Survival of the best prepared

The world is unpredictable. Events like the earthquake, tsunami and nuclear meltdown affecting Japan can't be foreseen. Business is the same. There's always someone in their parents' garage or in an unknown lab trying to make a better product or service.  And in an increasingly interconnected world, business models are under greater pressure.

That means businesses can't stand still. The title of a book by former Intel chairman, Andrew Grove, sums up the situation: Only the paranoid survive.

The problem seems particularly acute for technological industries; innovation and change are accelerating. Nokia dominated the mobile phone market a few years ago but now languishes behind the likes of Apple following the introduction of the iPhone. Nokia is now teaming up with another giant that missed the boat, Microsoft, to make a late surge in the smartphone market.

But other sectors face threats as well. Online retailers offer an alternative to traditional stores; clicks may replace bricks. And it gets more complicated: oil scarcity and crowded cities can alter the way we travel; health concerns can change the way we eat. It's an endless and unpredictable list.

So what are companies to do?

Continuously innovate and experiment. It's not only a defensive strategy, but a way of uncovering new opportunities.

Starbucks' founder and CEO, Howard Schultz, taps into this need in his book Pour Your Heart Into It:

'When you're failing, it's easy to understand the need for self-renewal. The status quo is not working, and only radical change can fix it.

But we're seldom motivated to seek self-renewal when we're successful. When things are going well, when the fans are cheering, why change a winning formula?

The simple answer is this: Because the world is changing.'

Starbucks hired a non-coffee drinking immunologist and spent millions in the 90s to deliver new coffee inspired products; an unorthodox approach no doubt.

Such a move highlights two critical ingredients for innovation; culture and capital. Starbucks certainly has an innovative culture, but just as important, it backed ideas with bucks.

Most companies lack both. Innovation is tricky to foster, and likely to be a dead end most times. So many managers are hesitant to commit necessary capital; the safer path is likely to be the more attractive.  And if a business is struggling with debt,  there won't be funds available at all. All this means healthier short term results, though at the risk of ending up like Nokia.

As Howard Schutltz said, 'The best CEOs are both farsighted and nearsighted.'