In our crazy world of blind-side disruption, it’s time for business leaders to learn a lesson from the military: Create a Red Team. Take a group of your very best people, send them somewhere away from the rest of the company, and assign them to write the business plan for killing your business. The only rule is that their plan must be legal; they’re free to use their knowledge of the company and to be as unconventional and disruptive as they like; and they’re unburdened by any existing assets, internal rules, or culture.
This morning’s news underscores not just the increasing threat of disruption, but also the reality that it’s happening far beyond the world of infotech. Exhibit A is a Boston-based biotech startup called Intarcia Therapeutics, which has just announced results of a test of its new drug for Type 2 diabetes. As Fortune’s Dan Primack reports – and as Intarcia CEO Kurt Graves explains in a video with Dan – those results appear to show Intarcia’s drug outperforming Merck’s Juvania, the world’s No. 1 oral diabetes medication, with gross sales of $6 billion. Instead of being taken orally or by injection, Intarcia’s drug uses a radically non-traditional approach, being delivered continually for up to a year by “a matchstick-sized osmotic pump that is implanted during a one-minute outpatient procedure,” Dan reports.
Why has Coca-Cola just bought a minority stake in an organic juice company called Suja? Because Coke, in classic incumbent behavior, has focused too much on protecting its legacy business and not enough on embracing consumers’ new tastes. The company has performed well under CEO Muhtar Kent, but for 20 years it has been too slow to accept consumers’ move away from carbonated soft drinks and, more recently, their growing rejection of Big Food.
There’s an old saying that people need banking but they don’t need banks. Ex-banker Michael Cagney understood that fact when he started Social Finance (known as SoFi), an online firm that just raised new funding that values the company at $4 billion – which would place it among America’s 30 most valuable banks, the Wall Street Journal reports. Except it isn’t a bank. At first it specialized in refinancing student loans using non-traditional standards of creditworthiness, such as the prestige of the borrower’s university; then it moved into personal loans for high-earning professionals. Cagney says everything the giant banks do is vulnerable. J.P. Morgan Chase CEO Jamie Dimon has said, “Silicon Valley is coming after us.” He’s right.
All the big incumbents threatened by the disrupters in today’s news would have benefited from the Red Team exercise. But nobody, big or small, is safe. In this morning’s article on SoFi and other fin-tech startups, the Journal notes, “Analysts and investors have expressed concerns including whether growth can keep up amid competition from even newer upstarts…” Even disrupters need Red Teams.
What We're Reading Today
A bold bet on a diabetes drug...
...could propel startup Intarcia Therapeutics into direct competition with Merck's $6 billion pill. New tests show significant improvement over Merck's Juvania, and, pending FDA approval, Intarcia's drug could be on shelves as early as 2017.Fortune
JPMorgan, Goldman, Morgan Stanley team up
The Wall Street banks have united to build a company that pulls together and cleans data that their employees use for trading. WSJ
Satya Nadella ushers in 'Windows as a service' era
It's a dramatic shift in thinking at Microsoft, one that has required the undoing of many of Steve Ballmer's plans, paring back hardware goals and writing off Nokia. But it's in an effort to make Windows work across all screens. Knowledge@Wharton
With Jared Fogle pleading guilty to child porn charges...
...Subway has to find a way to erase his memory from their ads, even though viewers have connected him to the sandwich chain for over 15 years. The crisis comes at a particularly tough time for Subway. NBC News
China unravels political connections that led to the Tianjin explosion
Two large shareholders in Rui Hai, the company involved in the explosion, have admitted to using political connections for government permits to build the factory near apartment buildings. NYT
North and South Korea exchange fire
Tensions have been high in recent weeks as South Korea blames the North for two landmines that exploded in a demilitarized zone, injuring two soldiers. CNN
Building a Better Leader
Tech workers are richer workers
But they're also less happy. USA Today
Making the rounds before taking the job
Target Corp.'s new CFO, Cathy Smith, who will start in September, took a trip to 65 stores across ten states (with her family along for the ride) before accepting the position. WSJ
The number of women-owned businesses is growing
Women owned 9.9 million businesses in the U.S. in 2012, according to the most recent Census data, says the National Women's Business Council in a new report. That's up 27.5% from the previous analysis in 2007. Fast Company
One way to win over your board of directors
Learn their biases. We all have them, and when directing a company, your board has strong opinions about how it should be run. SmartBrief
Startups' Strong Showing
Suja gets juiced by Coca-Cola
The startup juice maker created by Jeff Church has sold a minority stake to Coca-Cola. Suja gains access to Coke's distribution channels, while Coke has been looking for ways to diversify from soda as consumers seek healthier options. Coca-Cola
SoFi jumps to the front of fintech
With a new round of funding, Mike Cagney's Social Finance Inc. raised $1 billion, at a valuation of $4 billion. It places the company ahead of other startups in the space that are looking to wrestle customers away from traditional banks. WSJ
Fresh off FDA approval for the first female libido drug
The privately held Sprout Pharmaceuticals has agreed to merge with pharmaceutical company Valeant in a $1 billion deal. Reuters
Up or Out
Time Warner lifts Priya Dogra to vice president for mergers and acquisitions. She will lead the company's deal strategy and purchasing worldwide. NYT
Fresh off selling his transactional advertising startup to Visa for $116 million, Alex Rampell will join VC firm Andreessen Horowitz as a general partner. Fortune
Qualcomm's senior corporate communications manager, Michael Copeland, died in a plane crash this past weekend. He was 55. CNN Money
Fortune Reads and Videos
Women outside of tech...
…have a more difficult time leaning in. Fortune
Costco hit with class-action lawsuit
The suit claims the company knew about slavery practices on Thai shipping boats that caught shrimp sold in Costco's stores. Fortune
Google's new project phone could offer customization
And it shows that the company, now under the umbrella of Alphabet, will still look for creative solutions. Fortune
...just how much automobile companies are concerned about the much smaller, Elon Musk-run Tesla. Fortune
Today's Quote
“It was a very big bet, because it’s not the sort of things that companies like ours generally do. But it worked completely. It’s a dream come true.” - Kurt Graves, CEO of Boston-based biotech startup Intarcia Therapeutics. Fortune
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| Produced by Ryan Derousseau | |
| @ryanderous | |
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