Since the end of World War II, the dominant trends in Western society have been toward greater openness and greater networking among individuals, institutions, and nations. From the telephone to the Internet, from Standard Oil to the airlines’ Star Alliance, from the Berlin Wall to the European Union, these trends are interdependent and have combined to increase freedom and economic growth among the countries, companies, and people that have been their beneficiaries.
The terrorists who attacked the United States and its allies, from without and within, have shown that there is a fine line between openness and exposure. Their goal is manifestly to turn a strength into a weakness. “Terrorists want to turn the openness of the global economy against itself,” President George W. Bush told executives attending the Asia–Pacific Economic Cooperation forum in Shanghai last October. Their primary weapon is not civilian transportation, or invisible microbes, or any of the other bruited weapons of postmodern warfare. Rather, their weapon is fear.
In the past, people relegated the task of banishing fear to their governments. To this day, we equate leadership in times of crisis with the soothing words and bold programs of Franklin D. Roosevelt, who, on the eve of World War II, identified freedom from fear (together with freedom of expression, freedom to worship, and freedom from want) as one of the “Four Freedoms” that underpin the good society.
One of the hallmarks of the networked world is that governments now have less ability to drive progress — or reduce fear — on their own. Instead, eliminating terror and the threat it poses to the open society has become the task of both the public and the private sector. Leaders of corporations must assume a role unfamiliar to them during the past quarter-century of growing peace and greater prosperity: Alongside government and military leaders, they must strive within their own environs to evict fear, maintain openness, and sustain economic growth.
This may seem a daunting task, particularly to corporate executives stretched to the limits by the challenge of contending with a recession. In fact, the best-managed firms are capable of reducing the fear that has descended on them and their people, and can sustain the open networks necessary for their prosperity. For well-managed firms are already proficient at dealing with discontinuity, one of the most critical tasks a business faces today.
Discontinuities are the unanticipated events that can suddenly shift the landscape in an industry or for a company, requiring an immediate response either to mitigate loss or to capture opportunity. Peter F. Drucker has identified four major sources of discontinuity: the explosion of new technologies, the globalization of the economy, the growth of pluralism, and the spread of knowledge. All industries have faced these discontinuities in one form or another. The pharmaceuticals industry is subject to sudden product withdrawals and intellectual property decisions. Automobile manufacturers have had to cope with environmental regulation. Fast-food manufacturers grapple with protests by overseas activists. Financial-services firms contend with online disintermediation. In each industry, the successful companies are those that anticipate, and create adaptive mechanisms to contend with, discontinuity — the companies that, in effect, limit the sources of organizational, structural, and strategic fear.
The events of September 11 did not signal a change in the nature of the discontinuities that people, businesses, and nations face; indeed, the Al Qaeda terrorists might be viewed as an offspring of the specific discontinuities Professor Drucker identified 30 years ago. But by shutting down the largest economy in the world, deepening a worldwide recession, prompting large companies toward bankruptcy, and forcing the imminent restructuring of entire industries, the fallout from September 11 demonstrated that the severity of such discontinuities can be broader and deeper than we had previously understood. Companies that lost no employees, physical assets, or capabilities nonetheless lost revenues, market share, or value as a result of the attacks.