Dead Brands Walking – The Imperative for Change or Decline in Business

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Mohandas Gandhi once wrote that “you must be the change you wish to see in the world”. What he was alluding to is that there must be an inner transformation before you can hope to carry out a transformation in the outer physical world.

In the world of business this same idea has never been more relevant than now. The “out there” world of business and the environments and market forces they operate in are all in flux as we speak. Old business models are becoming redundant very quickly for many and not everyone is becoming the change they need to be or the change they may wish for in the world.

2013 has been in Australia one of the worst years for retailers and for some other sectors of the economy. The profit levels of almost all traditional retailers has taken a hammering and what is spooking business operators is that they instinctively know that things are changing beyond their control and beyond their understanding of what’s going on.

We see in this carnage some highly profitable new businesses which have business models and markets that simply did not exist even 5 years ago.  These new operators see a business landscape that is based on fundamentals of both digital and physical dimensions that call for a whole new mindset for business.

Meanwhile the traditional business operators grapple with the much needed fundamental transformation in the economic landscape. We see them as case studies of failed business practices via the stock market disclosure releases of such firms as Forge Engineering, Holden and Qantas who have or who are going into demise.

We also see those who have taken on a new business venture or old business models and transformed and adapted them towards success but often at a great personal cost. The recent personal story of James Packer as recounted in Forbes magazine is a warning about the personal and family cost of grappling with business issues and where the work-life balance can go out of kilter as a result of hard application to navigating a business through changing circumstances.

The trend is accelerating as we enter 2014. We are at a time in Australia’s economic journey when many dynamics are changing and even old stalwarts such as Ford, Toyota, David Jones, Myer, Sensis and others are under challenge by many new forces wracking the domestic and international economies.

At the small end of town there are a record number of small retailers who have put their businesses on the market for sale or who have gone broke. A symptom of this can be found by driving around and noticing the amount of vacant small commercial shop fronts which recently had a failed business and which now cannot attract a new tenant or owner.

The issue for business owners is not just that they are victims to an “out there” set of changing environments and market forces. What is just as relevant is that business owners must now go through an inner transformation if they hope to navigate their way through this period of fundamental change in the world.

The real issue for many is that the fundamental internal beliefs and assumptions that many of us carry into business no longer fully work or apply any more. What we once learnt and which once worked was consciously taken on and applied but increasingly is no longer that which defines reality or truth.

However we all as humans naturally have had these beliefs and assumptions relegated to our subconscious minds not long after whenever we first learnt them and mastered them. Each of us then goes to our business each day without consciously deeply thinking about the underlying constructs, beliefs, assumptions and rules that shape our “objective” view of business reality.

Thomas Kuhn first outlined this form of unconscious reality stagnation when he challenged the minds of scientists who often failed to innovate fundamental shifts in scientific discoveries. He found that humans tend to keep habitually following the same rules and beliefs blindly as a subconscious process until the system breaks down and nothing works anymore.

The Australian Bureau of Statistics notes that 85% of all small business will fail in its first 5 years. Business decline and death is an everyday occurrence but 2013 statistics show the rate of business failure, closure and bankruptcy has accelerated in the last 12 months.

Kuhn’s model of consciousness has direct relevance to the world of business at the moment as many are finding themselves at the point where their business models or systems simply do not work anymore. The long term assumptions that have served business owners for a long period of stable and slowly evolving business dynamics and environments are increasingly no longer true anymore.

We at Conscious Business Australia have noted in our coaching and leadership work with SME and corporates what is a form of the psychological stages of the death process in the thinking of businesses and corporates in the face of business threat and significant change. The manifestation of this psychological process often occurs in the business owner or the leadership team who find their systems and beliefs no longer working.

In some respect business operators may go through about 5 stages of transformation from the crisis of business threat or breakdown which mirror the death or grieving process.

Those stages could be summarised as:

  1. Denial
  2. Anger
  3. Bargaining
  4. Depression
  5. Acceptance and Moving On.

The only problem is that like grieving in real life some people get stuck in one of these stages and cannot progress through to completion. The problem for businesses is that there is no accommodation by economic markets for these grief like, time-consuming processes to play out.

Change is occurring quickly and old paradigms are becoming redundant whilst others are undergoing transformation. Unless business owners change their own internal settings at the belief, assumption, values and rules level of operative consciousness with some degree of urgency, they risk being a dead brand walking.

When I say “dead brand walking” what I mean is their business may still function but it is in some form of terminal decline. This is the case where it is approached by the same old mindset and using the same old strategies, processes, beliefs, assumptions and behaviours.

The process of “dying” in business can unfold in a number of ways but it can follow a progression or set of stages which may be linear or looping around in a stage before moving forward. A business may also regress back to an earlier stage and become “stuck” at some stage just like an individual.

STAGE 1 – DENIAL

In the face of stress, threat, and in the face of rapid flux around us in the world it is not uncommon for people to become reactive and rigid. This often marks the business who is in the first two phases of “death” of their traditional business, that being denial and anger.

When people go into denial or anger they tend to become rigid in their thinking, blindly adhere to old beliefs, rules, laws and demands. They refuse to face reality and refuse to consider change as they tend to put the problem “out there” rather than “in here”, within themselves or their business.

Denial and anger produce as a result a victim mentality of “woe is me”. While I moan and bitch and blame others such as unions, governments, employees, international institutions, or competitors, I am not facing up to the problem or doing anything constructive to deal with it.  Meanwhile the clock is ticking on the terminal decline in the business.

Many times when I arrive at coaching or consulting gigs this is where the business and leadership is at energetically and as a mindset. This type of business may have dominated or had success for a long time and are now in shock that all is changing around them. This takes them out of control.

I often find rigid perfectionistic or controlling and narcissistic personalities heading businesses stuck at this point in the change/grief cycle. It is often too psychologically challenging for them to consider failure as this means for them that they have failed and so they live from a delusion that they are perfect or right.

It is a strange fact about our human nature but when in a state of denial for many of us this involves the filtering out and rejection of incoming information that challenges old beliefs. We all possess an inertia to change that must be challenged and consciously managed in our business.

What is frightening is the experience of watching such people disregard, minimise, overlook or challenge the credibility of data and information that confirms the worst or which shows a trend that should not be ignored. There is a denial around the reality of what is occurring in the business environment where that information does not align to our current beliefs and ideas and what we call “facts”.

What compounds this filtering of objective data is the very nature of human consciousness. It may be surprising to know but each one of us lives a separate and different subjective reality.

No one has the same reality and no one is having an objective or “real” reality. The problem is that as the external reality changes and shifts then often a person stays stubborn, in denial, frozen in fear, or minimises the significance of the change. We tend to want to see uniformity and conformity to our beliefs, wishes, vision or plans.

In the denial reaction a person may become more disconnected from the actual external reality and they find that their businesses starts to struggle. If one remains fixed and rigid in their thinking and ways then there may be a reliance on putting energies into existing strategies and acting from current beliefs and assumptions.

STAGE 2 – ANGER

All denial does is create stress and anxiety as the part of us that tries to stay in denial encounters the part of us that feels threatened. We actually descend into a form of “fight and flight” where our brain goes into survival mode and retreats further into familiarity and safe routines.

This is where anger often starts to show up as we live more or less from an emotionally reactive place where anger predominates. This is the opposite of emotional intelligence and represents the emerging uncomfortable realisation of the fact that one has lost control and that the future is uncertain.

From a neuroscience point of view once we go into “fight or flight” then we will instinctively start to live from our limbic or mammalian brain which is at once the home of our emotions instead of our reason, of our subconscious fears, and the old ways we learnt to cope with life’s challenges which we term our early life defences.

Our early life defences are those coping or compensation behavioural mechanisms that we adopt in the face of pain, suffering and threat. We all have them and we learnt them early and whichever ones we have now form part of our personality or identity.

Our waking consciousness will tend to have an “adult” self which more or less operates from our most recent temporal or frontal lobes part of the brain. This executive brain is rational, analytical, objective, in the left side of the frontal lobe part of the brain whilst it is as well as fun, expressive, creative, emotionally expressive, artistic, and visionary in the right part of that brain.

When life is good we do not tend to live from that  defensive part of our brain as we process life from an adult executive brain consciousness which makes advanced thinking and cognitive reasoning available to us. We flourish and our brain allows us to think and be creative and to be optimally positioned for socialisation and relationships, all of which are critical aspects of modern business.

When we perceive or experience threat, and that can be bad economic news about the “out there” world, or a real experience of dropping incomes, rising costs, loss of staff or customers, or a sudden unanticipated risk, then we are prone to activate this defensive part of ourselves and the limbic emotional brain starts to come into ascendency in our personality.

A business owner on the defensive will tend to be extreme and either play it conservative or take risks, will tend to be reactive rather than strategic, may become emotional and lose objective perception, and start to live more or less from their early life defensive strategy. This early life defensive strategy is an unconscious blind spot that we all have but which can create real and tangible damage when it activates in the minds of leaders and business owners in the workplace.

Coaching in its traditional forms does not understand these dynamics as coaching does not teach its students in coaching academies how to be psychologists or counsellors. Coaches tend to work with present moment behavioural aspects of self, and are not equipped to explore any prior history of their clients and how that may now be creating the basis for current maladaptive behaviours.

In my coaching work I see this type of stress reaction and early defence behaviours all too often in stressed business owners and corporate leaders. They often are living a SAD reality(Stress, Anxiety, Depression) and their businesses suffer because of it.

One of the most common defensive reactions in business owners and leaders is rigidity. Rigidity is a safety seeking mindset that attempts to pursue black and white routines to resolve whatever threats or problems exist by resolving them into neat and convenient clear answers.

The only problem is that this type of mindset is not adaptive or creative or open to change and basically locks down a person into stuck ways of being and doing. It often arises from denial or from anger in the mind of the person and can manifest as stubbornness, obsessivenness and righteousness.

In this mindset the ever-changing environments and dynamics of volatile business markets can create stress and anxiety which may then threaten to overwhelm the person. They try to respond by making “grey” situations full of volatility and which demand a new response and new mindset, fit into a neat “black and white” answer, solution or response which makes complexity become simplicity again.

The rigidity is often in the mind of the person who will stay stubbornly in denial of new information, new data, new problems or crisis. They normally will not see the crisis they are in or open up to advice or an intervention such as coaching or consulting which can be an independent, objective mindset with the solutions needed to more fully respond to the threat or crisis.

Such a person will reveal their anger when challenged in their rigidity as they are invested in being right rather than being open to the truth. There is fear in being wrong which is masked over by aggression and anger at suppressing information that does not fit their version of the truth.

I am amazed at the number of businesses who have got me in for advice but then frozen in fear at the suggestion that their business models and strategies are out of step with the markets, customer expectations, and competitive dynamics and pricing. Anger often arises when you suggest they are out of step with the reality of the business market they are in and the coaching or consulting engagement soon finishes up.

Inside the business the denial sets in and they blunder on till I read about their liquidation, sale or bankruptcy in the paper. Denial can be so strong as to stay in place right up until the business goes under. Normally the owners at this stage withdraw, shutdown and refuse to discuss the issue as another form of denial.

STAGE 3 – BARGAINING

We are now in a period of massive change where old business models are changing and many businesses are in terminal decline. Once a business comes out of denial it may let go slightly in its control and rigidity by trying to essentially bargain with reality and those who advise them of the need to change.

This curious posture is that of a fear based entity that essentially cannot contemplate letting go and instead tinkers operationally at the edges of the business model or the operational aspects of the business. The unconscious disposition here is a form of distraction.

Distraction in human consciousness as in business consciousness serves a useful purpose. It is a distraction from facing a painful truth, feelings or reality. When we distract we avoid and instead concentrate on something else.

This is dangerous in business. When there is an elephant in the room then there are some who “act” and appear to act but in a way that does not confront reality but seems to give meaning and purpose and which can be sold as “we are acting”.

Yes they are acting like actors but not acting on the pressing reality or crisis.  Again this is another form of denial but more subtle than straight out denial. Its window dressing and tinkering and we often see businesses beholden to old outdated business models resorting to tired old strategies such as sales, or a resurrection of an old marketing campaign, as their answer to what is a systemic crisis.

This is the concept that people call “shuffling the deck chairs on the Titanic”. There is often a rose tinted view of reality that has to be constantly revised as the crisis deepens yet the leaders don’t seem to want to face the truth and accept the real position. They bargain constantly with reality.

This scenario is not unlike that in appearance of the recently forced liquidation of the Forge Engineering group. For months there were revised trading positions and statements to the market which were a downward slippery slope but which left market analysts with the impression that the full position did not seem to be either understood or communicated.

In the end the house of cards came crashing down when the ANZ bank called it a day on underwriting Forge a line of credit in the face of ever deteriorating positions on the state of the company. It will be interesting when the receivers report comes out as to whether the stated position of the company was indeed a moving but dying target or whether a form of deceptive bargaining with reality had been occurring along the way.

STAGE 4 – DEPRESSION

Depression is the darkest hour before the dawn of whatever person or entity is grieving or dying. It represents the emergence of the horror of the reality of the situation and how powerless the leaders or the person is in the face of that reality.

Depression marks the collapse of the denial process and the true commencement of actual grief. In business this is often the stage that they genuinely reach out for help but which in the nature of a tragedy, is often too late in the process to turn around and execute a managed soft landing or timely and managed exit or ending.

Depression represents the emergence of a sober reality that faces but is still not able to cope with the reality it must face. It is a thawing of the psychic numbing that the denial previously represented but there may still be an inaction and stuckness in this phase. A business in this stage may accelerate its decline by an operational collapse in process or by staff leaving or by inaction in the face of the reality it faces.

Depression may also cause a regression to earlier phases of the grief/death process and so denial, anger or bargaining can still breakout at this stage. The depression stage is more obvious in the sole trader, partnership, or SME where the leader or owner becomes depressed. This is because the owner or leader exerts a more direct influence on the day to day and the strategic layers of the business, and in their depressive collapse the business may suffer and so hasten its decline.

It’s often true that the ills of a small business can be traced to the ills of the owner in terms of their mindset or behaviour. Coaching may often uncover symptoms in the business of a decline or poor trading but upon deeper analysis the coach may find that the cause lies more in the province of the owner or leaders themselves than in the artefacts or processes of the business.

Depression as an illness in the owner has seen many a business fail or sold off as the owner can no longer cope with the stress and responsibilities that come with running the business. The scourge of the SAD (Stress, Anxiety, Depression) curse that afflicts 1 in 2 in society can create the crisis or emerge from another crisis in the business.

When we say the business itself is depressed we often are speaking about its sales, its turnover, its activity, market share or brand energy.  A depressed business will tend to show in the negative energy of its staff who are the emotional engines which bring the brand and relationships alive in the business.

A depressed business creates an emotional contagion that spreads through the workforce and to other stakeholders such as suppliers, customers and shareholders who feel the collapse and negative flat energy of the business. Often in a depressed business there is a lack of direction, a lack of creativity and leadership and the business is just going through its operational motions.

Like a bunny in the headlights it’s just a matter of time before the business becomes road kill on the economic highway.  The business cannot afford to languish in this state for any length of time as it is a terminal condition for any business to be in.

STAGE 5 – ACCEPTANCE AND MOVING ON

The final stage is the ability to face reality in its most objective form and to make informed rational decisions about how to move forward. For some this will mean closure of the business or selling it to someone who has the mindset and resources to take it forward.

For some businesses it may mean restructure, repositioning, downsizing or expansion, or even a change in the nature of the strategic direction of the business. There is no one right outcome just a situation of being in truth that best expresses an equilibrium of that business to its business markets.

The problem in our current economic landscape is that those who reach this stage often then struggle to know the true way forward or the options they have. We are at a time when the old ways are no longer the way forward and the new ways of the new economy are still being developed, experimented with, and still fluid and evolving.

It is hard under such an environment to map out a safe or proper course as there is risk in each choice. For example we are in the age of the internet and a global market exists in front of us all if only our mindset can accommodate such a vision and co-opt the right resources to enable creating a presence in digital and social media domains.

In this transition there will be many failures to adapt. Retirement beckons for many who will be overwhelmed by the new mindset that must be mastered and lived from in business. Many traditional business operators are still ignorant of technology and in denial of the business benefits of social media and an online sales platform for their products and services.

It’s hard to teach an old dog new tricks as they say and so many old dogs in business will need to face the reality that their world of business is increasingly less relevant each year. The paradigm shift that we are going through in business is sudden, systemic, brutal and across almost all economic levers of traditional economic thought.

The increasing sophistication of business models calls for a new mindset and a new flexibility of consciousness in order to flow and adapt with the changes that are all around us. Conscious Business is but one idea or thread of dialogue that attempts to give conscious awareness to these new dynamics and the deep economic, social, and human drives that underpin the systemic changes they represent.

Adapt or die is still a Darwinian truth of business. Where are you in your business evolution? Maybe it’s time you engaged Conscious Business Australia to assist you in moving forward either from being in a phase of grieving or simply to accelerate your transition and success in the New Economy.

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