In the present day, there exists the technology to propel most industries into the future, or drag them into the present: production, distribution, supply-chain management, and customer relations could all be greatly improved. But in spite of a great deal of happy talk about innovation, very little innovating is actually being done, and most industries have remained largely unchanged from the way they were half a century ago. While the technology exists, culture has not embraced it – and until it does, progress will remain superficial.
Culture is notoriously difficult to influence. A culture evolves over decades and centuries by adopting practices that were at one time highly functional and efficient – it is, in effect, an aggregation of the behaviors that make people successful. Or more aptly, it is the behaviors that made people successful in the past, and are presumed will achieve similar results in future. And against the historical success of culture, any new proposal is at a disadvantage for lack of proof: we cannot know if something that has never been tried will work, and prefer to stick to the tried-and-true.
It is for this reason that most industries are conservative and stodgy, deeply fearful of disrupting their cash flows. Some industries have very long traditions as they have been in existence for centuries, some even for millennia, and have been profitable under their existing business models. And those that have stood for centuries have seen others come and go, enjoying a few years or decades of success before collapsing. So there is a deeply held belief that doing the things that have always been done and making marginal efficiency improvements is the best path to long-term survival.
The culture of an organization is groomed and maintained by its leadership, so when it’s said that industries cling to tradition and fear change, what that really means is that its leaders cling to tradition and fear change. Those who lead achieved personal success by following the well-worn path and avoiding risk that comes with change, and expect that their continued success will be guaranteed by doing he same things that were done in the past. The power structures that are in place are designed to protect them against newcomers, and galvanize organizations against new ideas.
While old leaders speak enthusiastically about innovation, they do not allocate their budget accordingly. The biggest allocation of funds is to maintain the legacy systems (both technical and human systems), and innovation gets little to nothing. So their words and actions are disjointed, and their actions reflect their true values, which are invariably to maintain tradition and avoid change.
The next generation of leaders of a firm are the rank-and-file employees – and a stodgy and risk-averse company (or industry) attracts stodgy and risk-averse employees, those who will carry on the tradition of stagnancy. Those who are innovative want to work in an environment that will enable them to pursue their passions and avoid conservative companies. Those who have never worked in a long-standing industry expect they will be restrained and smothered, prevented from putting their best skills to use, their ideas dismissed summarily. Those who have experience in such industries know this to be true. So there is no “next generation” of leaders to move a firm forward – as that generation is being trained to do the job the way they are told and keep their new ideas to themselves if they wish to rise through the ranks.
As a result, there is almost no innovation in large and established firms, and what little innovation exists is largely imitation of practices that they presume to have been the cause of the success of other firms. It is only in the smaller firms, those who have no established culture, that innovation occurs – there is no “usual” way of doing business and everything must be invented from scratch, including the culture of the organization.