In steering towards the future, the old is often discarded for the new. Yet there is a trend emerging that suggests embracing the old might actually be the ‘new’.
Lloyds Bank’s recent ‘By Your Side’ campaign, celebrating the institution’s 250 year history, features its black horse at work in the fields and in the streets of London carrying men to fight the Great Fire.
Its new campaign, ‘For Your Next Step’, features the same black horse running through a stream of life events, births, marriages and deaths and seeks to further cement the Lloyds brand as reliable, honest and traditional.
Yet Lloyds are pushing the boundaries in terms of innovation, it is the largest provider of digital products in the UK and are experimenting with heartbeat authentication technology.
Can an old dog really learn new tricks?
Our research suggests not only can heritage firms such as Lloyds push the boundaries in terms of innovation, but they might actually be better at it than their younger rivals.
We examined six highly successful family firms (Aboca, Apreamare, Beretta, Lavazza, Sangalli and Vibram) and found that in each case their tradition had lent itself to distinctive, in depth knowledge and had used it to innovate, connect more closely with customers and achieve superior competitive advantage.
Vibram is a classic example. A traditional mountain wear firm, founder Vitali Bramani is credited with inventing the first rubber sole for hiking boots in the 1930s.
Since then Vibram soles have been associated with cutting edge footwear design – its Fivefingers barefoot technology has revolutionised outdoor footwear and took an Outdoor Industry Award in 2014.
Similarly, Aboca is a health care company founded by Valentino Mercati, ranked amongst the best Italian companies by the European Business Awards for its ability to develop homeostatic and pathological healthcare solutions based on complex natural matrices found in ancient officinal herbs.
Heritage can provide the seed for innovation
To innovate through tradition, firms not only need in-depth knowledge of their market and customers, but also they need to know and appreciate the heritage of their firm or territory.
But, ultimately, the key factor that enables heritage firms to innovate successfully is a superior capability to take in and reinterpret past knowledge.
This capability allows firms to be extremely innovative while remaining firmly anchored to the past. Integrating knowledge from the past into innovations elicits positive feelings and legitimises innovative functionalities.
This past knowledge fosters a deeper connection with their consumers and a readier attitude to adoption of the new, or in other words, consumers already trust the brand and as such are more receptive to innovation.
Volkswagen’s latest campaign captures this perfectly. The campaign video, perfectly titled as ‘Companion’, echoes the Lloyds approach in that it follows a young man’s journey through life, from childhood to adulthood.
‘By his side’ throughout? Yes, the reliable Volkswagen vehicle. From a child in the back of his parents’ car through to driving his own children, Volkswagen seeks to affirm its longevity and trustworthiness as a brand. Given recent scandals surrounding this particular organisation, it will be interesting to see if Volkswagen's heritage can save their reputation in the long term.
Don't give in to 'recency bias'
In steering towards the future, businesses therefore need to stop warning managers with responsibilities for innovation to "dismiss the old and make way for the new".
This approach, which has been the common advice from innovation management experts, risks to create a ‘recency bias’ that may significantly limit a firm’s innovation potential and prevent it from realising the benefits of past knowledge.
Think about the struggles Polaroid went through after abandoning the instant film business, while the second-hand market for Polaroid vintage cameras was thriving.
Thanks to the recent announcement that "Instant Is Back!", Polaroid is again considered as one of the most innovative companies worldwide.
Other firms, like Cartier and the Walt Disney Company, continue to base their competitive advantage on their capability to blend traditional knowledge and cutting-edge technologies to reinterpret traditional products with new functionalities and/or new meanings.
Therefore, successful innovation managers are not only those who find new ideas, but also those who are able to recognise the potential advantages of old knowledge and learn to successfully innovate by leveraging rather than discarding heritage and tradition.