Tradition is Not a Business Model

I’m currently reading The Nature of Technology by W. Brian Arthur. It’s a fantastic book. This morning I ran across this quote discussing the spread of innovations:

There is another reason the old pricniple persists beyond its time, an economic one. Even if a novel principle is developed and does perform better than the old, adopting it may mean changing surrounding structures and organizations. This is expensive and for that reason may not happen. In 1955 the economist Marvin Frankel wondered why cotton mills in Lancashire did not adopt the more modern efficient machinery of their American counterparts. He found that the new machinery in the English setting would indeed be more economical. But it was heavy, and to install it the Victorian brick structures that housed the old machinery would have to be torn down. The ‘outer’ assemblies or elaborations thus locked in the inner machinery, and the Lancashire mills did not change.

Oh, and, the Lancashire mills went out of business in time as a consequence.

This story made me think of two things. The first is that when you come up with a new idea, it does not spread automatically. Like I said yesterday, you have to fight to get the innovation embedded into the economy. There are always surrounding structures and organisations that will have to change to accomodate an innovation. You can’t just build a better mousetrap – you have to get people to want a better mousetrap too.

The second point is that if you are well established in an industry, and you are surrounded by structures and organisations that lock you in to one way of doing things – you have to be aware of what is going on in the marginal niches. You always have to be asking if we were starting today, would we do this? The worst excuse for doing something is ‘that’s the way we’ve always done it’. When I hear that phrase, my heart always sinks.

Our current structure always constrains what we can do. Even if we are not innovating ourselves, we have to take this into account, and think about what competitors without those same constraints might be able to do. This is hard to do, but responsible managers have to do it.

As the authors of the journalism Internet Manifesto put it – Tradition is Not a Business Model!

(picture from

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

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