An adventure is a crisis you accept, and a crisis an adventure you refuse
Explorer Bertrand Piccard explains why leaders should motivate rather than convince, and know when to let go of what they think they know....
Strategy
The boomerang buccaneers
How established companies can create a successful spin-off and then bring it back home.
OPPO’s experiment with OnePlus offers a blueprint for established enterprises seeking to sustain performance through breakthrough innovation. Nongfei Pan outlines a four-step framework for replicating their success.
Rapid read:
- OPPO’s portfolio will likely evolve again, perhaps even with new spin-offs, as market conditions shift. Strategic renewal is an ongoing, cyclical process, not a destination.
- The Boomerang Innovation Pathway is a blueprint for exploration that enables large enterprises to cross the innovation chasm.
- The mainstream does not buy the technology; it buys the friction-free fulfillment of its need.
The thorns of structural change
How can large enterprises innovate to navigate business cycles amid profound structural change? This is one of the thorniest problems in management, and it’s littered with disaster stories. Buffeted by disruption, incumbents can see tectonic shifts unfolding yet find themselves trapped between two polarities: exploitation (deploying and defending core capabilities to safeguard performance) and exploration (pursuing untested waters for future growth).
Immediate pressures naturally take priority: managers direct resources toward what feels like the safe ground of exploitation. However, defending against disruption by doubling down on established advantages has nearly always failed. As Clayton Christensen demonstrated in The Innovator’s Dilemma, market leaders almost always lose to disruptive entrants: optimizing existing capabilities for core customers leaves them unable to adapt to new technologies.
Large organizations have an immune system, an in-built rejection mechanism that maintains the efficiency of core operations – a lethal barrier during industry transitions.
Kodak invented the digital camera but collapsed after prioritizing its legacy film business – a pattern repeated across industries from mobile handsets to enterprise computing. As Ma Huateng (known as Pony Ma), founder and CEO of Tencent, reportedly observed: “When a giant falls, its body is still warm.”
Attempts to pursue exploration through internal incubation often fail because they are smothered by the constraints of the parent company’s culture and systems. Nokia developed touchscreen smartphones internally years before the iPhone, but its dominant feature-phone business starved the nascent project of resources and attention. Teams at Intel working on mobile processors were sidelined by its PC chip division, and it missed the mobile computing era entirely.
Large organizations have an immune system, an in-built rejection mechanism that maintains the efficiency and routines of core operations. While protective during stable periods, it becomes a lethal barrier to innovation during industry transitions.
The competency trap
Think of the competency trap, first conceptualized by Barbara Levitt and James G March in 1988, and later expanded by Michael Tushman and Charles A O’Reilly in their work on organizational ambidexterity. Incumbents over-allocate resources to exploit cash cows and starve or reject the exploration of radical, unknown frontiers.
The headwinds facing in-house incubation have hampered smartphone makers for years. Sub-brands, such as Xiaomi’s Redmi, struggled to shed the ‘‘appendage’ tag in their early stages. Their supply chain and R&D were coupled to the parent company, meaning they had little upper wiggle room for pricing within the parent’s portfolio. Some achieved strong sales but remained sidelined as a gross-margin firewall and volume driver, thereby preventing meaningful premium growth.
To escape this immune system, some firms spin off units dedicated to innovation. This brings new challenges. Even if independent startups survive the early stages, they frequently hit a growth ceiling as they evolve from ‘niche excellence’ to the mainstream: they are unable to cross the innovation chasm. Constrained by scarce resources, they are particularly vulnerable to missteps in strategy, operations, or management. One error can trigger crisis and collapse.
Motorola conceived the Iridium satellite as an internal moonshot for global communications. It was spun off in 1991 to escape organizational inertia and pursue untested market potential. Technically, it succeeded in building a worldwide satellite network and proved its value in niche uses such as oceanic and polar expeditions. But when it attempted to expand into the mainstream, its exorbitant pricing proved terminal. Without Motorola’s balance sheet to absorb losses, the heavily indebted spin-off had almost no room for trial and error. It filed for bankruptcy a year after launch.
Why companies struggle to cultivate high-premium sub-brands in-house
In-house incubation of valuable sub-brands faces three barriers:
1 – The minimum order scale bias
MOQ (minimum order quantity) is a pivotal metric that shapes the influence of teams within large enterprises. Leadership is often dominated by executives with strong track records in scaling sales volume. When an innovative project with low initial shipment volume competes for resources with mature, popular product lines, the parent’s immune system favors the latter. The mature lines deliver steadier inventory turnover and total gross profit, which sustain market position, ensure stable business unit operations, and help managers meet performance targets.
2 – Cognitive inertia
With a well-established brand and user profile, internal teams default to the parent’s design language and cost structure when defining new products. When a traditional manufacturer attempts to design a youth-centric smartphone, product managers might struggle to break free from the established component library. Under the weight of historical data, they default to thick, durable chassis designs or mechanical layouts optimized for mature mass-market users, rather than radical configurations that appeal to a younger demographic. Even if edgier designs materialize, internal reviews distort the vision. The approved blueprint rarely resembles the initial innovation, reducing new brands to tweaks within the parent company’s portfolio rather than breakthroughs.
3 – Misalignment in talent incentives
For entrepreneurial employees, the hierarchical structure of large enterprises often acts as a cage for innovation. Managers and staff incubating businesses in-house are constrained by the promotion ladder and KPI systems, leaving little room for entrepreneurial rewards.
OPPO and OnePlus: a blueprint for exploration
How can incumbents overcome these significant barriers to engage in meaningful exploration amid disruption?
Based on several years of research, I believe Chinese smartphone maker OPPO’s decade-long innovation journey with its spin-off OnePlus offers valuable insights for large organizations. The story of OPPO and OnePlus is not perfect and remains unfinished, but it shows how spin-offs can enable meaningful exploration that creates value for the parent without damaging it.
Around 15 years ago, China’s smartphone industry was in the throes of seismic change. Newcomer Xiaomi’s runaway success with an internet-driven business model had left most traditional handset makers disoriented. Predictably, a wave of exploration into internet-based models followed as incumbents scrambled to respond.
OPPO had built strong, defensible offline channel barriers in China, anchored by an exclusive wholesale-retail network. This system spanned hundreds of thousands of multi-brand mom-and-pop stores and exclusive retail points across China’s lower-tier cities and rural towns.
Unlike Western open-channel distribution, OPPO’s barrier relied on three pillars: regional exclusivity that prevented price wars, a shared-interest community in which local distributors held equity stakes or financial ties with the brand, and a heavy-subsidy infrastructure that provided stores with high-margin rebates, storefront signage, and sales promoters. Any attempt to pursue online direct sales would run up against these established interests.
Defending against disruption by doubling down on established advantages has nearly always failed.
At the same time, a global community of tech enthusiasts relentlessly pursued ultimate performance, industrial design, and a pure Android experience. This group also represented a valuable target for exploration, but it could hardly be won over by the traditional branding narratives of Chinese smartphone makers.
OPPO first explored an internet-driven model internally with a team led by senior executive Pete Lau. However, the project quickly ran into headwinds. OPPO’s offline sales network wielded enormous influence and resisted aggressive promotions around Double 11, China’s equivalent of Black Friday. It was clear that advancing the internet model from within would be extremely difficult. The decision was taken to spin off OnePlus as an independent, exploratory startup in 2013.
Over eight years of independence, OnePlus focused on exploring overseas markets and tech enthusiast segments, while OPPO concentrated on leveraging its massive user base and scale efficiencies. OnePlus grew into a globally influential and popular brand, validating the internet marketing model in high-premium segments and building expertise in global premium product development and operations, from operating systems to high-end displays. This, in turn, laid a critical knowledge foundation for OPPO’s strategic renewal.
In June 2021, OnePlus returned to OPPO’s portfolio. Over the next five years, OPPO repositioned OnePlus from a ‘flagship for global tech enthusiasts’ to its ‘performance pioneer,’ transitioning from a niche into the mainstream. At the start of 2026, OnePlus held a 4% global market share, up 426% since 2021 (data provided by OPPO).
More than a decade after the birth of OnePlus, the industry has converged and changed dramatically. Most smartphones come with pre-installed operating software, and no brand competes on internet marketing alone. Xiaomi has built an expansive offline retail network, and previously offline-focused manufacturers have moved into online sales. Geopolitics, unpredictable trade tariffs, and supply chains risks are also reshaping the industry.
Against this backdrop, in mid-2026, OPPO announced OnePlus would shift focus to China and emerging markets, with an eye on growing youth audiences and gaming, while withdrawing from mature Western markets. In Europe, OPPO’s Find flagship series – active as a premium brand since 2018 – would consolidate the group’s high-end positioning, building on the user base and brand recognition established by OnePlus.
For OPPO’s management, this marks the completion of one exploratory phase and the start of another. OnePlus’s mission to validate the internet-based business model and niche, premium Western markets was complete. OPPO had gained battle-tested playbooks for international branding, user engagement, and fast-cycle innovation. The task has begun to consolidate and redeploy those capabilities across its portfolio while mitigating the risks of duplication and brand cannibalization.
Shape what's next
Strategy programs
The future won’t wait for your strategy to catch up
Explore programsThe Boomerang Innovation Pathway
How did OPPO and OnePlus navigate this trickiest of management dilemmas? Based on my research, I have developed the four-step Boomerang Innovation Pathway – a blueprint for exploration that enables large enterprises to cross the innovation chasm.
Step 1: Independent spin-off – build a brand firewall
Through its spin-off, OnePlus established standalone brand equity. This was not merely legal independence, but a reinvention of a brand mindset: its founding team formally resigned from OPPO before joining the new startup – a visible gesture that reinforced psychological, not just strategic, independence.
OnePlus attracted the world’s most discerning early adopters – tech geeks in Silicon Valley – with its brand mantra ‘Never Settle’ and a lightweight operating system. Building a geek-focused identity would have been nearly impossible from within the mainstream-focused parent company. Early on, I visited OnePlus in Shenzhen’s Tairan Tower, where a Shiba Inu named Wan Zai (One Zai, hailed as Employee 0000 of OnePlus) lived. This Silicon Valley–style culture would have been unthinkable at OPPO.
A defining feature was its community-driven brand building. OnePlus cultivated intense loyalty among tech circles through a semi-religious geek subculture. At first, it bypassed traditional marketing, deploying an ‘invite-only’ purchase system. Invite codes became sought-after commodities, sparking trading on eBay at prices exceeding the phone’s manufacturing premium.
The Boomerang Pathway grants innovative autonomy to nurture brand equity free from the parent’s immune system.
It wasn’t always plain sailing. The OnePlus team apologized publicly for a messy launch of its second-generation phone in 2015 when slow delivery failed to match demand. Lau resolved to make up for it by launching a superior OnePlus3 phone, and the brand recovered.
Global tech fans treated OnePlus’s launches like cultural events rather than corporate press conferences. In London, New York, and San Francisco, thousands slept overnight in the rain, forming big queues just to experience a pop-up store or buy a phone, a phenomenon previously seen only at Apple launches. In 2019, during a posting in Silicon Valley to manage my company’s North American operations, I met an Amazon executive who proudly showed off his new OnePlus 7T Pro McLaren Edition. Employees at Google’s headquarters said OnePlus was the ‘favorite child’ among its Android engineers.
This brand firewall approach unlocked exceptional ‘average selling price’ potential. According to Counterpoint’s Q1 2020 report — the final quarter of OnePlus’s independent operation — OnePlus ranked in the top five premium smartphone makers in all regions except China and Latin America.
Step 2: Symbiotic accompaniment – support without interference
When a parent pursues exploratory innovation through an independent spin-off, it should provide a certain level of support without interference and grant operational autonomy. I call this ‘symbiotic accompaniment.’
Deep resource support, free of OPPO’s influence, has been acknowledged across the industry as a pillar of OnePlus’s early-stage success. This support took three forms:
- Shared heritage: Lau was a former OPPO Vice President and head of its Blu-ray division, and nearly the entire founding team came from within the OPPO system. OnePlus inherited OPPO’s industry resources, supplier networks, and product development expertise, without needing to build them from scratch.
- Manufacturing support: In its early years, OnePlus leased production facilities from OPPO. The brand could bring products to market without building its own production lines from the ground up, greatly reducing upfront capital risk and shortening time-to-market.
- Supply chain collaboration: Long before reintegration in 2021, OnePlus’s supply chain benefited from OPPO’s ecosystem. It shared the resource priority OPPO had built up in the global supply chain, securing more reliable access to flagship chipsets and core components than a standalone startup could obtain.
Crucially, OPPO observed non-interference in OnePlus’s decision-making. OnePlus retained full control over its product roadmap, brand identity, marketing narrative, regional go-to-market strategy, and the development of its OxygenOS operating system. This freedom resulted in pioneering products such as the OnePlus 7 Pro, which adopted industry-leading technologies ahead of competitors. It featured the world’s first 90Hz QHD+ Fluid AMOLED display, which redefined screen smoothness in the industry, and a motorized pop-up front camera for a notchless, full-screen experience.
The combination of heavy-asset resource backing and operational autonomy defines symbiotic accompaniment: the stability and scale of a large enterprise, paired with the agility and creativity of an independent startup.
Cisco’s three musketeers: symbiotic accompaniment in action
The US tech giant Cisco achieved three breakthroughs through symbiotic accompaniment. Its spin-off and reintegration strategy was led by Mario Mazzola, Luca Cafiero, and Prem Jain, who are known in the industry as the “Three Musketeers”. Each spin-off targeted an emerging segment not covered by the group’s portfolio. As the sole investor, Cisco funded the development of disruptive technologies. Once the products matured, it repurchased the entities at a premium. After reintegration, each spin-off became a core business pillar, delivering transformative innovation.
1 – From network equipment to storage networking
In 2002, storage area networks (SANs) emerged as a core segment of data centers. Brocade held over 70% market share. Cisco had next to none. It provided funding for the Three Musketeers to launch Andiamo, investing $184m for a 44% stake, with a right of first refusal upon technological maturity. In 2002, Andiamo launched the MDS 9000 Series of intelligent SAN switches, solving a pain point of high-speed interconnection between storage and network devices and outperforming Brocade. Cisco completed the purchase in 2004 for about $750m. Within a year, its SAN market share exceeded 30%, making it the world’s second-largest provider and expanding its identity from a network equipment vendor to a storage networking solutions provider.
2 – Transition to full-stack data center layout
In 2006, next-generation data centers began to shift toward virtualization and convergence. IBM and HP dominated the server market. Cisco invested $70m for an 80% stake in Nuova, which focused on integrated network-plus-server solutions. In 2009, Nuova launched the Nexus 5000 Series switches and UCS (Unified Computing System) servers. Cisco bought the remaining equity for up to $678m, breaking the market duopoly of IBM and HP and building a full-stack data center solution covering network, server, and storage.
3 – Technology positioning against disruption
In 2012, software-defined networking (SDN) emerged, exposing hardware vendors to the risk of commoditization. Cisco invested $135m for an 85% stake in Insieme, which focused on application-centric infrastructure (ACI). In 2013, Insieme launched the ACI architecture, becoming a benchmark solution in SDN. Cisco acquired Insieme for $863m and built ACI as the core of its cloud strategy, accelerating its transformation from a hardware vendor to a cloud infrastructure provider.
Step 3: Strategic reintegration – crossing the chasm
In Crossing the Chasm, Geoffrey Moore says the greatest pitfall for tech innovation brands is that they often succeed in early markets yet struggle when attempting to enter the mainstream market, because they fail to deliver a whole product: “The minimum set of products and services necessary to ensure that the target customer will achieve his or her compelling reason to buy.”
Think of an ultra-fast electric motorcycle from a startup that lacks a roadside charging grid, has zero localized repair shops, and offers no integrated navigation software. Early adopting enthusiasts might buy it for its raw acceleration, but mainstream pragmatists would reject it for leaving them stranded. A whole-product equivalent would include a high-speed battery-swap network, 24/7 roadside assistance, nationwide service centers, and localized maps. The mainstream does not buy the technology; it buys the friction-free fulfillment of its need.
OnePlus delivered a core product to niche fans with exceptional processor performance and system fluidity. At the peak of its independence, while Apple’s iPhone 11 and Samsung’s Galaxy S10 still ran standard 60Hz screens, OnePlus moved its flagships to 90Hz and then 120Hz. Its lightweight OxygenOS routinely topped international Android fluidity tables, outperforming legacy competitor skins in high-load gaming tests.
Unlike OnePlus’s early adopters, however, mainstream consumers do not dive into technical specifications or feel so steadfastly devoted to a brand. In the mainstream, purchase decisions depend on more than product experience alone. To cross into the mainstream market, OnePlus faced cost, service, and scale challenges that it could not easily overcome on its own. Through reintegration, OnePlus could leverage OPPO’s full-spectrum capabilities to build a whole product solution.
- Enhanced after-sales service: OnePlus users gained access to OPPO’s 2,500-plus service centers globally. This network became a foundation of security that niche brands can rarely provide.
- Core technology sharing and accelerated R&D: OPPO’s AI models, intelligent agents, and imaging algorithm expertise eliminated the need for OnePlus to bear heavy amortized R&D costs for foundational technologies.
- Supply chain pricing power and priority: Amid volatile component costs, OnePlus commanded the same procurement bargaining power and production capacity priority as OPPO.
- Offline channel coverage: OnePlus expanded beyond online channels by leveraging OPPO’s offline retail network to reach mass consumers.
Software stability: While OnePlus retained its signature user experience, unifying its underlying code with ColorOS improved usability and mainstream consumer experience.
Eclipsed by Saturn: when portfolios collide
In 1985, to combat the rise of fuel-efficient Japanese imports, General Motors (GM) created the spin-off unit Saturn. Marketed as a ‘different kind of car company,’ Saturn built an independent manufacturing base and dealer network, and a revolutionary ‘no-haggle’ culture. It captured customers GM’s core brands could never reach.
However, under financial pressure in the early 2000s, GM reintegrated Saturn into the fold to leverage group-wide platforms and scaling efficiencies. Not such a terrible idea, in principle. But the tragedy lay in its post-reintegration positioning. Instead of maintaining the brand firewall, GM forced it to share underlying vehicle platforms with its core mass-market divisions, Chevrolet and Pontiac.
The result? Catastrophic brand cannibalization. Stripped of its autonomy after reintegration, Saturn’s updated mid-size sedans and SUVs looked, felt, and cost almost the same as contemporary Chevrolets. Instead of poaching buyers from Toyota or Honda, Saturn aggressively bled sales from its siblings. GM’s infrastructure was compromised from within, accelerating its collapse and eventual bankruptcy in 2009.
Step 4: Repositioning – avoiding brand cannibalization
The most challenging phase of the four-step Boomerang Innovation Pathway is portfolio management after reintegration. Brand cannibalization is a serious risk. Without strategic renewal, including that of the parent brand, the reintegrated brand can fall into conflict with existing product lines.
By the time of OnePlus’s reintegration in 2021, it had established a strong global presence and a loyal user community. An abrupt shift would have posed unpredictable risks, so OPPO and OnePlus adopted a gradual strategic pivot. Instead, over five years, management agreed that OnePlus would evolve into a flagship brand as OPPO’s ‘performance pioneer.’
In 2025, OnePlus smartphone sales rose 44% year-on-year, ranking first in the industry. Its user base of young people grew by more than 1.55 times year-on-year. Compared with 2021, sales increased 2.6-fold. And in early 2026, OnePlus held a 4% global market share, a more than five-fold increase from 2021.
As OnePlus refined its own positioning, the positioning of OPPO’s Find N (premium foldable) and Find X (flagship imaging) lines also became clearer, enabling a solid portfolio firewall.
There is no question that the mid-2026 strategic pivot – OnePlus’s withdrawal from mature Western markets – will disappoint the fanbase the brand cultivated in the global tech community and beyond. The sense of shared identity and loyalty runs deep. But while this response must be managed carefully, it can be helpful to view the change of direction through the logic of the boomerang pathway and the shared purpose of a parent and its spin-off, rather than the narrative arc of a disruptive startup.
For years, the vision guiding OPPO and OnePlus was to build a healthier, enduring enterprise, anchored in the principle of ‘benfen’ – doing the right thing, with an open mind, in pursuit of sustainable development. This means weighing factors such as changing market and geopolitical conditions alongside the risk of brand overlap and cannibalization, and the future goals of the enterprise. OPPO’s portfolio will likely evolve again, perhaps even with new spin-offs, as market conditions shift. Strategic renewal is an ongoing, cyclical process, not a destination.
How to throw the boomerang and catch it
1 – Establish a ‘parameter firewall’ before reintegration
Before a spun-off sub-brand returns to the fold, draw an uncompromised line between portfolios to prevent cannibalization. The sub-brand and parent brand should not overlap too closely in price points. The returning brand must be designated its own specialized value proposition (e.g., extreme hardware performance and gaming), leaving other high-end domains (e.g., business productivity or lifestyle design) exclusively to the parent.
2 – Audit the ‘whole product’ conversion
Reintegration should never be just an accounting consolidation, but a mechanism to help a niche brand “cross the chasm”. Audit how effectively the offspring can mobilize the parent’s heavy-asset machinery. Synergy is achieved only when the sub-brand can leverage the parent’s after-sales service, shared global procurement scale to drive down costs, and core platform technologies (such as foundational AI models) without absorbing the R&D amortization alone.
3 – Protect ‘edge innovation’ and entrepreneurial autonomy
The gravest danger post-integration is sclerosis, where the parent’s “immune system” suffocates the agile culture of the returning unit. Senior executives must actively monitor organizational friction. If the feedback cycle for a sub-brand’s product proposals doubles post-reintegration, or if core personnel with entrepreneurial DNA quit, the strategy is failing. Leaders must guarantee a degree of operational and decision-making independence to ensure the sub-brand continues to deliver breakthrough, experimental niche features rather than safe, standard corporate templates.
The art of strategic release and integration
The four-step Boomerang Innovation Pathway grants innovative autonomy to nurture differentiated brand equity free from the parent’s immune system, while protecting innovative sub-brands from scale-related obstacles. Through well-managed reintegration, sub-brands can leverage the parent’s capabilities to break into the mass market, while the parent gains valuable market knowledge.
An effective innovation strategy is not a rigid organizational chart, but a dynamic process of adaptation aligned with changing market conditions. Had OPPO not undertaken its OnePlus spin-off experiment, it would likely lack the proven capabilities in the premium international market and the operational playbook needed to navigate today’s volatile global landscape.
There is a saying in China that translates as: ‘a good horse never turns back to graze in an old pasture.’ That is, one should never return to a place one has left behind. The boomerang pathway shows us there can be a different way.
Evolution Stage |
Organizational Characteristics |
Resource Exchange Mechanism |
Strategic Objectives |
|---|---|---|---|
| Independent Spin-off | Establishment of a separate legal entity | Capital injection and brand separation | Build a heterogeneous culture and break free from the parent’s organizational inertia |
| Symbiotic Accompaniment | External operation with two-way collaborative linkage | Share heavy-asset capabilities including supply chain and manufacturing; independent product, design and marketing functions | Capture niche markets and build high-value brand equity |
| Strategic Reintegration | Full integration of legal entity, sales channels, R&D and product systems | Share the group’s operational infrastructure to enhance efficiency | Break through niche bottlenecks and cross the innovation chasm |
| Repositioning | Proactive organizational strategic renewal; realigned integration between the reverted sub-brand and the… | Establish a product portfolio firewall | Refine strategic positioning, eliminate inter-brand cannibalization, and achieve synergistic growth across the multi-brand… |
Authors
Related
No job title required: Anyone can be a catalyst for change
Valuable social and environmental initiatives can come from anywhere. Elisa Alt, Katrin Heucher, and Sara Soderstrom offer a research-backed roadmap for leaders to activate the ‘change agents’ already on the payroll....
Audio available
Human accountability in the age of AI everything
When AI coaching hits a wall, human coaching unlocks real change. Learn Mohinder’s path to accountable leadership and faster decisions....
Trust and transparency: Building a media brand for the TikTok generation
Hugo Travers built a 20M-strong news audience by prioritizing accessibility, trust, and transparency, offering leadership lessons for the digital age....
Learn Brain Circuits
Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on - they only take five minutes.
Explore Leadership
What makes a great leader? Do you need charisma? How do you inspire your team? Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk.
Join Membership
Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.