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If you feel like you’re caught in a time warp lately, welcome to the club. In every industry, markets are merging, separating, growing in unpredictable directions, or even evaporating. It’s harder than ever to achieve and maintain a leadership position when your market is always moving. The question is: In an increasingly volatile marketplace, how do you manage change?

Ready with some answers are McKinsey consultant Shona Brown and Stanford professor Kathleen Eisenhardt, who provide a practical approach to dealing with change in a new book called Competing on the Edge: Strategy as Structured Chaos (Harvard Business School Press, $27.95). In terms of strategy, Competing on the Edge intimately ties “Where do you want to go?” to “How are you going to get there?”

Extensive analysis of situations faced by real companies demonstrates different approaches to preparing for change. Readers can reproduce questionnaires from the book to help analyze where their companies stand on issues such as organizational structure, internal communications, priority-setting, collaboration, and new product development.

One of the least understood facets of strategy in unpredictable and high-velocity industries, according to Brown and Eisenhardt, is “time pacing.” This practice holds that companies should choreograph transitions from product to product or market to market instead of letting outside events rule the pace of business activity. Time pacing relies on a rhythm that is synchronized with the marketplace and thwarts the competition.

“Competing on the edge, at a minimum, is about reacting responsively to change, anticipating change when possible, and at best, creating and even dictating the pace of change that others are forced to follow,” write Brown and Eisenhardt. Companies such as Intel, British Airways, Gillette, and 3M use time pacing. It’s all in the rhythm. After all, have you ever seen Michael Jordan play when he’s clicking on all cylinders?

Intel is an extraordinary example of a time-paced corporation that has learned to be synchronized with its customers, according to Brown and Eisenhardt. If the company pumps out too many chips or chips with too much technology, the firm falters. To keep a consistent rhythm, Intel must”create users and uses for our microprocessors,” says ceo Andy Grove. The result is an industry that is significantly led by the pace of Intel.

In contrast, event pacing simply drives evolution according to occurrences such as moves by the competition, shifts in technology, or new customer demands. As such, event pacing is typically reactive, note the authors. Since it’s impossible to foretell the future, managers will always be somewhat event-paced, but time pacing is essential for creating a continuous flow of competitive advantages.

On the edge “Time pacing is an effective strategy because it forces managers to look up from their businesses, adapt if necessary, and then get back to work,” the authors hold. By practicing this process, companies can react faster and possibly lead the pace of change in their industry, counteracting the tendency of most managers to wait too long, move too slowly, lose momentum, or simply lose out.

“At one level, managing change means reacting to it. But managing change also means anticipating it,” the authors emphasize. The most effective managers achieve this balance by straddling the rigidity of planning for tomorrow and the chaos of reacting to today. Winning managers understand that they cannot just take a wait-and-see approach, because reacting is fundamentally a catch-up game. So these managers steer on the edge through experimentation.

Charles Schwab & Co., the pioneering discount broker, is a good example of a firm that engages in experimentation, according to the authors. Managers used experimental products such as simplified mutual fund selection and futures trading programs to test new concepts. In addition, they probed the Internet with a broad range of transaction and information services such as Market Buzz. Increasingly they extended their business model into the competitive space of the full-service brokers.

Promotion agencies could surely benefit by following the experimentation example set by Schwab and others. Advertising and new media agencies’ early efforts on the Internet were motivated by the promise of a fourth advertising medium. Their probes have made clear to everyone that Web marketing has much more to do with changing behavior through calls to action than it does with traditional image advertising. That’s a huge opportunity for promo agencies, yet only the handful that have been part of the early exploration parties now have the strategic flexibility needed to compete on the Internet.

While Brown and Eisenhardt contend that competing on the edge is not a particularly efficient or predictable way to do business, locating that jagged line between structure and chaos allows managers the opportunity to be innovators while still remaining disciplined enough to execute a plan.