Millennium Marketing Research®

Tom Schori DBA Millennium Marketing Research®, 808 Ironwood, Normal IL 61761, 309-532-8466

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What happens when a company goes into total denial.

By Thomas R. Schori, Ph.D., and Michael L. Garee, Principals,  Millennium Marketing Research, 808 E. Ironwood, Normal, IL 61761-5239. 

Like people, companies, too, can demonstrate an incredible ability to go into "total denial" about the current state of affairs in the marketplace. That is, despite overwhelming evidence to the contrary¾steadily declining market share, product and service lines that haven’t performed up to expectations for many years, eroding market value (if a public company) and market share, etc.¾many companies today simply refuse to face the fact that they might need to take a sobering look at how they are currently doing business.

The signs that a company either is already in or is fast approaching "total denial" usually are unmistakably clear and evidenced by very specific behaviors. Management, for example, probably will increasingly (and ever more loudly) insist, both to internal and external audiences, that it now has the plan finally to turn things around for the company. The only caveat? It will take "x" number of additional years to fully implement this turnaround. Or, the company will turn ever more inward, and may even literally adopt a siege mentality, i.e., an "us" against "them" stance, whoever "them" is perceived to be, e.g., "the government," "unfair competitors," et al.

Even worse, in such companies, the "body count" for purveyors of bad news, i.e., any information or suggestion that runs counter to the company’s "official" position on things, can be expected to be quite high. The employees quickly conclude, quite accurately, that keeping one’s head down and one’s mouth shut are the best strategies for long-term survival. In fact, of course, that’s not true at all because in such an environment the term "long-term survival" certainly can quickly take on a very hollow ring.

Think only lackluster companies suffer from this "total denial" syndrome? Think again. Some rather stellar companies have recently demonstrated such behavior, much to their own detriment.

At one time, literally every other automobile sold was manufactured by General Motors. Then the Japanese automakers came on the scene. And, other American automobile manufacturers significantly improved their quality and dependability, thereby increasing their share of the market. GM’s commanding market lead soon evaporated. It would seem safe to say that GM’s market share will never again see such dizzying heights.

Remember when American electronics giants such as Zenith, Motorola and RCA were deemed to be the only companies producing state-of-the-art electronics products worldwide? Then, along came Sony, Mitsubishi and Panasonic. So much for "perennial" dominance of this market segment.

Or, how about the time not so long ago when there was only one "genuine" personal computer, and that computer had IBM stamped all over it? Everything else was just a "clone," second-class merchandise in every sense of the word.

Obviously, the common thread running among all of these examples is that in each case the companies that once held overwhelming market shares in each of their industries fell victim to the "total denial" syndrome. And it cost them dearly! To be sure, the companies identified in this article have survived, but each company also is much wiser today.

General Motors, for example, once was so smug about its dominance of the auto industry that it literally held its collective nose when in the presence of the "inferior" Japanese imports. The consensus of opinion at GM, at least initially, was that these imports were merely just more Japanese "junk" and certainly nothing to get too excited about. The fact that increasing numbers of auto buyers were embracing this "junk" was merely an aberration, GM reasoned. Talk about "total denial."

Zenith, Motorola and RCA (and others) took essentially the same approach to Sony, Mitsubishi and Panasonic. People who wanted real quality in their electronics equipment would avoid such electronics "junk." The only problem was, Sony, Mitsubishi and Panasonic were building exceptional quality in to their electronics products, and consumers readily recognized that and embraced their products. The only people who seemed to be in denial about that fact were¾you guessed it!¾Zenith, Motorola, RCA and other leading electronics manufacturers.

And, of course, the IBM story vis-à-vis the personal computer is a well known one. After all it was IBM that actually invented the personal computer. The "clones" that came on the scene shortly thereafter were not even considered to be in the same league with IBM’s PC. Consumers would always be willing to pay more (and not just a little more) for the quality that went into every IBM PC, or so the thinking went at that time in the IBM management ranks.

Now, it’s important to point out here that we’re not talking about marketing missteps. That would imply that the companies mentioned simply misread what was happening in the marketplace and unfortunately came up with the short end of the stick. No, what we’re talking about here are examples of companies (and, of course, we selected only a very few of the many examples we could have examined) that simply refused to face obvious, emerging realities in their various industries. That is, they looked at what was obviously taking place in the market and simply chose to deny the existence of what they were seeing with their own eyes. Such denial has already cost these companies (and many, many others like them) literally hundreds of BILLIONS of dollars, and the count continues to this day!

It’s important to bear in mind that it’s not just industry "giants" that can exhibit "total denial" behaviors. Indeed, companies of all sizes, shapes and in literally every industry do it as well, all too often. As we’ve seen, many times, though certainly not always, the "giants" can make faux pas of monumental scope and still survive, albeit sometimes weaker and much wiser. In most cases, smaller companies simply can’t expect to enjoy this luxury.

Look around your own company. Are there enclaves where "total denial" behavior is being exhibited? Probably. Is there anything you can do or should do about it? You bet! If you’re in a position of authority you better move quickly and forcefully to eradicate it. If you’re not in a position of authority, then make every attempt possible to persuade someone who is in a position of authority to take corrective action. Now! Because if you don’t, there may not be a "later," either for you of for your company.