Harvard Business Publishing

This is a great post Umair.
It seems that your last point, "Shallow Strategy" is a driver of the previous three crisis-trends. And shallow strategy is a by-product of modern corporate ideology. We can trace the genealogy of shallow strategy this way: (1) Ideology creates structure and instituions. (2) Structure drives behavior. Behavior begets strategy.
First, we are in the grip of these obsolete ideologies: market-knows-best, profit is solely a monetary calculation, and the myth that the world holds inexhaustible natural resources. These ideologies no longer serve common human goals of quality of life, liberty, justice and the pursuit of happiness. What's more the outcome of these ideologies are no longer isolated to effects on faraway places. Financial crisis, corruption and a polluted environment have hit home in the developed world.
These ideologies create the structures of the modern corporation - whose mandates for short term growth are demanded by an ignorant and unaccountable shareholder. This structure drives whacko behavior by the C-suite. It is one of the factors that creates the corporation as a shortsighted and by all measures, pathological institution. Beyond a total meltdown the only way to address these issues are to examine the structural underpinnings of the corporation.

society, including business, changes. slowly.

but all your work is about changing systems, and is based on a false (and perhaps youthful) assumption. than people want to change.

they don't. they fight it with every fiber of their being. unless they are suffering.

so, you need to know how to change people, if you want to be anything more than a young guy pointing out the obvious.

there are a ton of old guys still pointing out the obvious, in nicely funded think tanks, paid to point, and still nothing changes.

people don't want to change, especially those in comfortable circumstances.

so, what to do?

I'm going to play the devil's advocate and hope you'll appreciate the effort, even though I'm not necessarily good at this:

Let's assume Hamel & Prahalad were mostly right in Competing for the Future. Those who have built that past, will fail the future.

Is there a way out of this, before failure of a current way of doing things? Where will the DNA for this come from?

I'm saying it is already here, amongst us, but underdeployed.

Why?

The average lifespan has grown longer, people are clinging to business longer and longer.

We have had a very long run of fairly stable and war-free growth not constrained in major way by availability of basic resources (capital, labor, materials, information).

During that time, we have built big and stable corporations (aka the matrix run organization with proper degree of integration through the value chain).

These are run like engines that need to be optimized, not like machines that need to be re-invented and replaced.

Change is an anomaly that is modeled in corporate architecture as an error, a potential glitch in the system that slows the engine down.

But as you say, the glitches seem to be growing and managing them is becoming more and more challenging (hence the meteoric rise of risk management as a field).

So the current systems are often run by people appreciating stability. More than that, their new tool (risk management) aims to control any source of instability.

The innovators (assuming no inherent value judgment, it's just an activity) now have a steeper curve to climb.

Yes, there are more instabilities available.

However, the stabilizer are bigger and one of their main activity today is control, containment and minimizing of these instabilities.

The kinds that innovators either create and/or rely on in their innovations.

So, this are of innovation remains underutilized, due to - just as you note - that short turn profit making from stability is what is wanted instead of risky and unstable innovation.

The innovation that is wanted and utilized is merely evolutionary type tweaking, because it poses no risk for the status quo of current profits.

Hence, the under-utilization of this potential of new DNA.

Now the main question: when and how can this change?

I'll be a bore and say that when the context of the activity changes so rapidly that it completely destroys the ability to function - regardless of any risk management. BAU just doesn't work anymore.

Financial world, where there has been a surprising amount of disruptive innovation to everybody's delight, is repeatedly on this edge (S&L, LTCM, current crisis).

The interesting digression here would be to ask why financial world has managed this, but let's now leave that as an exercise for the reader.

What/when can change the BAU so much that it has to change and let the new DNA in and change the structure so much as to allow radical disruptive activity?

My tip is that the answer is partially in Greiner's 'Evolution and Revolution as Organizations Grow' and partially in the reports from Clingendael International Energy Program (7/2008) and the forthcoming IEO 2008 from IEA in November 2008.

The rest is left as a future exercise to the reader, because it wouldn't be fun otherwise - and hardly disruptive at all :)

What is driving all of this is greed. It's not about ethics, it's not about doing what's right for people, the world, the environment, etc. the people controlling the markets have only one motivation - making more money for themselves - despite the fact that they don't need the money. Perhaps its time for a throwback to true socialist values.

i think you need to add 'shallow innovation' to the list too...bankers thought they were being innovative by slicing and dicing debt products

Dead right as usual Amair.

Here's a good example of the edge economy effect doing an end run around the shallow real estate strategy:

http://tinyurl.com/5myx64

the amount of information in circulation is said to double in every five years. based on this info one of the basic challenges that would be facing tomorrows CEO is not that of planing only but strategic planing and development of management system to suit competition

Umair - another good post. Maybe the decisions to stay private by some of the best companies coming out of Valley are a reflection of how bad the financial system has become. I'm thinking Facebook and LinkedIn who have both begun the process of creating internal markets for their shares. In addition, Google is only half playing the public game.