Is Your Legacy a Moat or a Trap?

There is an unseen force at work in every boardroom.

It’s not the regulators, the latest interest rate moves, or the newest fintechs.

It’s the comfortable assumption that what made you strong in the past will keep you safe in the future.

For many institutions, that legacy has functioned like a moat. It protected margins, built share, and rewarded careers.

Over time, though, the same legacy can start to act less like a moat and more like a trap. It narrows your field of vision, channels resources into yesterday’s successes, and makes it harder to move at the speed of the market around you.

Geoffrey Moore put a sharp point on this in his wonderfully named 2011 book: Escape Velocity: Free Your Company’s Future from the Pull of the Past. His core question: why do so many successful, established enterprises struggle to build meaningful positions in next-generation businesses, even when they can see the disruption coming?

In financial services, you can feel this tension every day.

The Gravitational Pull of the Past

Moore’s premise is that most established companies suffer from a “power deficit”. They are very good at delivering short-term performance in existing businesses, and much less good at building the future sources of power that will matter over the next decade.

In practice, that gravitational pull shows up through a few familiar forces:

1. Familiarity and comfort

   Leaders know the legacy lines of business intimately. They grew up in them. They can read those P&Ls in their sleep. So they overestimate the certainty and safety of the old and underestimate the potential of the new.

   
   

2. Past success as a faulty map

   “What got us here will get us there” is the implicit assumption in many planning cycles. The playbook that worked for branch-led deposit growth in a stable rate environment is treated as universal truth, rather than something that was context-dependent and time-bound.
   

3. Fear of messing up, not hope of breaking through

   Decision making is often dominated by career risk, reputational risk, and near-term earnings risk. Optionality and upside take a back seat. Loss aversion takes over.
   

4. Planning and compensation wired to last year

   This is the one Moore points to most directly. He argues that the root cause is the habit of using last year’s operating plan as the baseline for this year’s business plan. The result is that resource allocation never really escapes the assumptions and constraints of the prior year. You simply spread limited resources like peanut butter, a bit more or less across the same portfolio.

When you combine these forces, you get a very consistent outcome. What we call “extending the line” of existing results.

Leaders of legacy businesses move more slowly than the world around them, not because they are blind or lazy, but because the internal gravity is stronger than the external signals.

Meanwhile, the World Continues to Accelerate

Moore’s original argument was written in the context of globalization. His question was: what changed so dramatically that “steady as she goes” stopped being a responsible strategy for large companies. His answer, in a word, was globalization.

Today I would widen that lens:

• Global democratization of capital and competition

• Digitization of customer behavior

• Platform economics and network effects

• Regulatory shocks and macro volatility

It's not that any one of these are new. It is that their combined speed and interdependence amplify one another. Categories mature and decay faster. Profit pools shift faster. Customer expectations change faster.

If your organization’s rate of learning and resource reallocation lags the rate of change in the market, it does not matter how strong your current position is.

Gravity wins.

Three Signs Your Legacy May Be Holding You Back

1. Overfunding the legacy, underfunding the future

   The core lending and deposit machines still generate today’s earnings, so they naturally absorb the bulk of capital and leadership time. New growth bets are treated as “nice-to-have experiments” that must prove themselves quickly while drawing on leftovers.

   
   

2. Treating last year’s plan as this year’s strategy

   Budgeting starts with last year’s numbers. Every line item has a constituency and a story. Cuts are made at the margins, usually pro-rata. New initiatives are forced to find room “within your current budget”. That is not strategy. That is gravity.
   

3. Innovation theater instead of portfolio management

   Pilots, labs, and partnerships look modern on a slide, but they are not wired into a coherent portfolio of next-generation categories. There is no clear sense of which markets you are actually trying to win, in what sequence, and at what scale.

None of this is due to bad intent. It’s just what happens when you have a culture and incentives tied to hitting this year’s performance targets, without giving anyone equivalent responsibility, tools, or incentives to build long-term competitive advantage.

That is the “power deficit” Moore is talking about.

And it’s why gravity may be turning your legacy moat into a trap.