Since time immemorial, thieves have been punished for stealing. As far back as when Jesus was crucified there were two thieves on the cross with him. The question I always ask is why do people still steal when they know if they get caught there will be consequences?
The truth is that every thief is convinced that they can never be caught. They are sure that all other thieves were dumb and that’s why they were caught. That’s why there will never be a shortage of thieves.
Now how does this connect with business?
A few weeks ago we discussed the collapse of Thomas Cook. Well now we have another company that has collapsed. American fast fashion retailer Forever 21, with over 800 stores, 6,400 full-time and 26,400 part-time workers, went bankrupt.
Don’t companies learn from each other?
Well, like the thief who believes that he can never get caught, many in corporate leadership seem to have fully embraced this thief mentality.
With all the case studies and books written about corporate failures for generations, with all the data available to show exactly why companies fail, with all the available information online and on TV why would a company like Forever 21 still fail?
Because like a thief, they thought that they could do what others did and still get away with it.
What thief mentality have you embraced today?
Let us look at some of the more common traits that brought down the company, which had revenues of over $4 billion.
According to Bloomberg, “Forever 21 suffered from the same cut-throat pricing and online competition that has forced other US retailers to close thousands of shops in the past two years.”
In a business where new comers kept coming in with fresh ideas and innovations, it was not enough for Forever 21 to glory in the past.
The success of the past did what it does to all companies that go through the same thing—it intoxicates. They leased oversized shops, which of course meant a large number of staff and huge overheads. Then the excitement leads to unrealistic visions—visions that can only be supported by fantasy.
These unrealistic visions almost always lead to huge expansion projects and this is exactly what happened. The excitement of initial success often leads to the actions that will bring the organisation down.
In a world of cut-throat competition, where customers are promiscuous with their loyalties and where they have an unlimited number of options and choices, companies that want to stay relevant must up their game when it comes to customer experience and satisfaction.
Forever 21 was accused of now having an unsatisfactory in-store experience. This is a bad place to be because when two people are selling the same thing at the same price range within the same vicinity the customer experience is what determines who makes the sale.
Many commentators have attributed Forever 21’s lack of a strong online presence as one of the key reasons for its fall. Now, so many other companies have fallen because of this but somehow the leadership of Forever 21 believed that they could get away with it. All this coupled with the poor quality of their products brought the company crashing down.
Hype may open the door but it takes substance to keep the door open and Forever 21 did not have the substance. You may excite people at the initial stages and people may flock to you, but that is the easier part. The harder part is to make sure they keep coming.
No one is too big to fail. No one is too rich to fall. Success creates a blind spot for decision makers, which often makes it difficult for them to see when they are going down the road of other failed businesses.
How can you overcome this blind spot if you are successful? A time comes when you have to pay attention to the haters. They do not care about your feelings. They will tell it to you the way it is. Listen to those who tell you what you don’t want to hear. Identify those who do not always agree with you.
I have adopted a personal mantra where teams are concerned. If everyone always agrees with me all the time, then there is no need for them to be there. A person who has two left shoes doesn’t need one. If you are part of my team and you always agree with me, then I am always right (which is impossible) and therefore there is no need for you!
Wale Akinyemi is the chief transformation officer, PowerTalks