We're living in a time when product life cycles, and even corporate life cycles, are shorter than they've ever been. The only way a company can sustain itself, therefore, is to continuously evolve, innovate, and change. The problem, however, is that change can be hard. People resist it, over and over.

So what's the secret to successfully implementing necessary change in a fast-paced market?

Recent headlines point to a "go big or go home" approach, with some companies executing monumental transformation in one big announcement. But it's important to remember that the CEOs making this approach work are doing far more than simply ripping off a bandage. They're contemplating risks and returns--and you can bet that when they go for the high risk option, they're counting on a payoff. Let's take a look at a few examples:

1. Zappos.com company reorganization. Zappos.com CEO Tony Hsieh announced in January that his company would be making the transition to a "holacracy," which essentially does away with job titles and management layers altogether. It goes without saying that this type of reorganization is a pretty drastic "go big" change--and it's one to which 14% of the company's employees has already said no, opting instead to accept a buyout offer and leave. Nevertheless, the majority of employees are going along with the transition to see where it leads.

Some might argue that implementing a sudden, massive change that almost immediately costs you 14% of your workforce is far too risky to be rewarding. Why not slowly weed out middle managers over several years' time, lessening the impact?

I'm not out to debate whether or not this was a good move for Zappos.com. It's too soon to tell, and--knowing Mr. Hsieh and this company as I do--I'm quite certain the decision was not made lightly. The company is known for its bold ideas and has become something of a poster child for making those ideas wildly successful. That's why I strongly suspect Zappos.com executives anticipated this exodus. I think they knew that some employees might have trouble living out the company's second core value: "Embrace and Drive Change." And they decided the larger risk would be allowing those employees to exist too long in a culture where they didn't fit. In this case, "going big" was likely the only option if the goal of a holacracy--and the idea of truly embracing change--were to succeed.

2. Gravity Payments' new minimum wage. Dan Price, the CEO of Seattle-based credit card payment processor Gravity Payments, publicly announced in April that he would forego his own $1M salary in order to raise the minimum pay of every one of his employees to no less than $70,000 annually. The transition, expected to take three years, made big headlines because it was a huge idea that plays very well into our nation's ongoing debate about minimum wage increases. Price's stated goal is to improve the happiness of his employees, which is certainly admirable. But can a change of this size prove rewarding enough to justify the risks?

There's no doubt it will raise the spirits of the 70 employees whose salaries will hike up--almost half of whom will nearly double their income. But it's important to note that the money to pay for this change comes not only from Price's own salary--it also drains close to 80% of the company's profits this year. Is that sustainable? What if the company hits a downturn?

I think if Mr. Price has thought this through well (and let's assume he has), his strategy could indeed deliver in the form of attracting and retaining higher quality talent, who in turn will produce greater innovations and provide superior customer service, which over time will continue to drive revenue. In short, Price is making a big, bold investment in his workforce. But here's the thing: He's committed to it publicly now. It will be interesting to see if his gamble pays off, and if he can remain competitive at those higher salaries. Backing down from such a "go big" change will be extremely difficult.

There are certainly other scenarios in business where you'll have to weigh your risks and rewards and ultimately decide if "go big or go home" is the right strategy.

  • Perhaps you're looking at adding new features to a software product, and you're at a crossroads. Do you build onto the current platform because it's easier--even though you're not sure how long it will last? Or is it time to invest in building a new platform from scratch in order to scale better over the long run?
  • Maybe you're considering an aggressive switch from geographically-based sales channels to ones based on vertical segments. Should you risk losing solid reps who were comfortable in the old regime and who won't be willing to make the change? Or should you bite the bullet and look at the long-term picture, where your biggest growth opportunities lie in certain key industries?

What it boils down to is quite simple: CEOs and senior executives are paid to weigh the short term against the long term, the high risk against the low risk, and make those critical decisions. It's your job to implement the strategies that can keep you competitive in a time of extremely rapid business cycles. Sometimes, the slow and steady change will be the best bet. Other times, you'll need to go big and go fast. Determining which option offers the best net/net returns for your company is the real art at which good business leaders must excel.

Published on: May 28, 2015
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.