Timing, as the saying goes, is ‘what it’s all about’. Timing when to change is vital, according to Mark Bertolini, David Duncan and Andrew Waldeck in a comprehensive article for HBR.

No business survives over the long term without reinventing itself. But knowing when to undertake strategic transformation—when to change a company’s core products or business model because of impending industry disruption—may be the hardest decision a leader faces.

Five interrelated “fault lines” can indicate that the ground beneath a company is unstable and that it’s time for radical change. The authors’ fault line framework addresses basic issues: whether the business serves the right customers, uses the right performance metrics, is positioned properly in its industry, deploys the correct business model, and has employees and partners who possess the capabilities required for future success. The framework can help executives build a case for change and persuade stakeholders to support the decision. And by identifying gaps between an organization’s current state and where it needs to be to continue to thrive, it can inform the vision of how the company must transform.

Diagnostic questions and an in-depth look at the health care company Aetna—an organization in the midst of an ambitious transformation effort, where one of the authors (Mark Bertolini) is CEO—illuminate how to detect the fault lines while there’s still ample time to respond.

No business survives over the long term without reinventing itself. But knowing when it is time to transform is difficult.

Five interrelated “fault lines” can indicate that the ground beneath a company is unstable. Executives who are able to detect those fault lines have early warning of impending industry upheaval and are better able to prepare and adapt.

The fault lines focus on the fundamentals: whether the business serves the right customers, uses the right performance metrics, is positioned properly in its industry, deploys the right business model, and has employees and partners who possess the required capabilities.

No business survives over the long term without reinventing itself. But knowing when to undertake deliberate strategic transformation—when to change a company’s core products or business model—may be the hardest decision a leader faces. This kind of change requires overcoming big obstacles: Employees feel threatened, customers can become confused, investors don’t like unproven strategies. And the risk of failure is high—research conducted by two of us suggests that although more than 80% of executives at large enterprises recognize the need for transformation, only about a third are confident that they can get the job done in five to 10 years. The decision to reinvent is even more difficult when company performance is strong and Wall Street is happy; it’s tempting to take a wait-and-see approach unless evidence clearly shows that industry disruption is imminent. But by then it may be too late, as demonstrated all too well by cautionary cases from Borders and Blockbuster to Compaq and Kodak.

So how can a leader know that it’s time to transform a company? We have identified five interrelated “fault lines” that suggest the ground beneath a company is more unstable than it may appear. Executives who can detect these fault lines have early warning of industry upheaval and can prepare and adapt. Just as important, our fault line framework can help executives build a case for change and garner stakeholders’ support. Finally, by identifying gaps between an organization’s current state and where it needs to be to thrive in the future, the framework can inform the vision of how the company must transform, which can be refined once the change is under way.

Given the magnitude of disruption required to compel a company to reinvent itself, our fault lines focus on fundamentals: whether a business is serving the right set of customers and using the right performance metrics, whether it is positioned properly in its ecosystem and is deploying the right business model, and whether its employees and partners have the necessary capabilities.

Read more at HBR: Knowing When to Reinvent