Is Institutional Innovation Possible?

Institutions make dangerous leaders when times are changing. Ambitious entrepreneurial communities should be wary of their local institutions dominating the conversation and community leadership roles. Why?  Because institutions inherently oppose change. The word institution means “an established law, practice, or custom.” The ability to oppose change is the strength of an institution. After all, opposing failure is an adequate means for success and sustainability (read: don’t die). That same ability to oppose adverse change has a corresponding impact on an organization’s ability to innovate. Opposing progress can look very similar to opposing adverse change. After all, the fear of the unknown is often justified. What is new can be considered bad when all change is viewed as risky. In my entrepreneurial experiences, creating change is the primary means of success. In my institutional experiences, following established practices were the primary means of success. Institutions can find themselves in a precarious position when the world changes in big ways around them. The established practices that prevented failure in the past may prevent progress in the changing present. All negativity aside, institutions play a critical role in all entrepreneurial communities. The nebulous term “institution” usually applies to the most dependable organizations that have an established track record of creating value and making a difference. Finding new ways to do things is at the heart of the progress of startups and entrepreneurial communities. New ways of doing things that prove to be successful are worthy of preserving, worthy of establishing, and worthy of institutionalizing. The tension here between innovating and institutionalizing is expressed at the fork between new possibilities and established success. When an institutional mindset includes a fear of failure, therein lies the danger of taking necessary risks and bearing necessary costs that greater success will require. Entrepreneurs must establish healthy boundaries with their institutional partners. The point is to work together better, not avoid collaboration altogether. And entrepreneurs will have the best sense of what entrepreneurs need. With the right institutional partners, this feedback is considered valuable and essential rather than threatening or rejecting. Nothing ventured, nothing gained. Nothing institutionalized, nothing retained.