The motor car has changed very little over 100 years. In the early 1900s there were electric cars, fluid clutches, steam cars, etc. I once owned a car, built in 1935, which had built-in jacks on all wheels. You could also adjust the tension on each of the four springs from the dashboard. When things reach a satisfactory equilibrium state, there is little motivation to change them. The perceived problems have been overcome. What is the point of further change?
Once equilibrium has been reached, then further change may be seen as negative. An individual might like a radically new car, but the general buyer is suspicious: 'I might like this new car, but what is the re-sale value? Other people might not like the innovation. There might also be risks with an untried concept'.
Buyers feel secure with the tried and trusted traditional approach.
SMALL CHANGES
Small changes are more easily accepted because the main concept has not altered. But any major change is seen as high risk. Individual buyers do not want to take this risk, so manufacturers do not want to take the risk of individuals not buying the new product. 'If it is not broken, don't fix it'. This traditional saying is usually applied to processes and methods, but it applies equally well to products. Our whole 'problem-solving' mentality assumes that if there is no problem, then there is no need for change or further thinking.
When the Cubist and Impressionist painters first got going, as I observed here last month, there was much resistance to these concepts of 'art'. But the movements succeeded and then created their own context for acceptance. The result is that such paintings sell for millions of dollars today.
There are two important points here. First, the movements only succeeded because there were dealers who saw the possibility of making money from these new directions in art. If you could persuade people to see these new forms of art as art, then there was more money to be made than from just recycling older stuff. So it was very much in the interest of some dealers to promote this new form of art. That is rarely the case with radical change. What body of people would see any benefit in promoting a radically new car?
The second point is that, once the context has been established, then you are locked into that new context. You know what to expect. You know what will satisfy you. So we are locked into the concept of a car as we know it today. Anything different will be seen as inferior. That is the essence of an equilibrium state - any deviation from the equilibrium leads to pressure to return to that state.
So there are two core difficulties. The first is that we are so trapped by the existing concept that we find it difficult to make any radical changes. It is rather like someone suggesting really radical changes in a restaurant and then being told: 'This new concept is not a restaurant at all'.
The second difficulty is that there is little point in trying to think of something different if we know that it will be very hard to sell - at least initially. It is said that McDonalds lost money for four years on their concept of selling breakfasts. Then it became the most profitable part of the whole organisation. It took that long to change habits, expectations, culture, etc. Not many organisations would want to risk losing money for four years on a new idea.
BENEFITS
When faced with a problem, we can immediately see the benefits of solving that problem. If you have a headache, you can see the benefits of being without the headache. If you have a stone in your shoe, you can see the benefits of removing it. If your organisation is spending a lot in a particular area, you can see the benefits of cost reduction in that area. But if there is no 'deficiency' type of problem, it is much more difficult to see the benefits of change.
Many of our well-established concepts and systems could be greatly improved by change. This applies to such basic concepts as democracy, the judicial system, retailing, government, education, etc., etc. But it would not be easy to persuade people of the benefits of any changes in these areas. If there was a specific new idea, then it might be possible to examine the benefits of this particular idea. But before we generate any specific new idea, how do you persuade people of the benefits of looking for unspecified new ideas? Often it is only by formulating something as a problem that we can get any new thinking.
COMPLACENCYComplacency is a management value, but not a shareholder value. Most organisations are run on the strategy of maintenance and problem-solving. Keep things going as they are, and solve problems as they arise. This makes a lot of sense from the management point of view. The visible risk is low. Any new idea is always a risk. If the idea does not work, then management gets blamed directly.
It may be true that in the long term failure to innovate is itself a risk. You may be overtaken by competitors. Your industry sector may be in slow decline. Since these processes usually are slow, it is hard to blame management. You do not know exactly who to blame.
From a shareholder's point of view, complacency may mean two things. The first is long-term decline of the corporation. By the time it is obvious that something needs to be done, it might be too late. Second, the corporation may be operating way below asset value. Shareholders may be losing out on dividends and on capital appreciation.
Risk-free innovation usually takes the form of 'me-too'. Let others take the final risk. Let others develop the market. When it is clear that the new idea is going to work, then jump in with a 'me-too' product or service. Usually this works pretty well, even though the first in the field may continue to hold a lead position.
NEED
So what's the solution to the equilibrium/complacency dilemma? The first step is to understand the difficulty and to face it. The second step is to set up some serious mechanism for rethinking matters which seem satisfactory.
The third step is to allocate resources for this sort of thinking. This thinking will not be done by conventional R&D departments. Nor will it be done by strategy groups whose business is to maximise on existing concepts rather than to create new remote possibilities.
The fourth step is to make the third step concrete. This can be done by outsourcing the needed creative thinking or by setting up an internal 'Concept R&D' department.
On a general social level, the task is much more difficult. There are many think-tanks which are excellent at analysis, but what is needed is more than analysis. I was recently in a meeting with the top Nobel Prize-winning economists in the world. They were excellent at analysis, but not so good at generating new ideas (perhaps they did not see this as their role). I have often suggested that every government should set up a 'Centre for New Thinking' to challenge the equilibrium in all areas.
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