Bob's Gutsy Leadership Blog

Avon: The Latest “Deer in the Headlights”

It is a psychological fact that if a deer is standing in the dark on a road and a car’s headlights shine on it, the deer is blinded momentarily and it freezes.  The funny thing is, it happens not only to deer but to companies and people as well.  Psychologists define the commonly used phrase “deer in the headlights” as “a state of indecision caused by surprise, anxiety, fear and confusion”.

Very recently Avon, the famous door-to-door cosmetics company, fired its CEO after that individual had been in the position for 5 years, during which she truly acted as a “deer in the headlights.”  To demonstrate how far Avon has fallen, it turned down an acquisition bid in 2012 from the beauty giant Coty for $10.7 billion, and today the market value of Avon is $1.3 billion.

In the 5 year tenure of the CEO who just lost her job, the stock price plummeted from the $16 range down to its current $3.  During her reign, basically no major initiatives were launched.  She let the sales force atrophy by -2% per year, watched Sephora launch a state-of-the-art website for cosmetics and become one of the best performing companies in the sector, and watched upstarts Ulta Beauty and Birchbox successfully launch top caliber websites that drew younger customers.  While under constant assault by Wall Street, the Avon leader simply froze in her tracks.

As I have pointed out in the past in these blogs, many major companies have incurred the same fate, such as RIM/Blackberry, Kodak, Digital-Equipment Corporation, Blockbuster, Circuit City, etc.

The steps to avoid this fate are well known, but often ignored.  Here are the key points we need to remember:

1.) Don’t Freeze; Attack! – It’s obvious that humans, to a varying degree, are wired so that when they see something shocking it generates anxiety, surprise, and confusion.  We need to recognize that and deal with it as quickly as possible; developing a plan for tackling the future.

2.) Protect Your Innovators! – There are creative people out there that thrive on change and this type of employee needs to be treasured.  These clever change agents are easy to spot because they tend to march to a different drummer and quite often are a real nuisance!  Importantly, make sure you have a few of these kinds of folks in your organization, and as difficult as it can be, they need to be listened to carefully.

 3.) Beware of the Status Quo Seekers! – While first stunned by a surprising move in the marketplace, many individuals will attempt to rationalize why the current business model is totally acceptable.  These people will attempt to shut down or minimize the need for any kind of change effort.  You need to protect your change agents from these people.

Just remember, when bad stuff happens don’t freeze; attack!

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