The Red Queen Rules.(business strategy)

When Alice's journey through Wonderland took her into the Queen of Hearts' croquet garden, she found a world short on logic, rules, and common sense.

What rules there were came from the "Red Queen" herself, who expected everyone to know automatically how to please her. If someone annoyed her, the only instruction she ever gave was: "Off with his head!"

Many people in business probably feel as lost as Alice, trying to make sense of today's marketplace, which can defy conventional logic. Consider the fact that PC manufacturers like Dell prosper using negative working capital, and market capitalization of Internet stocks increase as operating losses pile up. Meanwhile, companies with solid earnings languish in the market.

As we head into the new millenium, the market as we know it is being turned upside down. The only dependable maxim is: The Red Queen rules! We can laugh at the Red Queen, because Alice in Wonderland is a fantasy for children. But today's business is no fantasy world, it' deadly serious. Today, it is an often frustrating, sometimes illogical, and always unforgiving market that yells: "Off with his (or her) head!"

From Chess Match to Video Games

Business strategy was once like a chess game, where the players took time to contemplate their position, search for their opponents' weaknesses, and devise a strategy that looked four or five moves into the future.

Those days are gone.

Business now runs at the pace of the most action-packed video games. Managers dodge and fire reflexively, pouncing on opportunities the instant they arise. Volatile areas such as online services, the music business, and publishing have become even more volatile, and "sleepy" industrial kingpins are finding that all aspects of their businesses, including customer expectations and stock valuations, have become as unpredictable as the weather.

A good example is Borders. Last year, the …