The value of legacy

Words change their meaning as the years roll by.  You know all the familiar examples (you’re in the words business, after all), but I’ve been struck recently by the changing meaning of “legacy”.  Not too long ago, a legacy was a handsome inheritance built up over a lifetime by an individual or an organisation; a proud and solid expression of personal or institutional achievement. 

Then—almost overnight, as IT people started labelling anything over a couple of years old as “legacy”—the word became toxic. The legacy that was once an enabler is now an inhibitor; the old well-spring of prosperity has become a ball and chain, and its dead weight prohibits full participation in the 21st-century economy.  

I recently attended a business breakfast where we discussed the next round of technological change, set to revolutionise everything from insurance to car parking.  Another set of known knowns will be abandoned, but—our host asked—how should established companies adapt to these changes? No one had a compelling answer.  Across every business sector, managers are seeking ways to minimise the impact of their legacy activities so that they can explore new opportunities. It’s so much easier without a legacy.

Retailers are all too familiar with the challenges of legacy. Life has changed since W H Smith’s bicentenary celebration in 1992, which told a story of progressive legacy building, across sectors and around the world. Most of that legacy (even News) has now moved on, and the company values what it can achieve tomorrow, with no time for yesterday’s memories.

WHS today is unsentimental, and will continue to reinvent itself. But for retailers in many sectors, a chain of hundreds of long leasehold stores, built up when a high street presence was everything, has become a millstone that is hard to escape without some form of fundamental restructuring. With a depressed demand for high street leases, retailers have to press on, seeking to extract some sort of income from these sites, knowing that many of them will never turn a decent profit again. Too much of their fiscal and strategic capital is being invested in sustaining the legacy, rather than creating new solutions to tomorrow’s customer needs.

Retailers’ more successful divisions will have to be split from their struggling compadres, if whole enterprises aren’t ultimately to fail. This will lead to more restructuring pain, but “legacy strength” is of little value compared to well-capitalised and focused efficiency.  Legacies must prove their future relevance or be shaken off, if today’s market leaders are to thrive tomorrow.