This is a guest post from Lisa Lewis. Lisa is a participant in this year's Koch Associate Program and is working hard to learn and apply MBM. She is currently working at the Bill of Rights Insitute on their New Media resources.
Fifteen years ago, if you said that Blockbuster would be bankrupt today, nobody would have believed you. A booming, scalable business model seemed to show that libraries could be profitable and that video was the medium of the future. Yet, the news shows that if you don’t make yourself obsolete, someone else will: after losing too much business to companies like Netflix and Redbox, Blockbuster has filed for bankruptcy. If you’ve been watching the innovation around the mail and online movie rental industry, you aren’t surprised. Joseph Schumpeter’s principle of creative destruction practically guarantees that one day, every invention will be obsolete. In this case, a process became obsolete. Newer, more cost-effective distribution channels arose from changing technologies, and market forces got the best of our friendly neighborhood video store. Some companies manage to grow and thrive in a competitive, changing environment while others perish. In The Science of Success, Mr. Koch says that one of the keys to surviving constant creative destruction is to maintain a culture that promotes challenge and questions. You’d want to challenge and re-evaluate your mission and vision every now and again to make sure you’re creating value in society. There’s a natural prompt for re-evaluation in the for-profit world: falling profits. As an Associate Program participant, I’m interested to see how challenge, re-evaluation, and creative destruction tie into the work of nonprofit organizations as well. Absent the price and profit signals that typically indicate that your market is disappearing, what kind of signs should nonprofits watch to make sure they’re not becoming obsolete or insignificant? Or, perhaps, what signs should investors watch to see if their funds would be put to better use elsewhere? An added problem is that many charitable organizations would no longer be necessary if they achieve their mission. For example, the March of Dimes, after curing polio, stayed in business by rebranding itself against a much less “curable” problem: birth defects. Does becoming obsolete give nonprofits an incentive to work quickly enough to avoid creative destruction but not purposefully enough to truly solve problems in society? Thanks for the post, Lisa! If you'd like to submit a potential post, please email Ann.zerkle (at) cgkfoundation.org.
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