What explains this paradox? Over time, incumbent companies have built up a reservoir of assets and routines and, unsurprisingly, they lean on those when responding to disruption, rather than staking out new terrain. This leads “Schneider is more than 180 years them down familar paths. They double down on efficiency. old. We started in iron and steel and They get defensive. now we are digital solutions for For example, as oil prices collapsed following supply- and energy, using automation. What demand-side innovations like new drilling techniques and we’ve learned is that there are two energy-efficiency technologies, companies in the Energy kinds of pivots: the pivots you sector focused heavily on reducing their asset and transaction initiate, which are good for the intensity. The value of fixed assets (measured as property, company, and the pivots the plant and equipment) relative to revenue averaged 207 percent in 2016; by 2018, this had fallen to 165 percent. environment imposes on you. Those Other industries, such as Infrastructure and Transportation are very painful. So our obsession in Services, sought to strengthen their defenses, increasing the the past 20 years has been to value of their intangible assets and building cash stockpiles. anticipate, to choose our pivots and The proven, familiar strategies may have served incumbents transform continuously as a well in the past. But they are not sufficient for prospering company.” through persistent disruption. There is a better path; an unconventional one that enables Jean-Pascal Tricoire companies to take charge of their own destiny, by Chairman and CEO, Schneider Electric courageously making what we call an innovation pivot. This is the way to truly change (not simply protect) their position, with long-term impact in mind. 12 BREAKING THROUGH DISRUPTION