How can one successfully transform a business? Let’s look at one of the most dramatic and successful business transformations in recent history: Microsoft’s creation of the Xbox in 2000. How is it possible that a giant like Microsoft, totally focused on software and with business clients and productivity applications its stronghold, decided to dive into a world of hardware, young consumers, and entertainment?

How did it happen that Microsoft developed a totally new platform, the Xbox, with an operating system that was incompatible with Windows, its incumbent core technology?

Roberto Verganti from MIP Politecnico di Milano and Rami Shani (at MIP and California Polytechnic University) have discovered that the story of the Xbox resembles the typical dynamics of breakthrough movements in art and science, such as impressionism or the Viennese school of psychology: the key role is played by a small circle of radical thinkers, i.e. a Radical Circle. This is a small group of peers, not formally related to one another within the organization, but who are directly exposed to changes in context and therefore start to feel a malaise with the current business direction. Rather than proposing a new radical vision to their top executives (their pitch would undoubtedly fail, since their revolutionary viewpoint would certainly not be recognized or supported), these radicals start to work autonomously (often secretly) for a while. Once they emerge, their vision is so robust and powerful that it can withstand their harsher opponents, and can be more easily grasped by others. Verganti and Shani illustrate how a Radical Circle works, and how you can create your own.

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