The Dangers Of Complacency

THE DANGERS OF COMPLACENCY By Victor S.L. Tan The greatest threat hovering above an organisation today is not the competition. Neither is it the increasing demands placed by customers. Nor is the pace of change brought about by globalisation. The greatest threat to the survival of organisations today is complacency of people inside organisations It is the number one enemy in large and successful organisations today. When an organisation is small and thriving, leaders are up and about in addressing customer service issues, quality problems and productivity challenges. They are committed to do everything to stay competitive and win market share and grow the company. However, as the company started to grow in leaps and bounds and achieve considerable success, people begin to get too comfortable for their own good. They begin to lull into complacency in every area of work which they once placed great importance to. And it is this sense of complacency that leads to the eventual downfall of an organisation. Complacency in the workplace is defined here as a sense of excessive comfort coupled with a lack of urgency to address organisation issues or areas that need improvement and growth. There are six grave dangers of complacency. COMPLACENCY LEADS TO BLIND SPOTS One of the greatest dangers of complacency is that it creates blind spots in people towards the need for change and growth. Blind spots refer to those critical areas that need to be addressed but are not as people are not aware of them or refuse to acknowledge them. In fact, prior to the Asian Financial Crisis, due to a string of successes achieved by organisations, many leaders began to develop blind spots towards the need for better risk management. They begin to expose their companies to excessive risk to the extent that one failed investment or venture can bring the whole organisation down. Leaders in successful companies develop blind spots in many areas because of their refusal to see the changes around them and their impact they have on their companies. The strings of achievements and successes they have achieved have "blinded" them towards areas of potential dangers Often the success brings out the sense of arrogance and over confidence in leaders. These elements cloud their thinking and block their understanding of the actual issues that are happening. Blind spots developed because leaders are blinded by past successes and thus have the vision of their future blocked. COMPLACENCY LEADS TO POOR QUALITY In a booming business environment, whereby demand exceeds supply, it is easy for people in organisations to take the business for granted. In the rush to fulfil orders, the trade off is quality for quantity and they justified the extra effort for quality need not count as they have a lot of customers. Many have taken the attitude that in view of the good business, even if the company loses some customers that's fine as they still have other customers. It is this sense of complacency that lead to poor quality of products and service. In a booming business environment, this strategic flaw in products and services are camouflaged by new customers as new customers are lost. The impact of poor quality is often not discerned until it is too late. The danger of poor quality is that its impact is strategic and long-term. Customers who are not happy with a company's products or services will not only stop doing business but will inform ten other people they know about their dissatisfaction. The tarnished image from poor quality of products or services will undo millions and often billions of dollars arising from the goodwill of advertisement and branding. It will cost five times more to get a new customer than to retain an existing customer. Customers who are not happy with the quality of products or services of a company give the business to the competitors.

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COMPLACENCY LEADS TO EXCESSIVENESS One of the great ills that come from complacency is the tendency towards excessiveness. Companies who are doing well become lax in their control of resources. Departments and divisions become overstaff thus incurring unnecessary resources. Overtime and expenses of staff claims shoot up. Companies acquire a lot of unnecessary and unproductive assets such as excessive office renovations and décor. Granted company image is important to keep up with the success a company has achieved, but going overboard with luxurious head office, generous perks for top executives such as huge executive rooms with expensive taste, expensive cars, big expense allowances and unjustifiable fat bonuses will certainly increase the overall cost of the organisation. Of course all these excessiveness affects the productivity and competitiveness of the company. A good indicator to watch out for excessive costs is to look at where the increase in cost is coming from. If the increased in cost is due to increase investment and spending to increase revenue such as advertisement costs and additional staff to cope with increasing workload, that is fine. Increases in costs that have no direct or indirect impact on increasing the business have to be curtailed as much as possible to prevent recurring. COMPLACENCY LEADS TO INACTION AND STATUS QUO Success is often achieved as a result of taking the necessary actions. In fact one of the hallmarks of successful companies is that they take a lot of actions. They undertake customer satisfaction survey and take quick action to address any customer complaints. They undertake market research and continuously improve their products and services to meet the changing needs of customers. They innovate their products and services to fend off competition and increase their market share. Leaders listen to staff and address their needs to enable them to stay productive. They plan, train and develop their staff to increase the overall competency level of the organisation. They take great effort in motivating and rewarding people based on performance. However, success breeds complacency which eventually leads to inaction. There are many stories of successful companies which eventually fall, because people in organisations fail to take to continue to take those necessary actions which they had done before. The downfall begin when they stop improving, changing and growing the organisations. Many leaders and staff who are in successful companies reach a point which they feel they no longer need to take those actions. They ride on their laurels. Instead of making things, happen, they are immobilised by status quo. They become passive and wait for things to happen. They hope that the momentum created by the success will move things forward on their own. The truth is that things do not move on their own until people move them. COMPLACENCY LEADS TO STRATEGIC VULNERABILITIES One of the greatest dangers of complacency is the building up of strategic vulnerabilities. Strategic vulnerabilities refer to the weaknesses or flaws which expose the company to risks of failure or collapse. Thus a company which do not undertake market survey to understand the changing customer need, may continue to produce the same products or services which customers may no longer need. This is a strategic flaw which in time will lead to the collapse of the company. Likewise, a company which have poor cash management may find itself not capable of paying debtors and become insolvent. This can lead to the demise of the company altogether. The danger of this kind of complacency is like cutting the wrist of the hand of a person and unless we stop the bleeding, death is the certain outcome. When leaders are complacent they no longer think strategically about the future of the company. They become too comfortable with their past and current success. Their thinking has become too short-term, inward looking and narrow. They no longer assess the threats facing the organisation. By not taking actions or addressing strategic issues fast enough, they are exposing the company to grave dangers. Thus, not addressing the

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entrance of a new competitor in the industry and not countering the threats posed by the new products may create strategic vulnerabilities to the company. Complacency leads to the underestimation of the danger posed by threats in the environment, leaving it vulnerable. This often proves fatal to many organisations. COMPLACENCY LEADS TO DETERIORATING BOTTOMLINE PERFORMANCE Complacency affects the bottom line performance of the company in many ways, both in the short-term and long-term. Being complacent, people may not explore new products, new services or new markets. The missed opportunities affect the potential revenue growth of the company. Complacent organisations which no longer put emphasis on addressing quality problems and customer complaints will lose customers and sales revenue. Complacent organisations have operation staff who chalk up production costs and support staff that balloon up head office expenditures. This increases overall costs and squeezes profit margin. Complacent organisations develop blind spots which exposed the company to excessive risk and often lead to losses. In a very competitive and fast changing environment, remaining status quo is the surest path to losing market share. Organisations who become complacent who do not take fast actions to change and grow the company will see their profits evaporate quickly. Thus complacency brings a host of undesirable behaviour of people which lead to the deteriorating bottom line performance and eventually decimate the whole organisation. * Victor S.L. Tan is the chief executive officer of KL Strategic Change Consulting Group specialising in change management consulting and training. He is the author of 4 management best sellers.

NST Appointment - Tuesday, March 16, 2004

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