How to Reinvent Your Company Without Starting Over

Reinventing a company without starting from scratch can be a daunting task, yet it is often necessary when technological, regulatory, and societal shifts change the competitive landscape. Two prominent examples of companies that successfully reinvented themselves are Ørsted and Microsoft.

Ørsted, once a major player in the oil and gas industry, found itself under pressure from volatile fossil fuel prices and growing public opposition to new coal-fired power plants. The company, initially known as DONG Energy, recognized that its traditional business model would not be viable in the long run, especially given the global energy transition towards renewables. Ørsted's leadership discovered that its deep capabilities in large-scale infrastructure engineering, complex project development, and operating in harsh marine environments were transferable to the offshore wind sector.

This realization formed the basis of Ørsted's "85/15 Black-to-Green" strategy, which shifted its portfolio mix to 85% renewables and 15% fossil fuels. By leveraging its existing infrastructure expertise, Ørsted was able to scale its offshore wind business and achieve significant growth within a decade.

Microsoft, on the other hand, faced a lost decade after failing to adapt to the mobile revolution and making an ill-fated acquisition of Nokia's devices and services business. The company, however, retained its trust and strong relationships with enterprise customers, which became the foundation for its reinvention. Microsoft's deep kernel was its enterprise business capabilities and its products, which were in nearly every Fortune 500 company.

This core competency served as the anchor for Microsoft's growth story, leading to a tenfold increase in its valuation under CEO Satya Nadella.

In both cases, the companies did not build from scratch or simply protect their core business. Instead, they discovered a deep, embedded capability within their organization - what we call "kernels of reinvention." These kernels are powerful anchors around which new businesses can be built, repurposing existing resources for a fundamentally new strategic purpose.

Successful reinventions do not typically arise from wishful thinking about legacy assets, but rather from recognizing deep, hard-to-see capabilities that enable the company to transition into a new market or industry.