Learn to appreciate – and internalize – the fact that major changes in your industry are inevitable. Analyze potential changes on the basis of certainty and impact. For example, a group of senior managers at a certain health care company told me recently that of the many trends swirling about the pharmaceutical industry, the matter of whether new delivery technology will replace some of their company’s therapies is both uncertain and potentially high impact to their business. This means it is worth watching but not necessarily acting on. This was exactly the position that executives at Kodak and Sun found themselves in-facing an uncertain yet potentially high-impact trend.
Use an early-warning system to create different futures, different worlds, in which your company may find itself. The best way to understand my point is to compare how a professional baseball game looks on a television screen, from a two-dimensional perspective that mostly shows a pitcher versus a batter, and then from the three-dimensional view of a box seat, where you can also see the coaches giving their signs, the fielders positioning themselves and the base runners taking their leads. Suddenly, the game becomes richer, and more complex. Most strategic plans envision a two-dimensional world, one obvious set of rivals governed by certain predetermined industry forces. But companies that use an early-warning system see the whole field, and make the necessary adjustments.
Identify legitimate but clear signals that will forewarn of change taking place. Early-warning scenarios don’t just appear, they emerge relatively slowly. Executives learn to catch the signals by acting out scenarios, such as via carefully orchestrated war games, and thereby learn to appreciate the intensity of approaching tsunamis. In Kodak’s case, silver prices and the early application of digital-imaging technology were all signals. RISC technology and open-source software were two signals indicating rapid change for Sun.