Why old dogs need to learn new tricks

Established businesses often hold tight to what made them successful, but those same practices can become their biggest limitation.

Long-standing businesses have established themselves through market leadership, creating products that outlast long periods in the market. With product specialization, however, many companies have also held on to limited ways of managing their business.

Two common practices we see:

1. Satisficing instead of optimizing Optimization can be complex, and we've seen managers opt for "good enough" outcomes rather than optimal ones. Sometimes there's a lack of awareness that the solution isn't optimal; other times, there's a lack of knowledge to do something innovative.

One way this becomes visible: barriers aren't removed, they're replaced by smaller barriers or workarounds. No efficiency gain, no profit gain, just redistribution of tasks.

2. Knowledge acquisition through hiring (without the culture to support it) While knowledge can travel from company to company, research shows that for a new company to fully take advantage of knowledge that comes with a hire, the internal culture must be set up for absorption.

Mechanisms have to be in place to encourage knowledge spillovers, and collaboration must be promoted in meaningful ways. Given old, inherited management practices, this is rarely the case.

The bottom line: The methods and principles within a business carry competitive implications, and execution relies on the skill and knowledge of your management.

When managers grow, only then is there knowledge gain that can trickle down, creating a more informed and capable workforce.