Anti-disruption Strategy: A Few Thoughts

The leaders of large companies have many priorities, oftentimes competing. These could include projects from operational improvements, R&D investments, JVs, to M&As. I will posit the need for a well thought out Anti-disruption Strategy as a part of a balanced portfolio on the time and risk axes. The current macro environment with the projected slowdown will make it an imperative. The flip side of anti-disruption is innovation; so can we out-innovate disruption?

My career has been at the intersection of innovation and growth strategy in the climate-tech sector in the Fortune 100 companies and start-ups. I will anchor around this, acknowledging a similar case could be made for the other sectors, with tweaks.

One recent study showed that the venture investment in the climate-tech sector in the US was $56B in 2021 (Figure 1), almost 2x vs. 2020 and 8x vs. the decade prior. All together, this capital supported 1,611 deals across 6 sectors.

Figure 1: US VC investments in climate-tech startups (Source: SVB)

While impressive, let’s focus on one of the sub-sectors — energy storage, and have a global view. Figure 2 shows the geographical location of the select prominent battery start-ups. A disproportionate share of here is for the US-based companies. It’s not a surprise given that in 2021, $11B was invested in the sector in the US. According to one study, the total climate-tech investment in India between 2016–2021 was $1B. While on the rise, India is only one example of the global landscape on investment in innovation.

Figure 2: Global distribution of select battery startups (Source: BNEF)

Whether it’s a CEO of a company half way across the globe from the US in India or Japan; or halfway across the country from Silicon Valley; this presents unique opportunities and threats. Access to innovation and a thoughtful innovation strategy can give companies an unfair advantage.

An innovation strategy, in the present times is even more important as the access to innovation is getting leveled. For the sake of argument, let’s divide the corporate world in two: Technology companies (e.g. Alphabet, Microsoft) and Traditional companies (e.g. GE, Schneider Electric). Note that I’m not including the services sector here.

Historically, the Technology and Traditional companies, given their business models focused on different line items of the of P&L. Typically, Technology companies focusing on demand-side, while Traditional companies focusing on supply-side optimization. We are seeing the early indications of how these two worlds are not siloed, and the convergence will likely have significant implications on the business models and company’s growth. A few examples include Google focusing on solving food waste, Microsoft’s interest in concrete, or Schneider Electric’s vision to sell energy services. The list goes on. Not only will this remake the business models, but the savvy ones will also use innovation strategy to guide the course.

Tom Friedman predicted the flattening of global talent almost 20 years back. The current trends will make the case of access to innovation a key priority for the corporations, no matter where they are located. An explorer mindset with a risk adjusted, balanced portfolio of projects will serve well for the corporation’s growth trajectory and not get disrupted. Time to prepare and act is now.

I want to thank Dr Monty Alger for the inspiration and discussion of the themes in this article.

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Nitin Vaish

Decarbonization Solutions at Scale: Commercialization | Products | Investments