You choose your future.

• Author: TRUDEL, JOHN D.
• Position: Brief Article

The Information Age requires boards to spend more time probing for dysfunctional business models.

RECENTLY I was one of three consultants asked by a national business magazine to examine a publicly traded firm that was in desperate straits and to give my recommendations. The company was in a good market (software), and had once been on Inc. magazine's fastest-growing "top 50" list. It still had significant cash reserves.

Problem was, the firm's market had changed. It sold private e-mail systems and utility programs for PCs. In today's markets, such things are given away free or bundled with other products. Not surprisingly, the firm had been downsizing and cutting costs for years. The employees were incredibly loyal and hard working, but the board was quite passive. The outside directors declined to make waves.

The other two consultants, turnaround experts, focused on operational details and control. Typical comments were, "The CEO should sign every check, including payroll checks, for the next 90 days. He should also sign every purchase order during that time to understand where the cash is going. Any and all unnecessary expenses should be challenged."

My own suggestion was contrarian. Basically it amounted to, "Migrate to a different business or sell the company. Now!" I gently reminded the management that they get to choose their future. Nonetheless, my guess is that the firm, like many, will keep doing what it is doing until it prevails or becomes insolvent.

We are living in a time of what scientists term "punctuated equilibrium." The notion is that species, ecologies, and societies go through long periods where little changes, and then suddenly -- bang! -- there is a disruption that restructures the world. This time the focal point is centered on business and economics.

It is, paradoxically, both the best and worst of times. Opportunity abounds, but the economic, societal, and technological foundations of the Machine Age are crumbling. Confounded by chaos and heavily pressured for results, most Western managers have no better ideas for how to compete than to endlessly copy each other, cut costs, and buy up rivals.

Most agree that the 21st century will be a post-industrial or knowledge-based society, one where the fundamental sources of wealth will be knowledge and communication rather than natural resources and physical labor. Some astute observers argue that creating knowledge will become the key to sustaining a competitive advantage...