My post several weeks ago on reinvention spurred a number of interesting offline conversations. The first of which was learning that Waste Management is undertaking a similar portfolio strategy to BMW in figuring out what their long-term sustainable business model is. Their blog discusses some of these businesses if you’re interested in reading more.

But the reason for revisiting the topic is that I told an incomplete story. The portfolio strategy I described works well for established businesses that are well-capitalized and have long-term time horizons. What about small and mid-sized businesses that live and die by their ability to generate current positive cash flow? Read more

Reinvention is hard. It’s an order of magnitude harder for companies successful in their industry, and exponentially harder for companies whose business depends on natural resources that are becoming scarcer and facing greater price volatility.

Nowhere is this more evident than in primary energy production – coal, petroleum, and natural gas. Exhibit A is BP. Despite an attempt, begun in the ’90s, to move “beyond petroleum”, BP quietly abandoned their attempts to reinvent their business by shutting down their flagship clean energy business, BP Solar, in 2011.

Yet energy companies need to reinvent their businesses with more urgency than most. I won’t make the full argument for why here, but in brief, it’s a combination of their “balance sheet” business model (i.e., their proven reserves are delivered to market, depleting their asset base) and increased pressure from many countries to de-carbonize their economy. Read more