Lesson #2: Complacency and a Closed Mind Will Choke the Golden Goose
Complacency and a Closed Mind Will Choke the Golden Goose Lesson #2: Learned from the Rise and Fall of Vanquished Companies – July 2013 Dave Garlock, Fahrenheit Finance
This article is the second in the series of interpretations of the concept of “Habits of Mind” set forth in Good to Great to Gone, the 60 Year Rise and Fall of Circuit City by Alan Wurtzel, former CEO and Chairman of Circuit City. “Habits of Mind” represent ways of thinking used by executives who successfully develop strategies.
The first Habit of Mind covered in a prior article was Be Humble, Run Scared.
The second Habit of Mind is Curiosity Sustains the Cat: “The world is constantly changing. Be open and curious and strive to learn from others. Continuously try to understand the market and the changing economic, demographic, and other relevant forces at work that impact your business. Study your competitors. They have insights and practices worth emulating and refining.”
Mr. Wurtzel provided numerous examples of the successful execution of this Habit of Mind from the founding of the business in 1947 through the birth of CarMax. He also discussed how the failure to follow this second Habit of Mind may have contributed to the downward spiral of Circuit City.
A visionary business leader looks to places where a need exists but competition has failed to tread. When success is recognized, those strategies are quickly emulated by others. The marketplace is quickly populated with imitators who copy the concept and extrapolators who improve on the concept; provided the barriers to entry are not too high. It is exhilarating to be a visionary in birthing a concept. It can become consternating when the extrapolators provide new offerings of greater value and convenience by improving on the original concept that the visionary failed to evolve. A successful visionary will constantly reinvent and reinvest, often long before the initial concept has run its life cycle.
The message from Curiosity Sustains the Cat is (1) continuously evaluate the factors affecting the evolving world in which you compete and (2) treat your competitors as worthy and knowledgeable adversaries. Be careful when discounting the abilities of competitors. While your company may be setting the world on fire today with its bleeding edge strategies, competitors may seize the torch tomorrow with more appealing approaches that you did not anticipate. The failure to appreciate competitors’ evolving strategies and risk tolerance may blind a company to the need for change and evolution of business models.
Why do companies fail to follow the Curiosity Sustains the Cat Habit of Mind? I am sure you can add to this list from your experience.
- Complacency and intellectual laziness;
- Inability to recognize or respond to changes in the environment;
- Denial on an intellectual and emotional basis of faltering strategies and tactics;
- Condescending and deprecating attitude towards competition, technology, and markets; or
- Inability to make a decision due to lack of creativity or confidence (albeit fear) resulting in paralysis by analysis.
Behaviors consistent with Curiosity Sustains the Cat:
- Have a business planning process that objectively identifies and analyzes competitive, economic, regulatory and technology trends and risks impacting your business. The analysis must be quantitative and qualitative in nature. Update the plan every 18 to 24 months.
- Avoid pride of authorship in regards to deployed plans and concepts. Do not allow them to become immutable and beyond reproach. Be prepared to write the next chapter.
- Accept that nothing lasts forever. You may have put a lot of emotional and financial capital into your plans. If the plans have provided a good return, it is time to make a new investment before the old investment dries up.
- Be open to new ideas, even if contradictory to personal belief systems and stratagems. Do not discount or disregard opinions of others without an objective careful critique.
- Stay in constant contact with people who work with competitors and customers – vendors, lenders, and industry insiders. Use social media to monitor what is going on among competitors and the industry. Blogs and tweets are great places to pick up intelligence from talkative employees and customers. Carefully process the expressed positive and negative views from these sources in regards to your competitors and yourself. Is there a consistent theme?
Some of the most successful companies have borrowed and improved upon ideas from competitors. Do not be afraid to borrow or alter a great idea if it works for you. My corollary for companies that fail to follow the Curiosity Sustains the Cat Habit of Mind is “Complacency and a Closed Mind Will Choke the Golden Goose”.
R. David Garlock Director, Restructuring & Litigation Support
Contact Dave Garlock Dgarlock@fahrenheitfinance.com
David has more than 30 years of professional experience as a financial executive in corporate finance & accounting and as a restructuring and turnaround advisor. Since 1998, Dave has worked as an interim CFO and financial advisor to medium size businesses as well as distressed or bankrupt companies and liquidating trusts in the healthcare, manufacturing, and retail industries. He has performed litigation support services and has provided bankruptcy case management services involving Bankruptcy Courts in New York, Texas, Delaware and Virginia over the last 8 years
The content of this article expresses my understanding of the Habits of Mind and does not necessarily reflect Alan’s intent or meaning in the writing of the book. Form your own opinion by reading the book.
Wurtzel, A. L. (2012). Good to Great to Gone, the 60 Year Rise and Fall of Circuit City. New York, New York: Diversion Books.