The retailing giants of the past few decades, such as the four mentioned in the title above, enjoyed long periods of huge success. Over the past ten years, unfortunately they simply sat back and watched Amazon become the new king of retailing. Amazon absolutely owns online retailing. Why did the giants not react? Let’s face it, successful organizations tend to become complacent. In some cases that disease becomes so bad the company gets obliterated (Sears) while others eventually begin trying to catch up.
Why weren’t these big retailers adequately paranoid and jumping on the online opportunity 15 years ago when Amazon was just starting to gain momentum? Here is what I believe are the five key reasons why complacency occurs:
1.) Pride – Successful organizations or even organizations that are relatively stable, often end up being quite proud of what they have achieved. Once pride sets in, you simply get too much happy talk from senior management. There is no sense of urgency about what the future will bring and what it will take to be successful going forward.
2.) Fear – In many instances the pride and prior success causes a leader to become a bit arrogant and critical of anyone suggesting change is needed. Consequently it isn’t long before the troops understand that the messenger of bad news typically gets harshly rejected. The resulting fear leads to low candor in the organization and a minimal-confrontation culture.
3.) Excess Staffing– Managers always believe they could perform better if they simply had more people. For successful and/or stable organizations those staffing requests usually got approved. Hence, you get this built-in tendency to increase staff, causing more and more bureaucracy.
4.) Consensus-Driven Decision-Making– In general, people want to be involved in key decisions. In an over-staffed environment with all kinds of staff groups, committees and task forces, you end up with consensus decision making. This leads to watered down decisions that are simply compromises across large groups of people. Also, it leads to significant delays in making things happen.
5.) Antiquated Organizational Structure– With success and stability, you end up with organizational structures that focus employees on narrow goals associated with what has brought people to success in the past. There is no interest in anyone doing anything different versus the past. The thinking is: we simply repeat what has brought us success in the past.
Strong leadership is all about being very aware and aggressive about the need to fight off these innate tendencies that lead to complacency.