Jane C. Linder

Five business‐model myths that hold companies back

Most executives are well aware of the acceleration in the pace of business, and they want to know what to do about it. The authors talked with executives in 40 companies about how they are dealing with this issue and identified five business‐model myths that are holding these firms back. Companies that have dispelled these misconceptions are not only achieving record profitability they are hitting new highs in the tough business environments that have driven their competitors under. This article describes the five myths and outlines how businesses can become more fluid and ready to respond quickly to change.

Paying the personal price for performance

No firm can rest on its competitive laurels. Winning companies must know how to change, not just their products and services, but their business models. Changing business models used to be a once‐a‐career challenge. Now it’s the way firms compete. Most organizations have not been terribly successful at changing themselves, even at the old pace. It requires learning, becoming a “learning organization,” and building a culture of learning. But many executives aren’t buying. Many firms still relegate learning activities to the training department and look there first for cost cuts when business hiccups. Perhaps all this makes it clear why learning seems to have hit a glass ceiling. To get the benefits of learning – the management culture that makes an organization agile amidst shape‐changing markets – executives must be willing to face the cost: threatening, gut‐wrenching, personally invasive change, not just for the rest of the firm, but for the leaders themselves.