Most organizations would be happy to last for centuries, as the Venetian Republic did. From 697 to 1797 AD, Venice’s technological acumen, geographic position, and unconventionality were interlocking advantages that allowed the Most Serene Republic to flourish. But when change comes suddenly, it can turn strengths into weaknesses and sweep away even thousand-year success stories.
Venice’s military technology and the city’s pivotal location on the main trade routes of the time gave Venice several strong, mutually reinforcing advantages.
The Arsenal, an advanced naval munitions factory that anticipated by several centuries the production-line method of manufacture, was the beating heart of the Venetian naval industry. From the thirteenth century on, the Arsenal nurtured creativity and spurred innovation and entrepreneurship in the construction of its galleys.
The city’s geographic location helped it to defend itself from both land- and sea-based invaders. This location, consisting of a series of islands in a marshy lagoon, also pushed it to develop a (then unusual) trading and moneylending economy, since there was little land to support agriculture. And its position at the top of the Adriatic Sea allowed it to become a vital trading hub, connecting the East with the West via the Mediterranean.
If, as Michael Porter wrote, competitive advantage stems from how “activities fit and reinforce one another….creating a chain that is as strong as its strongest link,” then strategic fit is something that the Venetian Republic had in spades.
But, like a lot of successful entities, Venice reached a point where it focused more on exploitation than exploration: Venetian traders followed existing paths to success. Entrepreneurs chose not to move away from traditional pathways. Established practices and preferences became more popular than exploration and speculation. Merchants and traders played the game of incremental innovation by focusing on efficiency and optimization.
Determined to grow their own fortunes rapidly, they pressed their feet to the accelerator rather than charting new courses.
But toward the end of the 16th century the world was changing in ways that would make Venice less relevant. The Arsenal’s focus on galley ships made sense when the Mediterranean was the most important trading waterway.
Alessandro Barbero, professor of medieval history at the University of Eastern Piedmont, in Italy, notes that the galley remained for a long time the favorite vessel of Venetian navigators. But the invention of seafaring galleons allowed countries bordering the Atlantic to set up new trade routes that did not flow through the Adriatic.
This age of exploration triggered the beginning of Venice’s decline. One huge advance in technology — ships that could survive at sea for months, even years — weakened Venice’s competitive advantage and the strategic fit of its competencies.
The rise of the seafaring galleon meant Venice was suddenly disadvantaged by its location at the northern extremity of the Adriatic Sea. Moreover, its Arsenal was no longer at the cutting edge of naval technology. Venice’s economic importance had sharply contracted by the time Napoleon invaded, bringing the Venetian Empire to an official end.
What’s the lesson for entrepreneurs and innovators today? The stronger the assumption that the future will function as today does, the greater the gravitational force of the status quo. Organizations set in their ways slow down and never strive for new horizons. They are doomed to wither.
If you don’t want to be caught by surprise, you have to recognize that the future will be different from the past. The future is unfathomable, ambiguous, and open to every option. One major move by a competitor, or one new technology, is sometimes all it takes to end an empire. If your current business is like a carefully tended garden, with neat beds and high walls, that’s not enough. The next opportunity (or threat) may lie outside those walls, at the messy intersection of sectors and markets.
Entrepreneurs and innovators resist “success as usual” syndrome, exploring emerging technologies and new business models. They try to keep the big picture in mind and are wary of being too efficient and too optimized. This perspective helps them promote unconventional ways of thinking, solving problems, and challenging the status quo. They know the goal is not to chase a fixed horizon but to understand when and how the horizon moves as they approach it.