Paradigm Shift

In the 16th century, the Polish astronomer Nicolaus Copernicus discovered that the earth revolves around the sun. With this simple observation, Copernicus created a heresy and a "revolution."  The dethronement of the earth from the center of the universe called for the rethinking of almost every religious and scientific "truth" mankind had relied upon for the past 5000 years. This wasn't just a paradigm shift, it was a paradigm shift on a grand scale.

Paradigms are simply agreed-upon models of the way things appear to work. But, as the Copernican revolution demonstrates, they are not immutable and they are not eternal. Paradigm shifts occur whenever our understanding of the world conflicts so dramatically with our experience of the world that the old model stops serving any useful purpose. It's when action based on a given model no longer produces the desired or expected results.

The business world is experiencing such a shift today. Not because some Harvard economics professor proclaimed a fundamental error in our concept of business dynamics, but because business dynamics themselves have evolved beyond the model that gave rise to them 200 years ago. The forces behind this evolution -- the shift to a global economy, the impact of new technologies, the power of the consumer, the transition from the Industrial Age into the Knowledge Era, and the changes in the expectations and demands of the work force -- have combined to dethrone past truths about organization, leadership, and business strategy. To paraphrase Peter Drucker, "The certainties of the past are no longer sufficient to inform the policies of the future."

The model on which all businesses have structured themselves since the industrial revolution derives from the laws of Newtonian physics. Its defining characteristic is its resemblance to a machine, and its longevity can be explained by the simple fact that up to about 30 years ago it worked. Then with the waning of the Industrial Age and the advent of the new global economy it stopped working. Predictions started going awry. Results began falling short of expectations. All kinds of practical problems began surfacing that could not be resolved by referral back to the old mechanical model.

At about the same time, corresponding anomalies were starting to surface in physics. The predictability of Newtonian science no longer dovetailed with new discoveries. The universe was not so orderly after all; chaos, it soon became evident, was an integral part of its makeup. "For the first time in 300 years," Fritjof Capra wrote in The Turning Point, "physicists faced a serious challenge to their ability to understand the universe. . . . The new physics necessitated profound changes in concepts of space, time, matter, object, and cause and effect; and because these concepts are so fundamental to our way of experiencing the world, their transformation came as a great shock."

Today's business leaders are experiencing a similar shock with the breakdown of the old business model. But while the universe will go on running however physicists react to its newly discovered dynamics, businesses will not. "Many scientists," Thomas Kuhn wrote, "remain emotionally attached to theories that have long since been disproved. Ignoring overwhelming evidence, they will go to their graves stubbornly clinging to their limited but familiar points of view." Unfortunately, business leaders who follow that example are going to see their companies arrive at the graveyard long before they do.

In our business and government enterprises, we are only just beginning to comprehend what it means to move from a purely objective perspective to one that includes the intangible, subjective, emotional aspects of business. For example, "quality" was conceived as an objective, statistical concept -- allowing only so many flaws per 1,000 or 1,000,000, and so on. Today, that thinking is being challenged by people like Charles Hampton Turner, a professor at the London Business School, who says: "There is no escaping the fact that a product or service can be no better, no more sensitive, esthetic or intelligent than are the relationships and communication of those who create the product or provide the service."

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