First published on the Financial Times on 4th March 2014.
While old names often have assets and tradition on their side, they also have baggage
I used to believe it was better to restore existing organisations than build new ones from scratch. It always seemed that their resources, goodwill and momentum were a safer bet than the risks of creating something modern. Now I am not so sure.
I have spent a fair chunk of my career working with respectable institutions including Channel 4, the Financial Times, Kleinwort Benson, the Royal Society of Arts and so on – all of which have been around for many decades, and will surely continue long after I’m retired. Or will they?
Mature nations such as Britain and the US are full of established institutions that used to dominate society – banks, universities, political parties, foundations, major corporations, unions, newspapers and so forth. They endured, and the people who ran them held the power, together with branches of the state, including the judiciary and army.
But now most, if not all, of these bodies are under threats of various kinds. Technology, globalisation and changing behaviour mean many previous assumptions and hierarchies are falling apart. The end of authority across so many aspects of life is palpable: the barriers to entry for upstarts are collapsing. Loyalty too is evaporating – witness how membership of major political parties is withering; see how old brands are under challenge, as brilliantly described by James B Stewart in last week’s New York Times article about the problems at Coca-Cola; and how the banks are desperately trying to revive their credibility.
Better informed, empowered citizens are deserting old media because they want to participate, rather than be lectured. Almost every industry I know is facing upheaval, from retailing to financial services to travel to pharmaceuticals to entertainment. Models that worked for 50 years or more are no longer viable. Revolution is in the air but most of the leadership are from the wrong generation – like me.
Competition, choice and innovation are more powerful forces than ever before. While old names often have assets and tradition on their side, they also have baggage: issues such as pension deficits, the wrong infrastructure, hidebound cultures, an aversion to experimentation, legacy technology and a sense of pessimism. Too often they are obsessed with looking in the rear-view mirror, fighting yesterday’s battles, in denial about the future.
Oxford university, my alma mater, is a classic case of a complacent establishment that is refusing to reinvent itself. It will consequently find life much harder in the 21st century. Britain’s finest educational name has shunned the entire academy school movement, ignores the explosion in online learning and fails dismally to exploit its intellectual property commercially. It has been captured by insiders, too many of whom teach degree courses for the old world. It lives off past glories, and is doomed to fade unless it reforms vigorously.
Start-ups, be they companies, charities or social enterprises, are cheaper and quicker to launch than ever before. I’m involved with fresh initiatives in banking, education, baking and pubs among others – often it is simpler than trying to transform the old oligopolies. Many of the latter are finding it hard to cope with a lack of trust and the end of deference. They will no doubt disappear or be merged, as the public desert them.
Niall Ferguson argues in his book The Great Degeneration: How Institutions Decay and Economies Die that the dwindling of core institutions, including parliament, is undermining western democracies. But I believe changes can be healthy if new constructs replace worn-out systems. Dynamism and adaptation are necessary to avoid extinction. How can Britain take its second political chamber, the House of Lords, seriously when there are 28 times as many peers aged 90 or over as there are peers aged under 40? It is an expensive, out of date gerontocracy that should be wholly restructured or shut, like a bankrupt business. But vested interests always cling on to sinecures and the status quo, protective of their hard-won prizes.
Custodians of great institutions have a responsibility to press forwards and, if necessary, ignore history. The world is moving too fast. It is a more comfy life for stewards if they permit drift but in the long run this policy is a profound dereliction of duty.