly to avoid getting locked into “the old way of doing things” and potentially missing out on new opportunities to expand the business. Often this can mean creating and investing in new ventures or smaller autonomous units to explore new technologies and businesses that may disrupt the core business.

CourageThis attribute is difficult to quantify but perhaps one of the most important for many enduring science and technology companies. Having courage at scale, in essence, is a cultural attribute. Companies with it tend to encourage, accept and reward innovation and risk taking. They are not afraid to disrupt their core business and transform their enterprise to invest in the next wave of their market’s evolution. Companies that survive consistently through major disruptions respect the sheer power of technology disruption and exhibit humility about their present dominance. They might make bets on science, technology or market trends that are still quite ambiguous and, consequently, unproven. That takes a lot of courage, as it often can mean cannibalizing or even abandoning products or lines of business that contributed greatly to the company’s success in the past. Courage is at the center of the motivational impetus it takes to realize a forceful transformation of the enterprise to fit the times. It can be a clear differentiator between companies that sustain success and risk-averse organizations that fumble away promising opportunities.

Courage and boldness can also require leaders who personally champion the mindset, as well as an infusion of risk taking in the talent and organizational culture. For instance, Medtronic’s leadership supported a new business unit that was focused on reinventing mainstream coronary artery bypass surgery. People in Medtronic’s core business found this new venture threatening. The CEO at the time, Bill George, told his executives “if we don’t make these innovations, our competitors will.” And the organization supported these potentially threatening ventures.13 Medtronic’s courage to take risks and explore opportunities out of its comfort zone is arguably a major factor in the company’s ability to sustain its growth for more than 50 years in a notoriously volatile industry.

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Many companies that do this well continually reinvent themselves and their offerings to stay steps ahead of customers’ needs and competitors’ actions—and consequently might often enjoy robust, consistent growth over time. Those that do it poorly typically are unable to follow up their initial successes with other products that customers enthusiastically embrace, and may end up either becoming less relevant over time or disappearing from the scene entirely. Leading science and technology companies are not afraid and should not be afraid to transform their enterprise in the wake of ambiguity—and those who successfully do so, endure.

Conclusion

For companies facing ambiguity, the time is now to embrace the attributes that enduring companies embody. While doing so won’t guarantee they become the next GE, 3M, Novo Nordisk or Apple, it can help position them to take better control of their future, unleash their own disruption onto competitors, and create a more sustainable pipeline of compelling and desirable products.

While most companies—like organisms—might prefer equilibrium and a sense of stability, they are likely to find these in short supply in today’s world. Indeed, for science and technology companies in particular, volatility is the name of the game, and their ability to control and even influence volatility can play a major—often deciding—role in their staying power.

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1 R&D Magazine, “2013 Global R&D Funding Forecast,” December 2012, http://www.battelle.org/docs/default-document-library/2013-R-and-D-Funding-Forecast.pdf?sfvrsn=4

2 Novo Nordisk Press Release, “Novo Nordisk and LifeScan announce diabetes partnership,” June 5, 2001, http://www.novonordisk.com/press/news/news.asp?sNewsTypeGUID=&lMonth=0&lYear=0&sLanguageCode=en-GB&sSearchText=&sShowNewsItemGUID=f7778989-fb3e-46fb-bfca-416a6e824883&sShowLanguageCode=en-GB

3 Bill George, “The Idea That Led to 10 Years of Double-Digit Growth,” Harvard Business Review, November 1, 2012, http://blogs.hbr.org/hbsfaculty/2012/11/this-article-led-to-10-years-of-growth.html; Medtronic SEC filings, 1994-2012.

4 Celia Henry Arnaud, “Diagnostics-Drugs Pairings Advance Personalized Medicine,” Chemical & Engineering News, July 23, 2012.

5 Philip Elmer-DeWitt, “Apple overtakes Exxon. Most valuable company once again,” August 2, 2013, http://tech.fortune.cnn.com/ 2013/08/02/apple-exxon-market-cap-2/

6 Peter Schwartz, The Art of the Long View: Planning for the Future in an Uncertain World (Doubleday, 1996).

7 Amazon.com, Company Facts, March 2013, http://phx.corporate-ir.net/phoenix.zhtml?c= 176060&p=irol-factSheet

References8 Tom Mainelli, “Worldwide and U.S. eReader 2012-2016 Forecast Update: December 2012,” Doc # 238740, December 2012.

9 “Amazon.com Now Selling More Kindle Books Than Print Books,” May 19, 2011, http://phx.corporate-ir.net/phoenix.zhtml? ID=1565581&c=176060&p=irol-newsArticle

10 Jeffrey P.Bezos, “2003 Letter to Shareholders,” Amazon, 1997, http://media.corporate-ir.net/media_files/irol/97/97664/reports/2003_%20Shareholder_%20Letter 041304.pdf

11 A. Rassweiler, “Amazon Kindle Fire Costs $201.70 to Manufacture,” iSuppli, November 18, 2011, http://www.isuppli.com/Teardowns/ News/Pages/Amazon-Kindle-Fire-Costs- $201-70-to-Manufacture.aspx

12 Henry C. Lucas Jr. and Jie Mein Goh, “Disruptive Technology: How Kodak missed the digital photography revolution,” Journal of Strategic Information Systems (2009): 18, 46-55. Doi:10.1016/j.jsis.2009.01.002.

13 Bill George, “The Idea That Led to 10 Years of Double-Digit Growth,” Harvard Business Review, November 1, 2012, http://blogs.hbr.org/hbsfaculty/2012/11/this-article-led-to-10-years-of-growth.html; Medtronic SEC filings, 1994-2012.

For more information on how Accenturecan help your organization achievehigh performance through enterprise transformation, contact the authors:

Michael V. Peterson is the global lead for the Accenture Enterprise Transformation Strategy group. He is based in Chicago.

michael.v.peterson@accenture.com

Reza Firouzbakht is a senior principal in Accenture’s Digital Business group. He is based in Seattle.

reza.firouzbakht@accenture.com

Amrita Kimmi Grewal is a senior manager in Accenture’s Enterprise Transformation Strategy group. She is based in Austin.

amrita.k.grewal@accenture.com

About the Authors

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About AccentureAccenture is a global management consulting, technology services and outsourcing company, with approximately 275,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com.

About Accenture Management ConsultingAccenture is a leading provider ofmanagement consulting services worldwide.Drawing on the extensive experience of its17,000 management consultants globally,Accenture Management Consulting workswith companies and governments toidentify and deliver value by combiningbroad and deep industry knowledge withfunctional capabilities to provide servicesin Strategy, Analytics, Finance & EnterprisePerformance, Marketing, Operations, RiskManagement, Sales & Customer Services,Sustainability, and Talent & Organization.Its home page is www.accenture.com/consulting

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