Management consultants call it the 'boiled frog syndrome'. As the story goes, if you place a frog in a pot of boiling water, it will immediately try to jump out. But, if you place the frog in a pot of room-temperature water and slowly turn up the heat, the frog won't do anything at all. It may even appear to be enjoying itself, oblivious of the impending danger.
As the temperature climbs, however, the frog gets sleepy and eventually cannot hop out of the pot.
Too many companies, it seems, are suffering from this 'boiled frog syndrome' these days. What's worse is that most of them have failed to learn from their mistakes in the past.
Consider the dot-com boom-bust. Bloated dotcom companies failed to notice shrinking markets; in fact, there are countless examples of companies diversifying into dotcom at the fag end of the boom cycle, only to be severely burnt at the end of the day.
This herd mentality was once again visible before the current slowdown actually became so obvious.
Take retail. One company, which prided itself as the common man's retailer, expanded furiously over the past couple of years and took on thousands of employees. The company concentrated on its top line, forgetting that expansion without strengthening the back-end supply chain network can be fatal.
So everything was alright till the boom lasted; when the slowdown came, the management was busy blaming its investors and telling its employees to pick up groceries from the stores instead of pay packets.
But this didn't help as the stores were empty after all major suppliers stopped supplying to them due to payment problems. When employees went to the HR department to register their protest, they found out that the HR boss himself was among those who didn't get his salary!
Today, the company is all but closed and the employees are out on the streets.
So let's return to the intrepid frog. Why didn't it jump out? After all, there was nothing between it and its freedom. Assuming that the frog didn't have any ulterior motive in staying put (such as making money at the expense of the workers and investors), it didn't jump out because its threat-sensing ability was triggered by sudden changes, not slow, gradual ones. The incremental change in the water temperature wasn't great enough for it to jump out; rather it took comfort in the rising warmth of the water until it got cooked and died later.
The latest slowdown has shown that too many companies across the world are insensitive to changing environment. After all, even leaders can lose their leadership by complacency.
And it's not companies alone. Management experts say the current slowdown is also a wake-up call for employees: Don't rest on past laurels; you have to re-engineer yourself constantly by acquiring new skills. The heartening sign is that a majority of Indian employees are doing just that -- if not by choice, then by at least compulsion.
The findings of the Accenture Global Research released earlier this month shows that as high as 81 per cent of employees globally are taking on additional responsibilities and complexity to advance their career. In India, over 70 per cent are currently expanding their skills and 82 per cent are willing to consider a new position or role regularly in order to advance their careers.
As high as 63 per cent would consider relocating to another country, if required, to advance their career; the same percentage of employees are working longer hours and 80 per cent are flexible with their work schedule.
Sixty six per cent are working harder to differentiate themselves at work and 71 per cent are stretching beyond the comfort zone.
Coming back to companies, there are valuable lessons to learn from all over the world of leaders who have beaten the 'boiled frog syndrome' by staying out of the comfort zone and pushing performance boundaries to the limit.
Even as competitors try their best to catch up with them, the leaders change the rules of the game by constantly reinventing themselves.
The best example of all times is GE under Jack Welch. When the legendary CEO was warning that the sky was about to fall, GE was posting record financial results. Net income was up sharply and only nine corporations in the Fortune 500 earned more. Yet, Welch didn't get tired of alarming everybody who cared to listen that GE had to change fast.
Most employees took this as a big yawn initially and thought Welch was being insane. But what Welch saw and others didn't, was that GE's comfortable order book position was mostly due to backlogs and this obscured the fact that winning new orders was becoming increasingly difficult. So GE had to change, the CEO said. The rest of course is history.
What Welch did was nothing but avoiding the 'boiled frog syndrome'. Welch's key employees listened to him. Are you?