We Need Bankruptcies, not Crutches

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It sounds brutal, but those of us who’ve built businesses know it’s the truth. Business – like nature – is trial and error, death feeding life, pain feeding gain, survival of the fittest – meaning ‘the most adaptable’. Therefore, government ‘life support’ for businesses in rough times is almost always a bad choice. Bad for business, bad for the future.

Nature is brutal. Like watching a lion hunt an antilope. Some survive, some don’t. The long term survivors aren’t the strongest or the smartest but the fittest, the most adaptable – as famously stated by Charles Darwin. Evolution takes another turn etc.

We’ve spent hundreds of years and huge resources protecting ourselves from this reality. We tamed continuous evolution by turning a slope into a staircase – with seemingly controllable steps. This artificial predictability worked fine when the rate of change (evolution) was moderate, the steps small and far between. 

Needless to say it doesn’t work anymore. The accelerating rate of change is revealing reality – effectively summarized by an old saying: “Life, at best, is completely unpredictable”. We tried really hard to keep the ‘artificial stability’ alive, but the pandemic and the ever more dramatic effects of climate change put the final nail in its coffin.

This is reality, but one that countless businesses (and politicians plus many more) still refuse to accept. When the weight of the real world becomes too heavy, they demand protection from change instead of help to adapt. Like “we need to keep this business segment alive to preserve the competence” – a song sung by the oil industry to markets and governments for the past years when threatened by ‘environmentalists’ (aka ‘realists’) and (a few) politicians aiming for important changes. Right off the bat it may sound reasonable, but it’s fatally wrong. It’s like “help us stay alive until the past comes back”. Which will never happen.

Think about it: Everyone in the shipbuilding business fought hard to preserve their (impressive) expertise in building wooden ships when the iron hulled ships sailed into our harbours 150 years ago. They died. So did their ships. The world had moved on.

We can list thousands of segments, industries, disciplines and areas of expertise that have died over the years. Some of them ‘dead but not gone’, others ‘dead but not forgotten’, most of them just gone. Because however meaningless the demise of an industry may seem at the time, it is – one way or the other – the foundation for something new. Steps in an evolution. 

Natural progress if you like, and here’s the point: The crutches (aka ‘support’ by whatever means) these ‘threatened’ segments are crying for, are detrimental to progress, some times even dangerous. And remember, the requested ‘support’ comes in many shapes and sizes – in addition to direct cash infusions which became the rule in many countries during the pandemic. Like easing or removal of regulations, tax breaks, long term contracts etc. Some of us recall car manufacturers resisting mandatory seatbelts 50 years ago (remember the arguments about seat belts being dangerous?), later resisting restrictions on emissions, etc. 

These days the global oil industry is about to complete their (very successful) run to kill the planet (with our blessing). On the brink of extinction the world is making moves to disconnect, switch to other energy sources. And what does the oil industry do? They ask for government (life-) support to keep going! Delivering short-sighted and self-serving arguments en massé, ignoring reality and not the least, ignoring the future.

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My point is that knowledge and expertise expire, now faster than ever. Providing life support because something feels valuable is detrimental. Developing it – which includes accepting its continuous expiration, is not only beneficial, but necessary. In the heat of the moment it’s easy to forget that while knowledge and expertise come and go, understanding and experience last forever. They’re the cornerstones of creativity which in turn creates the future.

That’s what we want, isn’t it? Businesses and some times entire business segments need challenges and competition, not crutches and life support. Life is unpredictable. Pretending otherwise is like preparing for a ‘Kodak moment’, maybe even a ‘Titanic moment’.

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