The founders of our country were great thinkers. With vision and an understanding of history and human behavior. It is by no accident that they created the separation of church and state as they learned this lesson from their history books. It is also by no accident that we have the separation of powers in the United States, as they understood human behavior.
They went so far as to plan the election of a new President every four years, making sure the job is a temp job. Our leaders only have four years to do the best that they can, and then they can be replaced. Seems to be a great idea; monarchies and entitlements create a negative effect on the greater society.
We move so fast in the Information Age, but our institutions now seem to be in gridlock. Governments and companies alike are trapped in gridlock. So much so that we are now seeing the effects (lack of innovation and progress) because of the lack of action. Most recently, we have seen the political debacle of raising the debt ceiling and the credit downgrade.
It’s a disturbing trend, called institutionalization.
I see it happening with our government and I see it happen everyday in corporate America. As a consultant, I have worked with check printing companies, banks, newspapers, magazine companies, yearbook printers and you know what I have heard? “This is how we have always been doing it.”
Let me tell you about my favorite MBA story. The story of Blockbuster, right here in good old Dallas, Texas. Blockbuster was established in 1985 and grew into a multi-billion dollar business (yes, with a B) by renting out videotapes, then DVDs, then getting into games. Did you know that in 2000, a small company called Netflix was presented to Blockbuster for purchase for the amount of $50 million (yes, with a M). Blockbuster said no thanks.
Did you know in 2004, Blockbuster finally began offering online DVD rentals, four years after the company could have purchased Netflix. I have personally met with several high ranking executives at Blockbuster over a nine-year period who recognized the threat of Netflix. All I ever got was, “This is how we have always been doing it.”
What made Blockbuster fail? Not Netflix; they saw Netflix coming. They knew who their competition were, what they were offering and how to combat it. (They even started the Total Access program). Blockbuster became so accustomed to doing things one way, the leaders either forgot how to innovate or feared failure — so they stopped innovation.
Political breakdowns, cultural breakdowns, leadership breakdowns. All contribute to institutionalization. So why write about institutionalization? Change is good. Our forefathers (and foremothers) knew that. We can change Congressmen and Congresswomen every two years, Senators every six years and Presidents every four years.
We can change laws, we can even amend our Constitution. But if you don’t want change, it will never happen. Institutionalization destroys change and innovation. Even at the most innovative companies like Apple and Google who breed innovation and change into their culture, leaders need to shake up the program once in a while, because any type of institutionalization will eventually lead to stagnation.
THE TAKEAWAY: Avoid institutionalization! At Imaginuity Interactive, we strive to be more than just a digital agency. Our goal is to be agents of change. We help companies evolve with ideas, concepts and strategies that can get your organization moving again, on the right path.