No business survives over the long term without reinventing itself.
But undertaking deliberate strategic transformation—changing a company’s core products or business model— requires overcoming big obstacles: Employees feel threatened, customers can become confused, investors don’t like unproven strategies.
How can leaders know that it’s time to transform a company and make the case for change? Five interrelated “fault lines” can indicate that the ground beneath a company is unstable. By detecting fault lines at Aetna, CEO Mark Bertolini and the board of directors were able to make the choice to transform the company beyond a traditional health insurer – even as its profits were soaring. Similarly, Adobe, Nestle and other leading companies have preempted disruption by spotting fault lines early.
Preemptive change is challenging under any circumstances, but it’s even more difficult when the journey will be long-term. The fault line framework, and related diagnostic questions, can help executives frame the challenge, build confidence and align stakeholders, before it’s too late.