Thriving on the edge of chaos
Fortune’s most recent issue has a number of articles on the increasing chaos in markets, technologies customer behavior, and products. Business models that sustained companies for decades no longer work. Companies can now enter and leave markets at a moment’s notice. Market disruptions happen faster and faster.
According to the article, the way to manage chaos is not by retraining managers, it’s by changing people’s mindset and assumptions about business, management, and most economic principles we grew up with. Successful companies are meeting the challenges of a chaotic environment with chaos - by loosening controls, getting rid of hierarchies & titles, providing full transparency into all aspects of the business and more.
What causes all this change? For starters, the fact that companies can now operate free of physical assets makes them both more flexible and vulnerable at the same time. Next is the fact that with the advent of the Internet we have witnessed a dramatic power-shift towards the consumer. Information about products and services, which used to be controlled by the seller - giving them an unfair advantage - is not only widely available, it is complemented with free flowing consumer generated content that gives the consumer the upper hand in the power play.
And the chaos is here to stay. As the article points out “the forecast for most companies is continued chaos with a chance of disaster.”
The only way to survive is to allow your company to operate at the edge of chaos - something that nature knows all to well how to do. Perhaps the best training for company executives and employees will not come from business schools but from science departments who are studying complexity theory and how self-organized systems can thrive in nature -even in the worst of circumstances.
If you are starting a new company it may be easy for you to inject that right kind of culture in your company’s DNA. For existing companies the only answer is change, dramatic change that is - and as scientists have found, change hurts, and people naturally resist it.
So should we get ready to see many corporate icons dissapear in the near future?
[Tags: business models chaos complexity theory edge of chaos]
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October 5th, 2006 at 3:11 pm
I enjoyed the post. I missed the source article (truth is I have stopped reading MSM unless someone points me to it). I agree that letting go of control is the way of the future. The problem is that many companies and industries are still being successful following the “status quo + incremental improvement” path. It is hard in those cases to get traction with this line of thought. Is it a matter of just waiting until something breaks bad enough for these industries? (For help reading between the lines, I work for a Big Pharma company.)
October 6th, 2006 at 6:11 am
That is so true - and not just in pharma. Large companies do benefit from inertia - but eventually (and eventually comes faster and faster) they too have to change or face extinction.