Complacency Has Its Roots in Success

“Companies usually fail because of the incompetence and arrogance of a complacent management team, not because they struggled to predict the future.” (Scott Davis, Carter Copeland, and Rob Wertheimer, Lessons From the Titans)

In Lessons From the Titans, a book about large industrial companies and their various ups and downs as businesses, the authors share a story about Boeing. The aerospace company, with great focus on driving efficiency, achieved financial success by improving its operations and capturing more economic value in its supply chain. However, over time, their focus on financial results led to complacency in managing stakeholder relationships and safety, which led to an erosion of trust with suppliers and employees as well as the tragic crashes of their 737MAX planes.

In most stories about businesses, failure to calibrate, adjust, and stay vigilant to the changing variables of a business lead to disastrous outcomes. What blinds most businesses to changing variables is success – the feeling that they’ve “figured it all out”, especially having experienced periods of exponential growth or fat profits, is what leads to complacency and arrogance.

How Complacency Creeps Into Agency Business

I’ve had my fair share of complacent moments and it didn’t take much success to have the blinders come on. I’ve also heard of many cautionary tales from others over the years. Here are some real life examples:

Winning a Large, Game-Changing Account

Landing a big-name account is a boon for any agency and can quickly put the business on the map. However, there are pitfalls to be aware of:

• The client can quickly balloon to have too high of a concentration, which presents risk in the event they suddenly decide to cut back or wind down the engagement.
• The seemingly reliable volume of work streams and retainer fees can make it feel okay to take a break from continually marketing the agency, developing new leads, and going after new business (“We have more than we can handle”). This can make it hard to kickstart things again in the event new client work is needed to replace a shrinking or churned account.
• Having performed a certain type of work for a large client, the agency fails to invest and challenge itself in enhancing and expanding its services offering. It may profit nicely for some years but when the engagement winds down, the landscape for offering value-add work to new clients becomes a lot more difficult to compete in due to an outdated offering.

Having a High Performing Leadership Team

Agencies pride themselves in having great talent. Some agencies are lucky enough to assemble strong leadership teams that work well together and drive strong results. In such situations, complacency can take the shape of failing to develop future leadership talent – when the going is great, there’s sometimes a false belief that it’ll go on forever, which lulls teams into under-developing younger employees and not having anyone to step up in the case one or more members of the leadership suddenly depart.

Enjoying a Golden Goose New Business Channel

Similar to winning a game-changing account, establishing a really effective new business channel that provides a seemingly endless stream of leads can quickly catapult an agency towards success. I’ve seen many forms of these through the years ranging from channel partnerships with tech platforms (e.g. leads from Shopify), tight relationships with venture capital or private equity firms, or collaborative partnerships with complementary agencies.

When the going is good, the tendency may be to double down on what works and to keep strengthening existing or tangentially related relationships. An agency may be able to ride these channels and exit on top if they’re lucky. For others, if any of these channels suffer a setback (e.g. platform loses popularity, investment money dries up), not having built some diversity in lead sources can put the business in a tough position.

Offering an Effective and Highly Valued Service

I alluded to this under winning a game-changing account – the services you offer today may be seen as valuable to a buyer and experiencing a great deal of success with an offering can sometimes trick an agency into thinking that there’s no need to evolve, expand, or enhance the offering over time. A certain kind of “if it ain’t broke, don’t fix it” mentality takes over because of the long track record of “always having done it this way” and this is a dangerous place to be.

In digital services businesses like web development or digital marketing, those that continually embrace new approaches and translate them into new service offerings are bound to stay more competitive. For less technical services like branding, it also pays to understand and adjust to the changing needs of the client. It’s hard for more established players to evolve and embrace change quickly, which is why we’ll always have new entrants offering new ways of solving similar problems for clients.

A Certain Degree of Paranoia is Healthy

I’ve come to develop a natural feeling of uneasiness whenever things seem like they’re going well in our business. I may take a second to enjoy our wins and progress, but I’ve conditioned myself to focus on the existing gaps and the risks that can derail our efforts to achieve goals.

This is not about being stressed out or discontent. It feels more scientific and systematic: I know that when things seem to be going well, it’s also a sign that we’re more prone to having our blinders on, so it’s a logical move to bring greater scrutiny to various aspects of the business and keep on improving what we can.

There’s an upside to this kind of stance: when trouble does come and bad news pops up in the form of client complaints, delivery problems, team attrition, and new business deal losses, I’m not nearly as troubled as I once used to be. By staying a bit paranoid, I expected any and all of these things to happen and know that we’re continuing to do work to improve ourselves and become ever more resilient.

I’ve written previously that for me, a definition of success includes the pursuit of excellence. It’s the desire and related actions to continue getting better not for any end reward but because it provides great inner satisfaction and meaning. In the same vein, resisting complacency in business, staying humble and dialed-in through periods of success, and being mentally tough through hard times – that’s the game of business I’d like to keep on playing.