Maelstrom of Change in Business– Manage The Unmanageable, Manage The Unknowable, Manage The Chaos…

Today’s business world is a maelstrom of changing markets, technologies, customers,  products… that are whirling so fast that they create an illusive and uncertain mind-set for managing a business… Chief executives of many companies are quietly lamenting that their business model don’t work anymore…

According to Bill Ford; the business model that sustained us for decades is no longer sufficient to sustain the business now… The biggest challenge has less to do with corporate strategy or management structures than with the nature of people and their instinctive reactions to change… The companies that have found ways to survive, thrive in the chaos of business hold valuable lessons, e.g.; paradoxically, many businesses are meeting chaos with chaos, i.e., loosening controls, sometimes radically, reorganization, restructuring… And yet, even these efforts are losing their effectiveness over time.

Today’s fast-moving reality is forcing a rethink of just how long companies can and should survive, and when they do survive– what business model will sustain their survivability… managing amid chaos is the central problem for many companies; it’s a predicament that arises from very nature of today’s digital economy… And some experts believe the solution requires a rethinking, retraining of leadership’s very mindset and assumptions…

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According to Geoffrey Colvin; the digital revolution makes business more chaotic by its shifting of information and power to customers, and it’s changing the way business is producing product in every industry, new or old, for example; today’s cars are essentially computers on wheels. Some credit cards have chips in them. Some greeting cards have chips in them. Some children toys have chips in them… Now, what did the makers of any of these ‘things’ know about computer chips? Probably very little; yet these and many other industries are being transformed by technology…

Hence, real challenge for many modern day business– in the maelstrom, chaos of disruptive technology– is leadership’s ability to manage uncertainty, manage the unknowable, manage the unpredictable. According to David Nadler; the concept of the corporation was to create a structure and rules to resist forces buffeting the enterprise… This concept worked fine in an era when great companies would last 30 years or so, but now in the digital era; what used to be an asset for a business is now a liability.

In the article Survive in the Business World is Crazier and Riskier Than Ever by Geoffrey Colvin writes: Businesses are not designed as being– structures or machines or collections of assets… A business is groups of people working together for a common outcome… But in the digital era while business is changing at the speed of light, these groups of people are not changing at the same rate of speed, and haven’t changed much in 10,000 years… Hence, the most intractable business problem is getting these groups of people to think and behave in new and very different ways, which is consistent with the rapidly changing technologies of business… 

In many situations it’s identifying the right business model or structure that works for both people and the rapidly changing business environment; often its managing the unmanageable, managing in chaos… Some of the reasons are familiar, e.g.; most change creates winners and losers in an organization and the caveman part of people’s brain is still wired to defend against loss, so people almost always tended to resist change.

According to Peter Drucker; the key management challenge of 21st Century is ‘abandon it yesterday’… By yesterday Drucker meant whatever it is in the business that ‘no longer works’, then change it… but, abandoning yesterday is excruciatingly difficult for many businesses because yesterday was often– safe, knowable, comfortable… But, it’s time for businesses to face reality; in a world where technology, competition, business models are in a constant state of flux, it’s highly unlikely, if not foolish to think, that many businesses will be able to keep-up or even survive as they might have in bygone decades…

Perhaps, in this digital age, some business will conduct themselves in the manner of Hollywood’s movie making business model, i.e., bringing together the right mix of people, hired for a few months or few years, and until the project is completed, then move on… However, sustainability is the key and in this revolutionary business age, it’s crazy to think that even more radical business models will not develop… Hence, the challenge for management and all stakeholders is to find the courage to embrace uncertainty, and think about how to manage the unmanageable…

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In the book The Strategy Paradox by Michael E. Raynor writes: A compelling vision, bold leadership, decisive action… these are the key attributes that are owned by the leaders of successful businesses, but unfortunately these same attributes owned by the leaders of failed businesses, too… In fact, most leaders seeking to maximize their chances for glory are often unwittingly setting themselves up for ruin.

The sad truth is that most companies have left their futures almost entirely to chance, and don’t even realize it. The reason? Leaders feel they must make choices with far-reaching consequences today, but must of them base their choices on assumptions about a future they cannot predict. It’s this collision between commitment and uncertainty that creates– a strategy paradox… This paradox sets up a ubiquitous but little understood trade-off, i.e.;– most leaders base their strategies on assumptions about an unknown future, and the more the ambitious leaders, either; hope their guesses are right or that they can somehow adapt to the turbulence that will confront them, then the more they are in jeopardy…

In fact, most leaders who try to predict the unpredictable or know the unknowable or guess the unguessable, only a small number of these ambitious leaders prosper, while many more find themselves at helms of sinking ships…

Hence, since many leaders are well aware of this dilemma even if only intuitively, and most will shy away from the bold commitments that success demands and many choose instead a timid, unremarkable strategy… and thus they are sacrificing the trade-off between any chance at success, against a better chance at mere survival. Hence, in this turbulent digital age there exists a desperate need for leaders who can manage in the unknowable, manage the unmanageable…

In essence these are leaders who have the vision and skills to commit specific resources in today’s world that will service customers, markets… that will emerge in a distant and inherently unpredictable future… These are leaders who have the ability to take bold actions while maintaining strategic flexibility… According to Peter L. Bernstein; many leaders admit that they do not know what the future holds, but many of them go on acting as though they did, and that can be dangerous when taken to the extreme… 

According to William Hunter; not many executives or board members look forward to the annual corporate clairvoyant ritual known as strategic planning; in no small part because of the unspoken recognition that ‘their’ crystal ball vision of the future has no greater fidelity than the competition’s glass sphere...

In the article Behavior is the Unknowable by Joseph Dager writes: People’s behavior is the key unknowable, and it’s the variable that most determines sustainability of a business model… According to Thomas Koulopoulos; businesses are at the beginning of a new era that focuses on the innovation of what I like to call– behavioral business models. These models go beyond asking how you can make what you make better, cheaper, or asking how you can do what you do faster. These models are about asking ‘why’ you do what you do, to begin with

The question ‘why’ is almost always tied to the question of how markets ‘behave’, for example: When Apple created iTunes it did not just create a faster, cheaper, better digital format for music, it altered very nature of the relationship between music and people… eBay did not just create a platform for auctions, it changed the way people look at the experience of shopping and how many communities plays a role in the experience…

Google did not invent Internet search, but Google changed the way people interact with the Internet and how people’s behaviors are tracked and analyzed, allowing advertisers to find and pay for buyers in a way that was inconceivable before… All of these are examples of innovations in ‘behavior’ that led to entirely new business models. Yet most business continue to be obsessed with just technology innovation… To paraphrase James Carville: It’s not technology, it’s– behavior, stupid…

Leaders should not abandon their concern for the long-term, but they must recognize its uncertainty… they must understand that the mental model of ‘control’ is out of touch with the nature of the new era of change… Trying to control the outcome of situations that are out of their control carries with it the certainty of ultimate failure…

According to Ralph D. Stacey; when the business leaders who still embrace the conventional wisdom of the traditional long-term strategic planning begin to understand that its only value is as a talisman against the anxiety of uncertainty… in traditional sense, the misguided comfort of long-term strategic planning and the notion that it bring stability is fantasy that is not particularly desirable… and, as odd as it may sound instability, which is at the ‘edge of chaos’ can, in fact, be the enabler of great creative innovation…

According Alfred W. Hübler, Glenn C. Foster, Kirstin C. Phelps; ‘chaos’ means that a strategy have gone wildly astray and it’s often associated with very real and tangible issues, e.g.; missed, ineffective leadership, disruptive technology, competitiveness…

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But managing ‘chaos’ is essential, particularly when it becomes clear that the goals of a strategy are unachievable, and therefore the outcomes become– random, unpredictable, often undesirable… According to Geoffrey Colvin; some business believe that a radically changed world requires a radically restructured business… hence, some companies take extreme steps in order to ‘meet chaos with chaos’, e.g.; some organizations can become completely virtually, which means– no job titles, they trade CEO role every six months or so, workers set their own hours and choose their managers by vote…

Some organizations find this approach a little too extreme, but the concept of decentralization and anti-control ethos seem to characterize a growing number of successful businesses… Managing the unmanageable, managing chaos– is the hardest thing a leader must do, and vast majority of leaders would prefer not to deal with it, if given a choice…

But, great leaders accept the challenge with a positive mind-set; they know the inevitability of uncertainty, they stay calm, they don’t think in terms of ‘winning’, and they work hard to optimize the business sustainability…