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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