I recently came across an interesting quote from Michael Schumacher, the seven-time Formula One champion. He said, “To perfect things, speed is a unifying force. To imperfect things, speed is a destructive force.”
Business, like auto racing, is a world of imperfect things. Always has been. But as the pace of change continues to increase, both the danger and the likelihood of a company hitting the wall grow exponentially greater. Strategic mistakes that in the past might have required a pit stop now could be fatal.
A lot of companies are learning this the hard way during the protracted downturn. We’ve all read about Lehman Brothers, GM and Washington Mutual, but a number of lower profile yet still well-known names have also joined the bankruptcy club, including Six Flags, Crunch Gym and Nortel. According to the American Bankruptcy Institute, business bankruptcies in the first half of 2009 are 64 percent higher than they were in 2008. More than twenty thousand corporations have gone belly up since the beginning of the year.
What does this mean to those of us that are still in the race? We have to stay calm, stay focused, and keep a tight but responsive grip on the steering wheel. The pace of change requires that we drive faster and faster, but bumps in the road and the inches that separate us from our competitors can change in an instant and send us careening into the wall. As Adam Hartung, author of Create Marketplace Disruption, puts it, “When a new technology can go from invention to market in weeks, adaptability becomes far more important than size.”
Adaptability. The true test of today’s environment isn’t simply which companies have enough cash or market share to ride things out, but which can best adjust to the changing environment–both outside and within their organizations. While power has always been important, smart strategy is more vital than ever. This challenging race calls for cool-headed drivers.
Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of “When Growth Stalls: How it Happens, Why You’re Stuck, and What To Do About It.” Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.