A Tale of Two CEOs

Ignoring potential risks doesn’t seem to pay off. The eerily similar tale of two failing companies.

When I read about the demise of HMV, there was a quote from here that rang a bell:

The relevant chart went up and I said, “The three greatest threats to HMV are, online retailers, downloadable music and supermarkets discounting loss leader product”. Suddenly I realised the MD had stopped the meeting and was visibly angry. “I have never heard such rubbish”, he said, “I accept that supermarkets are a thorn in our side but not for the serious music, games or film buyer and as for the other two, I don’t ever see them being a real threat, downloadable music is just a fad and people will always want the atmosphere and experience of a music store rather than online shopping”.

Sounded eerily familiar, and then I managed to find it:

I outlined to the Fairfax board what I described as a ‘catastrophe scenario’, which involved losing a decent chunk of their classified advertising, and they chose to totally ignore that. Roger Corbett, who was then a board member and is now the chairman of the company, he stood up at the front of the board table and he picked up a quite fat edition of the Saturday Sydney Morning Herald that was sitting there. And he held it up in front of the board members and he said to them, ‘I don’t want anyone ever coming into this boardroom again telling us that people will buy cars or houses or look for jobs without this.’ And he thumped the big fat Saturday Sydney Morning Herald on the board table.

Two companies, major problems, the same root-cause. You can’t always ignore problems in the hope that they go away or don’t materialise.