The Preference for Tradition

People, in general, are much more inclined to stick to what they know rather than undertake the risk to try something new that has the potential to be even more successful.   There's a certain comfort in a familiar routine and the perception that past results will be repeated if past procedures are followed.  And in many instances, this turns out to be true, which reinforces the notion that they should keep doing what they are doing rather than attempt something different.

As consumers, they purchase the same products and brands to serve the same needs and in spite of their verbal fascination with novelty tend to stick to the well-worn path.   And as professionals, in any act of production to earn revenue, they likewise follow established procedures rather than branch out.   And as managers and executives, they coach their people in the same manner.

For this reason, companies tend to be fond of procedures and policies that prevent deviating from established procedures.   What they did yesterday was adequate and created results that were good enough to earn enough profit to keep the firm sustainable, or at least slow the degradation that occurs naturally over time.

Companies are in that way can be likened to historical amusement parks, where actors do things the way they were done in the distant past rather than taking a more efficient and modern approach.   And make no mistake: their procedures are historical.   A procedure is generally not created or institutionalized until it has proven itself to be sustainable - by which time technology and markets have already evolved.

Once an adequate procedure has been institutionalized, it is defended until a crisis occurs.   The craftsman who produces simple products by hand shuns the use of newfangled machinery other producers who make use of it exceed his quality and undercut his prices to the point that his existing practices are not competitive - and even then, he will often wait until he is in a financial crisis, on the verge of bankruptcy, before he will consider changing his production processes or getting out of the business.  Often, this occurs too late.

The very same behavior occurs in corporations, particularly during financial downturns when risk aversion runs highest: board members and senior executives cling to the past rather than looking to the future, seeing tradition as proven and safe and innovation as unproven and risky.  And in the end, they fail.