Last Updated Oct 26, 2011 5:51 PM EDT
In other words, company performance may rise like a rocket or fall like a rock. The only thing it's not likely to do is stay the same. Change may be inevitable, but big change is scary, nevertheless. And how you deal with it plays a big role in the outcome. We'll get to that in a minute.
In just the past 24 hours we've seen big change in the works at some of America's biggest and most widely followed companies, primarily in the technology industry:
IBM named its first female CEO, Ginni Rometty. After nine years at the helm of the IT services giant, Sam Palmisano will step down at the end of this year and turn the reins over to his sales, marketing, and strategy chief. Rometty previously led the company's global business services group, including the mammoth integration of PWC's consulting practice. IBM's currently firing on all cylinders. Palmisano may be a tough act to follow, but then, we said the same thing when he took over from Lou Gerstner.
First Solar abruptly ousted chief executive Rob Gillette. Founder and chairman Michael Ahearn said the board wanted a change in strategy. He also slashed guidance and announced a plan to cut costs. Good move. The solar panel giant is clearly in hot water as it faces weak global demand, a glut of panels from China, and high-profile executive turnover. Not to mention an industry under congressional scrutiny following the Solyndra government loan scandal. The stock is down a whopping 75 percent from its 52 week high, as of yesterday.
After a tumultuous couple of months, shares of already beaten-down Netflix plummeted another 35 percent yesterday on news that 810,000 subscribers defected last quarter. CEO Reed Hastings admits the company has stumbled badly in attempts to transition its business model from DVD rentals to streaming exclusive video content. To compensate for higher license fees, the company announced a new price structure that hasn't gone over so well with consumers. Hastings maintains that the pricing strategy is solid; it's the way he implemented and communicated it that was flawed. Time will tell.
Shares of Amazon have tumbled 16 percent since yesterday, when shareholders learned the online retailer's stellar growth came at a price - an earnings decline of 73 percent. The earnings surprise comes just weeks after the rollout of Amazon's new tablet, the Kindle Fire, which many see as the first viable competitor to Apple's category-creating iPad. Guess this is a classic good news - bad news story, but the net result will likely be good.
Big, big changes in the technology world. How do the pros handle it? Not as easily as you'd think. There's no magic bullet or miracle cure for change. Dealing with change is hard. Dealing with big, gut-wrenching change is, well, something few people do well.
Look, everyone resists change. It's human to resist change. Change is scary, and for good reason. You see, the universe is addicted to chaos. No, I didn't make that up; it's the second law of thermodynamics.
And the only thing that brings order to chaos - at least on planet Earth - is organisms, i.e. people, and their organizations, i.e. companies. And the way good executives do that, their primary weapon against the inevitability of change, is by making smart decisions, i.e. good strategy.
Let me say that again, since it's an important point: smart decisions bring order to chaos.
Of course, the reverse is also true. Not only that, but not-so-smart decisions are far more likely. If that wasn't the case, we'd all be rich, powerful CEOs and every company would be a megasuccess like Apple and IBM.
The bottom line is this. If you let change or the prospect of chaos rattle you, you won't think clearly and you'll make bad decisions. The result will inevitably be more chaos. So take a deep breath, put one foot in front of the other, and try to enjoy the ride. If you're really freaked out, meditate, go for a run, drink a glass of wine, whatever works for you. You'll feel better. When it comes to big change, that's the best strategy. Really.
Also check out:
- How to Make High-Risk Decisions
- Change Management: It's the Strategy, Stupid
- Should You Focus on Strengths or Weaknesses?
Image dbking via Flickr