07/12/2010 04:36 pm ET | Updated May 25, 2011

Insights on Doing Both: A Conversation With Inder Sidhu, Part 2

This week, I am sharing some common questions and answers about doing both. Today, let's talk about companies that benefit from doing both--and those that struggle without it. Then I have some advice for those of you who want to get started with this approach. I hope you will comment or Tweet with your thoughts and additional questions.

What companies are following the doing both approach?
Not surprisingly, many of the companies that are prevailing in the market today are doing both. Apple simultaneously introduces new business models--take the iTunes music store, for example--and fine-tunes existing ones, such as its iterative improvements to the iPod music devices.

Then there is General Electric (GE)--an organization that has increased its footprint in established countries while pursuing opportunities in emerging countries. GE Medical tried to sell imaging products developed in the West in China. But they were too expensive. It had a team of engineers in China develop products for the local market, with great success. These lower cost innovations have since been exported to established countries, where they are now sold as alternatives to GE's more feature-rich offerings. By sharing innovation across borders, GE realizes a force multiplier effect from doing both. Cisco is seeing the same results in its engineering labs, as disruptive and sustaining innovations produce transformative value--together. To ensure that its breakthrough TelePresence solution gained market acceptance, for example, Cisco had to make it easy to use. So the company turned to Call Manager--a sustaining innovation that it developed to run phone calls over the Internet. With this, a sales director in New York can host a live meeting with a customer in Shanghai with just the touch of a button.

What happens to companies that don't do both?
I argue that companies often "stick to their knitting" when they cannot solve difficult challenges, such as developing new business models while fine-tuning existing ones. Had Blockbuster succeeded at doing both--nurturing its legacy brick-and-mortar business model and building a new one for online rentals--it wouldn't be teetering on the brink of bankruptcy today. Doing both can help sustain an organization through difficult times and magnify its successes in good times. But it compels leaders to embrace that which comes naturally and that which often does not. That calls for awareness and courage, not indecision.

How are most leaders trained to deal with tough choices?
Most leaders are taught to be strong, focused, and disciplined. When sizing up a new opportunity or assessing a competitive challenge, they instinctively narrow their scope. There's nothing wrong with being focused, of course, except when it creates conditions that prevent leaders from seeing alternatives or taking prudent risks.

Leaders miss opportunities for profits and growth when they choose alternatives or compromise in their decision-making. Today's market dynamics require additional strengths--flexibility, for example. More progressive organizations are training decision makers to recognize that there are steep consequences to making poor tradeoffs. There's an opportunity cost associated with the option not chosen, among other things. Smart organizations overcome this by training their leaders to see beyond the norm and pursue multiple objectives simultaneously.

How do you suggest people get started with doing both?
To do both, you should reconsider how you make decisions and ask yourself some questions: Why do I do things a certain way? What options have I failed to consider? What opportunities am I missing?

Think about the last time you struggled between two good alternatives. Maybe you chose to lower costs rather than increase quality. Or perhaps you opted for green manufacturing at the expense of higher profits. Now think about the opportunity cost of the option you didn't choose.

Better quality might have improved your customer satisfaction. And higher profits could have been invested back in the business--perhaps even toward sustainability initiatives.

The first step in doing both is recognizing--and refusing--false tradeoffs, and then finding the complementary elements that create the multiplier effect.

Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco, and the author of Doing Both: How Cisco Captures Today's Profits and Drives Tomorrow's Growth. Follow Inder on Twitter at @indersidhu.