Reading D: Managing Chaos

The most fundamental and alarming of business problem: The Business Model does not work anymore.

The Ford Motor CEO: The business model that sustained us for decades is no longer sufficient to sustain
profitability.

Or, the firm’s way doing business does not make money, and does not even know what the new way of
doing business should be.

Today, a maelstrom of changing markets, technologies, customers and product that are whirling so fast.

Rocking the Foundation

The pattern is old hat by now.

Ebay and its PayPal unit are disrupting credit cards. Google is now trying to disrupt PayPal as well as the
whole ad-sale industry. The digital revolution also makes chaotic by shifting information and power toward
customers.

Rethink Your Business

Business models lives shorter lives these days, but there are ways to get comfortable with chaos.

Tough Talk. Force conversation on how the company will have to operate differently to be successful two
years from now.

Yellow Flags. Pay close attention to what your sharpest, most mobile customer are doing. This is early
warning of business model problems.

Remodel Early. Start changing the business model when you are successful. When we are in trouble is
to late.

Abandon Yesterday. Maintaining what no longer works draws your most valuable resources away from
your No. 1 job, creating tomorrow.

A New Improved Story Line. Explain the company’s changes within a larger context. Employees,
investors, customers and suppliers are more comfortable with change when it’s presented as part of a
story line.