Change / transformation | Leadership | Management / Strategy

Doing nothing will kill you

There was a time — not that long ago, come to think of it — when doing nothing wouldn’t cost you anything.

A hot new trend would emerge, and what would we do? Study it to death. Try to master it before we took action on anything. Or better yet, let someone else do the hard work of building the blueprint so we could follow it later on without any risk.

We could get away with inaction because there was no sense of urgency. Things weren’t changing all that quickly. We didn’t have a million different competitors breathing down our necks. We were making money doing what we had always done. There was no point getting stressed over new stuff because we didn’t have to.

Today, that kind of lethargy will kill you.

Harvard Business School professor Clayton Christensen said as much in his article “Innovation Killers: How Financial Tools Destroy Your Capacity to Do New Things."

“When evaluating a future course of action, the argument goes, managers should consider only the future or marginal cash outlays (either capital or expense) that are required for an innovation investment, subtract those outlays from the marginal cash that is likely to flow in, and discount the resulting net flow to the present,” Christen writes. “… (T)here is nothing wrong with the mathematics of this principle, as long as the capabilities required for yesterday’s success are adequate for tomorrow’s as well. When new capabilities are required for future success, however, this margining on fixed and sunk costs biases managers toward leveraging assets and capabilities that are likely to become obsolete.”

In layman’s terms, here’s what Christensen says: In times of relative stability, the cost of not innovating — of doing nothing, in other words — is close to zero. Inaction won’t make us any money, but it won’t cost us anything, either.

But in times of great change and complexity — like today, in other words — doing nothing means we’re falling further and further behind. You might choose to ignore things like social business and the cloud, but your competitors are not. By choosing not to act, you might as well be choosing to go extinct.

We spend too much time worrying about ROI and not nearly enough time focused on what Reggie Henry, the tech guru at the American Society of Association Executives, calls “RONI” — that’s “risk of not investing.” And when it comes to stuff like the cloud, mobile technologies, social media, artificial intelligence, and blockchain, the RONI is astronomical. In fact, given the speed with which these things are moving, the RONI can be fatal.

So invest. Act now. As thought leader Peter Sheahan says, we’ve arrived at a point where action must come before clarity. We don’t have the luxury of studying this stuff to death anymore. We have to move. Now.

Or not. You don’t have to do this stuff. Nobody’s holding a gun to your head.

You also don’t have to stay in business.

The choice is yours.


William D. Sheridan