Dispatches From the Strategy Trenches: When companies get blindsided
“What are you telling me? Your strategy just isn’t going to fly with either me or my Board. Our situation isn’t as bad as you’re making it out to be.”
Boy, these are not the words you want to hear as a newly promoted Partner in a consulting firm. My team had just presented a well-researched, logical, fact-based argument which we firmly believed would persuade our client that a change of strategy was imperative.
My client was the CEO of a family-led regional retailer. They’d been around, and successful, for 3 generations. In fact, their world was changing dramatically. Competitors were introducing innovative formats targeted to specific consumer segments and were gaining market share at our client’s expense. But the CEO – and the handpicked Board – would have none of it. They rejected any suggestion that their existing strategy and business model wasn’t up to the challenges they faced.
We’ve all tracked the stories of seemingly unstoppable industry leaders caught by surprise by market innovators. These companies are run by smart, (mostly) well-intentioned executives. So how do they end up getting blindsided and left scrambling as things begin to go south (as it eventually did for my retail client who, unfortunately, went bankrupt a few years later)?
It’s easy to chalk it up to arrogance. Have you ever witnessed a management team that’s drunk a little too much of their own Kool-Aid? Something along the lines of: “We’ve been successful for (fill in the blank) years and we know our market and customers better than anyone.” Until, of course, they don’t.
It’s not just arrogance.
Though arrogance can play a role, I’ve seen that three other entirely manageable and thus avoidable phenomena help explain why companies and their management get blindsided:
- Weak “Corporate Radar.” This means there is no structured approach to identifying and evaluating the changes occurring in their market. Which are the important events that could mean bad news? Or good news? Weak Radar companies don’t really know. And if a shift does occur in the market, will the company even know about it? Weak Radar companies are often caught unawares.
- “Belief Obstinacy.” We’re hardwired to believe what we’ve come to believe. Changing our minds is really, really hard. Research highlights this all-too-human tendency, and I’ve seen it time and again in my client work. Leadership teams, particularly in companies that are drifting but haven’t hit a crisis point, have trouble acknowledging looming threats to the business – despite mounting evidence to the contrary.
- “Don’t Rock the Boat!” Some leadership teams have a paralyzing fear of rocking the boat. Often, what this is really about is fear. Fear that change – even necessary change – will trigger a reaction that will spin out of control, or, more cynically but no less true, imperil a manager’s personal fiefdom. When this happens leadership opts for what they believe are incremental, safer, less risky changes that have the illusory virtue of manageability.
Either way you have risk.
The truth is, changing a model that everyone understands and is comfortable with is scary stuff. It’s risky. But what is also true is not changing a model in a changing world can be even riskier.
So what to do? The best companies I’ve seen are those which are able to look at the world as it’s going to be and make the commitment to adapt, and even shape, the outcome. These organizations:
- Have courageous leadership…It all starts at the top. These leaders are prepared to embark on the journey toward new business models for a new world. Without this type of leadership nothing will happen, and any change will feel like pushing a rope up the hill.
- Allow themselves to consider the unthinkable by projecting a number of possible realities within their broad business ecosystem.
- Develop finely tuned “corporate radar” by identifying and tracking key potential events or milestones that might indicate a changing game.
- Are able to move quickly to exploit – or respond to – industry changes because they’ve considered what new skills and capabilities are needed to win, and have pre-established alignment among their stakeholders.
Start with the conversation.
My own research, and personal experience in the strategy trenches, show that exploring how the world might look and work leads to a conversation about possibilities. And simply having those conversations triggers further conversations about how the business might change, where the organization would like to be, and what capabilities would be needed to get there. Organizations that encourage and nurture these “conversations” are much less likely to be caught flatfooted as the market or consumer needs change…and you know they always do.
Picture credit: “Surprised”, 1891, Henri Rousseau, The National Gallery, London