One of the major pitfalls of business and organizations today is believing that what they have done in the past will continue to work into the future.
I understand even hearing that may bother you, but it is a fact.
It is human nature to find comfort in what we know, in resisting change because that which is known is safe. While some may call this complacency, I refer to it as legacy thinking. No matter what it pertains to, legacy thinking keeps us firmly planted in the past and incapable of moving forward.
You may want everything to stay the same, but it doesn’t.
As you try to cling to what has worked, you tend to forget that the world will continue to change around you. All that really results from legacy thinking is a stress-ridden protect-and-defend mindset. All of your energy and, in many cases, money goes toward desperately protecting the status quo.
If you are a business leader, putting out fires becomes your job as disruptions from the outside hit you hard.
Why worry about legacy thinking?
As I have stated in the past, legacy thinking represents the strategies, thought processes, and actions that are becoming outdated. This can be defined as a mindset not suitable for providing you with the same growth you are used to in the modern market.
Tied closely to legacy thinking in today’s world is legacy technology. This type of technology you employ that no longer operates efficiently, effectively, or safely too often acts as a great reinforcer of a legacy mindset. It works, so why replace it?
The price you pay with legacy thinking and legacy technology can be astronomical — that’s why!
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How legacy thinking is costing the banking industry
A legacy mindset connected to legacy technology creates a threat to your internal operations, leading to a large financial loss. How so? Let’s take a look at this recent example regarding financial institutions.
In 2023, the company Zelle faced multiple technological glitches that locked out thousands of clients and stopped the flow of funds. In total, this cost JPMorgan Chase millions of dollars.
Today, banks rely heavily on banking systems that were instituted decades ago. These applications have older programming languages that are rigid and difficult to accommodate for flexibility and scalability. Outages, glitches, and even security risks due to improper IT systems are running rampant with these different types of software.
According to IDC Financial Insights, legacy technology cost global financial institutions $37 billion in 2020, and that number is expected to rise to $57 billion by 2028! That is an incredible amount of loss that is already being predicted. But this is a Soft Trend that can be changed!
Legacy technology and the auto industry
Legacy technology hurts more than just financial institutions. In the wake of the COVID-19 pandemic and natural disasters like the Texas ice storm, the United States faced a shortage of semiconductor chips for automotive vehicles, and we are still not at capacity in 2024.
One automobile can use upward of 3,000 chips. The auto industry is currently researching how to increase chip electrical capability to reduce this number, but we are still years away from a breakthrough. In real time, we are seeing the detrimental effect of the auto industry’s reliance on legacy technology with regard to these semiconductor chips. Trying to find a more efficient technology while behind the curve leaves many companies ripe for disruption that they could have prevented!
It is never enough to protect and defend the status quo. We should be learning from the past in this modern age of digital transformation and technological disruption.
Organizations need to move past their old way of thinking and strategically look toward the future.
Change your mindset
Always remember: I do not disparage developments from the past. There is so much to be said about the usefulness of what we have implemented in industries thus far. This is why I swear by my Both/And Principle.
Do not completely scrap your old ways of doing things. What you need to consider as a business leader is being Anticipatory in how you address the changing market. Choose to embrace innovative technology to pre-solve disruptions before they disrupt and inhibit your growth.
It is important to take time to conduct an in-depth review of the systems and thought processes you have in place at your business or organization. Do not be afraid as a leader to ask the questions that need to be asked.
- How long have you had this same system in place?
- Are there glitches or malfunctions, no matter how minor?
- Have your costs of maintenance increased throughout the years?
- Are you keeping up with your need for increased data storage, your customer base, and the higher demand by customers?
Next, I encourage you to take an exponential look at recent innovations in the market. For instance, would cloud computing improve your operations or increase security for your customers? Are there systems in place that would better accommodate 5G speeds? Could the use of AI streamline some of your processes?
Legacy thinking and legacy technology may be comforting, but that comfort will not last. Having a reactionary approach will only inhibit your growth. It is time for business leaders to shift away from a legacy mindset to an Anticipatory one instead, transforming the future into an advantage instead of trying to hide from it.
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