Imagine that your business is humming along perfectly.
Growth is ticking along as planned. Sales are flowing in—right on schedule. Revenue? You don’t even have to look. It’s growing like clockwork.
This seems like a dream come true, right? Time to kick back and relax. Enjoy the ride and just make sure nothing goes astray.
Not so fast.
In times of growth or when your company is consistently hitting its goals, it’s easy to feel like it’s the right time to take your foot off of the accelerator. But, this can prove—and has proven, many, many times—to be a decision with devastating consequences.
One of the most dangerous feelings in business is comfort—feeling like things are going well and nothing can go wrong.
Comfort breeds complacency. And complacency is a big danger for companies.
There’s no good time to stop planning for the future of your business. But, when business seems to be going well can actually be the worst time to become complacent.
The Complacency Paradox
If you run a business, then you know how fleeting a feeling of comfort can be. Everyone from corporate executives to startup founders have felt the constant push for growth. So, when you do finally hit a major goal or milestone, it can seem like the perfect—or only—time to take a deep breath.
Unfortunately, that sense of accomplishment can often be a siren song in disguise.
Our feeling of comfort is often an indication that something else is on the horizon—challenges, changes, or disruption.
Running a business is difficult because almost every industry is competitive. It’s not a vacuum where things remain static; it’s a market with competitors and external threats. Competition squeezes out the “easy” wins almost as quickly as they appear. As soon as you find a small advantage, you can expect a competitor—or some scrappy upstart—to pounce on that opportunity. Everyone else wants to eat your lunch.
This is the nature of business. And it’s exactly why feeling complacent during a time of consistency is so dangerous. If your company has found a way to meet its goals and find growth in a competitive market, then you can bet that your competitors have taken notice. They’re actively trying to figure out what you’re doing and do it better.
It’s easy for a company to rest on its laurels—to coast on a business and a model that works. All too often, though, this leads to the kind of complacency that paves the way for another company to step in.
Most of the disruption and major market shifts over the last several years have happened in the equivalent of a blink of an eye. Life comes at your fast.
In the worst case scenario, a company that’s been asleep as the wheel could have the entire rug pulled out from under them--they could go from industry leader to doors closed in a matters of years or months. Of course, most companies won’t be swallowed up as soon as they look away for a second. But many business leaders have awoken in a cold sweat thinking about these kinds of scenarios. Sometimes it’s beneficial to keep those in mind as a way to stay motivated and vigilant.
The True Cost of Complacency
It may seem obvious to point out that complacency in business can carry a heavy cost. But, how can we actually quantify the financial burden of doing nothing?
To wrap our heads around the dollars and cents, let’s look at a few recent examples of companies or industries becoming complacent and the fallout that has ensued.
There are complete nightmare scenarios, like the arrival of Uber for taxi companies. By even conservative estimates, the traditional taxi industry has been decimated, losing about one-third of its business over a period of just a few years in Los Angeles alone. Of course, for individual businesses, it’s done more than just carve into their revenues. The value of taxi medallions in major cities has fallen by almost 80%, signaling the declining revenue of cab companies and wages for their drivers.
It's difficult to quantify this amount in terms of dollars, but NYC taxis shed an estimated $198 million in revenue between 2015 and 2016. Drops are likely more dramatic as ridesharing has continued to gain market share.
The cost of complacency for yellow cab companies is enormous and continues to grow. But, complacency doesn’t only manifest itself as a competitor’s stealing away market share.
Even companies that have not been disrupted entirely have still paid the price of complacency.
Equifax recently demonstrated this in grand fashion when it was announced that they had suffered one of the largest data breaches in history.
It’s estimated that the cost of this breach will reach a whopping $125 million (only counting the immediate cost to the insurance company). But, a data breach of any kind can be costly—analysts say most cost the company $4 million, on average.
Although there are scant details on how the Equifax breach occurred, it’s clear that the company wasn’t as diligent as they should have been. They were complacent. It’s really not shocking when you consider that the company was amid a period of enormous growth. But, that complacency led them to become blind to their own weaknesses.
Now they’re paying a huge price.
For businesses in almost any industry, the cost of complacency extends beyond just lost revenue or market share that comes with stagnation or crisis. It can impact almost every aspect of your company:
- Branding and reputation
- Sales and marketing
- Hiring and talent retention
The key is to be aware of these risks. Understand them and then be conscious and deliberate about how you’ll mitigate them, just like you would with any other market threat.
With the right approach and the right state of mind, your company can avoid complacency. You can keep your eye on the future and plan for what’s next in your industry—before someone else does.
How many companies have had their entire business model disrupted in the past 20 years?
How many of them saw it coming?
One key to avoiding complacency is to be paranoid. Assume that the next big disruption—the one that could put you on your ass—is just around the corner. The next big thing is being built right now and that you’ll never see it coming. How would you react if you knew this was true?
Don’t sit around and wait for it to happen.
Use that idea to drive your actions. It’s not productive to be needlessly worried or obsessed with every move your competitors are making. But blind optimism can be much worse. Be paranoid about what threats could be lurking for your company and harness that to drive change and innovation.
There are many ways that you can embrace the threat of disruption and use it to instill a culture that never settles for what’s working now.
Use tools and exercises to help shed light on problems and surface opportunities to grow.
Dream Big, Dream Bad
It’s easy to say that a company should dream big about the future. Try to think up the next big innovation—and then go after it. But another strategy might be even more effective when it comes to avoiding complacency.
Try dreaming bad.
Imagine that you wake up a cold sweat in the middle of the night. You’ve just had a nightmare about a new competitor or a new business that will totally wreak havoc on your company. What does that bad dream look like? What’s the thing that would keep you up at night or make your spring out of bed from a dead sleep?
Consider the worst case scenario. What threats are lurking out there? How will the next big startup radically disrupt your entire industry?
Then, think about how to take it on.
This is an actual exercise that executives can use to envision what possible competition could be brewing in the market and help them create growth and contingency plans for how to deal with evolution of their industry.
Using the doomsday scenario can give some teeth to a potential threat. It can force you to consider how to react, or, most importantly, what steps to take now in order to avoid that future.
This proactive approach is the key. Disrupt or be disrupted, as they say.
Don’t be complacent. Never let your current accomplishments blind you to what the future holds. Take proactive steps to identify the threats that your businesses faces and actively plan for how to mitigate those risks and protect your business into the future.
Innovation can be expensive. One of the leading reasons why companies become complacent is because continued investment in growth and change does not come cheaply. But, consider the alternative. Consider what happens to most companies that allow themselves to coast for any extended period of time.
The cost of complacency can be much, much higher.