If you don’t negotiate the tricky balance of disrupting your own business while simultaneously nurturing your core, someone else will surely perform the disruption part for you.
Even with the most established brands, disruption is frequently business as usual. In October, Proctor & Gamble announced it would shed its Duracell battery business to Warren Buffett’s Berkshire Hathaway for $4.7 billion in Proctor & Gamble stock. Duracell goes all the way back to the 1920s, when scientist Samuel Ruben teamed up with businessman Philip Rogers Mallory to form the company.
The private equity firm Kohlberg Kravis Roberts picked up Duracell in 1988 for $1.8 billion before it was passed on to Gillette in 1996 for a whopping $7 billion. And why not? Duracell batteries are used in all sorts of popular gadgets, from toys and personal CD players to digital recorders and cameras. As recently as 2008, the “CopperTop” battery was ranked 88th on Bloomberg Businessweek’s top 100 brands with a valuation of $3.68 billion. That put it ahead of Smirnoff and powerhouse luxury automaker Lexus.
But growth stalled, necessitating the spin-off. Duracell was felled by smartphones, of all things. iPhones and Android phones have three of those gadgets that Duracell powers right on board — four if you count games and apps that operate remote control toys. And perhaps more importantly, smartphones don’t need replacement batteries.
Disruption came out of left field for the CopperTop. True, Duracell has forged a pact with Powermat, an Israeli firm that markets wireless charging and backup batteries for smartphones and tablets. Regardless, it’s still a steep value crest to scale in order to reach that ’90s value high. Which proves a point: If you don’t negotiate the tricky balance of disrupting your own business while simultaneously nurturing your core, someone else will surely perform the disruption part for you.