As a child we entrust our parents to guide us through our formative years, making decisions on our behalf which, with the exception of some truly sad cases, our parents undertake with our best interests at heart. Now I am no anthropologist, but it comes as no surprise to me that many of us tend to look to our CEO’s in the same way. When you think about it, there are indeed varying degrees of similarity between the two.
As the world moves forward and as social trends subsequently evolve, parents have the unenviable task of having to adapt to our new social, political and macroeconomic environment in order to maintain standards as good parents, it saddens me to see that this process is not replicated in the CEO’s corner office. Now I am not saying that all CEOs are bad, as the job of a parent is a difficult one, so too is that of a CEO. It is undoubtedly an extremely challenging role and is not for the shrinking violets among us.
That being said, it is hard to avoid the niggling question that has continued to repeat itself in the dark recesses of my mind since the collapse of stellar companies such as Lehman Brothers in 2008, not to mention the more recent demise of companies such as Blockbusters and HMV. These CEOs have been in the industry for years and helped shape some of the major conglomerates we would call market leaders in their respective industries, yet they have all fallen foul of the same error in judgement, namely failure to respond to or anticipate changes in the market. While this loosely applies to Lehman Brothers, due to the unique nature of the financial market and the factors which led to its meltdown, I will focus more on the retail industry.
Let us begin with Blockbusters...how many of you can remember the local video shop... not store or retail chain..., shop?
If you are struggling to visualise what I am talking about then my point has been made. Following the arrival of Blockbuster to our shores in the early 1990’s one by one our local video shops began to close and by the early 2000’s, Blockbuster stores had spread around the country like a virus spreads within its new host, taking a strangle hold on the home entertainment market. One could make a compelling case for complacency, mismanagement or simply negligence... whatever the reason, the result remained the same. Driven by the rapid growth of the internet, by 2000, we had 2 new competitors in the market signalling the beginning of the onslaught on Blockbuster’s market share. Despite the growing threat, Blockbuster’s remained assured in their archaic model. Surprisingly, it was at this time that a single question resonated within its consumer base, “why didn’t Blockbuster’s introduce an online streaming service?” Surely this would have gone some way to securing their future? Sadly this epiphany never materialise. In fact it was Amazon who seized upon the opportunity in 2011 and acquired LOVEFILM. For many, this acquisition signalled the end of Blockbuster’s as Amazon’s significant distribution network drove LOVEFILM to the heights at which they operate today. Truth be told, the only surprise is that it took yet another 2 years for the towel to be thrown in.
Tragic though it may seem, would it come as surprise if I hypothesised that HMV succumbed to a similar foe?
Having seen off the challenge of Tower Records, Our Price, Virgin Records and Woolworths to some degree, HMV also found their comfort zone in an archaic model and basked in their past success. Despite embracing an effective online service and enjoying a healthy market share, even in light of the growing threat of Amazon, HMV failed to strategically position itself for the dawn of the “download culture” which was now sweeping through the consumer space, in particular, with the younger demographic...a trend exploited with ruthless efficiency by Apple. Once again, an onslaught on a market leader began. Whilst HMV tried to respond by allowing consumers to listen to songs prior to purchasing an album, they could not compete with the exponential rate at which iTunes online store grew.
It is interesting to see that one can draw the same conclusion from both case studies. If video really did kill the radio store, then the latest predator of the high street is the Worldwide Web and the complacent CEO.
The unfortunate victims in both circumstances are the employees. Through no fault of their own thousands of people may now find themselves out of a job without a redundancy package to ease the transition through an already saturated labour market. Now I would like to reiterate that it is not my intention to vilify the CEO, there are two sides to every story and unfortunately, I do not have the resources to ascertain both points of view. All information sourced in this blog has been procured from the various articles and business reviews which are readily available on the internet. That being said, I feel that as we hold CEOs in high regard in periods of success, so to must they be held accountable when strategies fail. I have personally experienced situations when a failed strategy is met with a mass of redundancies and the opportunity to redress the situation with minimal accountability. Sadly this is all too often the reality.
Now I do not proclaim to have all the answers, nor do I claim to be the next Steve Jobs....
I’m just saying...
