#300 from Innovative
Leader Volume 6,
You Have a Titanic Mentality?by M. Michael Markowich, DPA
Markowich, a consultant, speaker and author, specializes in
organizational development and the management of change, and is on
the faculty of Temple University School of Business.
He is located in Huntingdon Valley, Pennsylvania, and can
be reached at (215) 938-1687.
seem invincible. And,
then the unthinkable occurs.
They topple; why? This
was brought home to me when I read that half the companies
described in Tom Peters In
Search of Excellence, had lost their “excellent” status
only five years later. In
response, I feel the decline results from management being blind
to considering “crazy ideas.” Consequently,
instead of maintaining a leadership position (which past crazy
ideas helped to propel), many of these companies “stayed the
course.” Why change
if you are on the top! I
call this view Titanic
Mentality. We all
know what happened to the Titanic.
That Hit the Iceberg
IBM insisted that customers wanted mainframes, even while
they saw the business world moving towards personal computers.
This allowed Microsoft and others to advance rapidly in the
hot personal computer market.
Compaq passed IBM as the major seller of personal computers
in 1994. IBM
executives were blindsided by their past mainframe successes and
did not see changes (icebergs) in the marketplace.
In 1982, Bill Gates and Paul Allen approached Bell Labs to
jointly develop a standard for Unix.
AT&T, which then owned Bell Labs, turned down Gates’
offer. AT&T felt
it didn’t need help from a “puny” Microsoft.
In 1997, sales of Microsoft’s standard (Windows NT) is
projected to exceed $1.8 billion.
And, Gates now refers to NT as Microsoft’s centerpiece.
Not bad for a company AT&T thought was too puny to do
There was a time when Wang Laboratories’ word processor
(forerunner of the personal computer) was the favorite of every
staff urged the company to take the next step and develop the PC. The company refused. Instead, the founder felt his instincts
were unerring. Had he
heeded his staff’s counsel, Wang may have owned the PC market
since its word processor already had a huge share of the market.
Wang’s shortsightedness (or Titanic Mentality) was
similar to Apple Computer’s strategic error of not selling its
(Windows-like) software separate from its hardware.
In the early 1960’s, I worked at a Ford Motor Company
stamping plant. In
those days, all Ford employees drove Ford products.
If one of us used a competitor’s car, we would take a lot
of “heat.” As the
years progressed, however, the Ford parking lots started to fill
up with competitor’s cars.
I often wondered what top management was thinking when they
saw their employees not
buying what they produced.
And, what was the union leadership thinking when they saw
their members driving non-Ford cars?
Someone should have wondered why the product employees
produced wasn’t good enough for them.
Consequently, the Titanic Mentality caused the loss of
hundreds of thousands of jobs, and Ford (along with GM and
Chrysler) lost billions. High
price for the Titanic Mentality.
to Avoid the Iceberg
The way to avoid
Titanic Mentality is to think
the unthinkable—and then take action.
This is easier said than done.
Especially, since the prevailing attitude in a successful
company is “what got me here will keep me here.”
So, why should executives even consider to think the
“market is predictable” viewpoint.
Many top executives want to believe in their almost
“divine power” to know
what will happen. In
reality, their ability to predict is not that exceptional.
When we accept
that we may not know what will happen, and accept limitations
associated with not knowing, then our mind is open to consider
that the impossible can become the possible.
How else can we explain Galileo’s assumption that the
earth circles the sun (and not the reverse); or Jefferson’s
notion that “all people are created equal”?
These statements don’t rattle us today; but they were
revolutionary (and some thought, crazy) when first pronounced.
“icebergs” could your company crash into? Have mental disaster drills.
What would we do if…?
Could a newly discovered material give the competition an
edge? What would
happen if a competitor were involved in a new kind of partnership?
How could we handle an unjustified perception of our
company or product? I’m
sure you can think of many more nightmares.
Don’t ignore them since the best defense against the
Titanic Mentality is to see what changes need to be made before
outside forces drive you to the brink of annihilation.
At that time, when you are speeding directly into the
iceberg, morale is low and panic overwhelms the potential for
creative ideas and actions to avert the tragedy.
That Overcame the Titanic Mentality
In 1992, Sears was considered by Fortune
Magazine as a dinosaur. Sears
had lost almost $4 billion, and its retail leadership position.
However, Sear’s return to investors from August 1992 to
March 1997 was 300%. What
happened? Sears changed its focus.
The new CEO asked tough (unthinkable) questions, and
launched what many experts feel will be the “stuff of future
management texts.” Sears
wanted to emulate GE, Coca-Cola and Disney rather than its
competitor, Wal-Mart. Crazy
In the 1960’s, Gillette was dominating the shaving
market. But, as
always happens, a small competitor, Wilkinson Sword, did the
introduced a new blade, a coated stainless steel blade that cut
sharply into Gillette’s market.
Wilkinson caught Gillette off guard.
Gillette could have easily dismissed Wilkinson as an
insignificant niche player. Instead,
Gillette immediately countered and introduced its own stainless
steel blade. Although
Gillette was humbled, the company learned from the incident: never take a rival for granted, no matter how small.
Not bad advice for avoiding icebergs.
Revenues began slipping at Taco Bell.
The company decided to expand, but in an ingenious way.
The restaurants had been designed with 70% of the space
used for food preparation, and 30% for customer use.
This ratio made expansion (for more customers) very
thought the unthinkable. Reverse
the formula—have 70% for customer use, and 30% for food
the company expanded within reasonable cost.
The change required a rethinking of how to prepare food,
but the course correction avoided hitting another iceberg.
that a company’s own success can be the seeds for decline.
This occurs because success creates a habit of thinking,
behaving and reacting. Habits
are good. Unfortunately,
habits can create a corporate “calcification” that makes it
difficult to see “outside the box.”
See any icebergs
approaching your company? No?
Then imagine them. They
could do a lot of damage. Prepare
for them before it’s too late.