Neil Tambe

I'm a Detroiter who happens to enjoy writing, national parks, orange juice, the performing arts, and fanciful socks. More than anything though, I aspire to be a good husband, father, and citizen.

Measuring Resistance to Institutional Change

A few weeks ago, I wrote up a post exploring whether or not traditional institutions are starting to lose power. The question I was struggling with was how the balance of power was (or wasn't) shifting between traditional, centralized institutions and non-traditional actors.

At the bar, Nick Andrew (what up doe) and I were arguing (more accurately: he was lawyering me / taking me to school) about whether this shift in power was or wasn't happening. As it turns out, that's probably not the most important point.

The more important point is that both sides - traditional and non-traditional actors - aren't rolling over and letting the other "win". Both types of institutional actors are trying to stake out a claim as the world changes. If the shift in power is happening, traditional actors are digging their heels in and are trying to hold onto their power as long as possible. If the shift isn't happening, non-traditional actors are certainly trying to flex as much muscle as they can to angle out their larger competitors.

So, this is all great and theoretical and nerdy, etc., but it has real consequences too. When two competing powers try to live on the same turf there's often conflict. And when the powers are powerful and the stakes are high, the conflict is big. What this means is...there's probably going to be some trouble starting. Big trouble.

What's worse, if institutions are resisting change it means they aren't changing. This is problematic, because we desperately need institutions to change.

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Deloitte's Center for the Edge (full disclosure: I've spent time researching there so I'm not an unbiased observer) has an index called the Shift Index which measures the macro-level shifts that are occurring in the economy and society. They're measuring the way our world is changing.

What the Shift Index isn't measuring, at least in my opinion, is resistance to the change. After brooding on the conversation I've referenced and reflected on above, I think there's a lot of value that such a measure would bring. If you are an entrepreneur, you could determine which industries are ripe for disruption. If you're a policy maker, you could figure out where to spend your time trying to smooth out the transition. If you're a social sector change maker, you could use the index to determine which sub-groups have the most need for assistance.

A natural question to ask is, how one would even go about measuring resistance to colossal, macro-economic change? Well, I think there are a few categories of metrics that might be appropriate - rent-seeking behavior, risk-aversion, and existence of conflict. Here's how I'd describe each category:

Rent-seeking behavior: as I understand it, rent-seeking behavior is basically when a company tries to get a bigger share of existing wealth instead of trying to create new wealth. Some metrics might be:

  • Lobbying activity by industry
  • Advertising and Marketing spend in proportion to innovation
  • Trade grievances levied, by industry
  • Amount of legislation that creates barriers to entry for new players
Risk-aversion: If institutions are taking less risk, it might mean they are trying to shield themselves from threats in their domain. That might be due to the institution trying to prevent itself from vulnerability - to me that's resistance. Some metrics might be:
  • Industry consolidation
  • Accumulation of cash on balance sheets
  • Rates of new product development (lower numbers indicate risk aversion)
  • Rates of acquisition of competitors
Conflict: If there is already conflict between institutions it means there is resistance to change. So why not measure it? Some metrics might be:
  • Number of lawsuits raised in an industry
  • Hostile takeovers in an industry
  • Rates of antagonistic advertising
  • Union strikes/protests/grievances
Anyway, here are some thoughts about measuring resistance to change. Why or why don't you find measuring resistance to change valuable? How would you measure resistance to institutional change?