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Imagine a parallel universe
Imagine a parallel universe: One where your cell phone is built by Western Electric, runs on an IBM platform, and connects to a network operated by Northwestern Bell. AT&T made big promises, but lots of other firms delivered.
■ America's free-market economy accepts a challenging trade-off: We give up a whole lot of marketplace stability in exchange for a high degree of dynamism -- most of it productive.
■ The lack of stability renders itself all over the place: Products beloved by hard-core fans disappear (farewell forever, Tab Cola), one era's entertainment giant becomes the next era's pawn (as 27-year-old Amazon buys 97-year-old MGM), and the rise of a new industry decimates the prospects of another (whither the newspaper classified ad).
■ The consequences can be pretty harsh for customers, suppliers, shareholders, and most especially employees, if firms are unwilling or unable to adapt, change, or pivot as the market deems necessary. And sometimes the conditions they face are insurmountable: Some production innovations, new competitors, or substitute goods are too much for any industry to overcome.
■ But for all the comforts that stability can bring, it also tends to stifle innovation. If everyone is reasonably satisfied with their position, then the opponent is change itself. And that's why we can look back on the era of the telephone monopoly and wonder at just how much has changed since 1984 by comparison with what had changed between 1947 and the breakup of the Bell System (for the record: not nearly as much).
■ A lot of praise and attention gets lavished on people who call themselves "disruptors", but one of the things we really ought to encourage more in places like our business schools is the art of institutional evolution. Companies like Textron, which started as a small textile producer and is now a major aviation manufacturer, are the kinds of firms that deserve considerable attention from the people who run our institutions -- not just our for-profit businesses, but also our government agencies, non-profit organizations, co-ops, and family businesses, as well.
■ Dynamism doesn't have to hurt -- at least, not very much. But it's up to sound, forward-thinking leadership to make sure that the comfortable status quo doesn't take the place of continuous growth and development. A dynamic economy is the harder path, but it's clearly one with desirable payoffs, too.