In a connected economy, business models don’t stay current for long. It holds true for firms and industry institutions. Yet there is often a deeply held mindset that industry institutions are somehow immune to the constant and disruptive changes that are shaping and re-shaping modern businesses.
People ask ‘why do we need to fix what’s not broken’, which in some cases is like saying the fax machine is still working just fine.
The size of the challenge is revealed when business leaders try to modernise their industry institutions. They quickly find that demands escalate for more evidence of the value and benefit of alternative new business model/s.
Such a response emphasises that a lot of people within and outside an industry have a big stake in the institutional status quo. They are instinctively reluctant to let it go.
Regardless, it all seems so reasonable: people are asking how can we support a new business model without evidence of the benefits? Give us more details so that we can decide, they say. But decide compared with what?
Shining a light inward on out-dated industry institutions, quantifying the costs and sharing that knowledge with businesses across the industry could be game changing. It helps to create urgency for action and puts options into perspective.
The implication is that a good decision on choices for innovation is informed with knowledge of the current and projected costs of not changing and the expected benefits/costs of alternative new models. Not one or the other.
My experience is that when leaders know and share the true costs of outdated institutional arrangements, any talk about incremental change to the current circumstances becomes muted. Then, the real work to innovate and create more value for industry businesses can begin.