The legacy legacy

Many upstarts are based around one person's massive ego and materialistic dot-com dreams rather than a mission of creating success by business innovation.

I'm beginning to think the popular "legacy" label is being applied too liberally and often unjustly. The tendency is to use the term automatically to tag a company as archaic because of its age, its size or the perceived condition of its infrastructure. But can an organization be categorized fairly based on those factors or should it be judged after a more thorough evaluation of its responsiveness, its adaptive actions and the intelligence of its management?

Many negative characterizations are based on simplistic perceptions that are exacerbated by marketing - and sometimes journalistic - spin: New ventures are fresh, groundbreaking, nimble, unshackled. Incumbents (not often referred to as ventures because that implies certain levels of innovation and risk) are stale, routine, sluggish, laden.

Some of this terminology is accurate. Some upstarts with intriguing business models will be wildly successful if they aren't already. Some incumbents are losing face and market share because they are unwilling or unable to react to change. Then again, some new ventures will fail, and some established companies will make the right strategic moves and succeed.

Part of the issue is that many new undertakings are run by people who have good ideas and access to capital but lack an effective organization or a sense of how to put one in place. They might also lack the right motivation: Many upstarts are based around one person's massive ego and materialistic dot-com dreams rather than a mission of creating success by business innovation.

The reason they get so much attention and are perceived to be so successful early on, however, is partly because of theories about their competitors. To be fair, large organizations do not change quickly. They have many layers of management, which makes effective communication - and thereby innovation - difficult. They are often comfortable with their market share and revenue streams. Some of them, having figured how much maneuvering time their current positions will allow, may make more subtle and calculated moves that involve less risk.

Innovation, however, is required at the human level and the organizational level. That's why upstarts so often are identified with the people who run them. And that's why an incumbent company that possesses human talent with the right kind of vision and a good business structure can navigate through a successful transition.

The Internet is at the core of all of this, and it is important not to overlook the ultimate transformation it drives. The Internet and everything associated with it is the reason young businesses are forming and old ones are adapting.

I'm convinced that at this early stage in the Internet transformation, it is not yet possible to determine which companies will ultimately succeed and which will eventually fail. And even if it were possible, it would be much more complex than assigning categorical labels to companies based on the length of time they've been in business. Most businesses are concentrating on the infrastructure and transport components of the conversion; the true measures of their success will not be evident until they move more fully into the content and commerce stages.

At that point, it will be possible to discern which companies fully understand the broad business and sociological implications of the Internet, and which are either short-sighted or misguided by the notion that it is simply a get-rich-quick proposition.