At an employee meeting, Amazon.com’s Jeff Bezos noted: “Amazon is not too big to fail … In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.”
Yes, it’s something many CEOs don’t say. Hey, why be a downer? And besides, in the case of Amazon.com, the company does seem unstoppable – dominating strategic markets like cloud computing and e-commerce.
Then again, there are still many risk factors as well. Amazon.com is stretched across various highly competitive industries. There is also the potential government liability, such as with antitrust actions. Keep in mind that this wound up being the major problem for other dominant companies like AT&T, IBM and Microsoft.
So thinking about worst-case-scenarios is probably a smart thing to do. Maybe other companies like Sears should’ve done the same, right?
I think so.
Interestingly enough, some CEOs do quite a lot of thinking and evaluation on this topic. Just look at Nigel Travis, who is the Executive Chairman of the Board for Dunkin’ Brands. He has an exercise that he calls “define your demise” (he describes this in his book, The Challenge Culture: Why the Most Successful Organizations Run on Pushback).
He has a diverse background as an executive. From 2005 to 2008, he was the CEO of Papa John’s and also served as a senior vice president of HR at Burger King. But perhaps the most interesting post was as the president and chief operating officer of Blockbuster. Of course, he got a good view of how wrenching changes can quickly take down a dominant player in an industry (he left the company in 2004).
In his book, he writes: “The company’s eventual collapse made me realize just how important it is to consider how the future might develop in ways that could disrupt the company, throw the business off-balance, or lead to a serious bump in the road.”
This is why Travis has group exercises to define and explore how his business could face existential challenges. Part of this involves looking at well-known risks, say a hack or a food safety crisis. But he also knows that the most fatal vulnerabilities are those that are unexpected. To this end, there is a focus on looking at those exposures that relate to the “changing needs of customers and likely advances in technology.”
Actually, in his book, he goes through a list of potential risks (related to Dunkin’). Some include:
- Delivery: The possibilities include drones, robots and autonomous vehicles. After all, it was the delivery mechanism of mail delivery of DVDs from Netflix that led to the downfall of Blockbuster.
- Coffee Alternatives: Might Americans turn to another new beverage?
- Amazon.com: Travis notes in the book, “If Amazon.com can move into the grocery business, can coffee shops and bakeries be far behind?”
It’s all about engaging in expansive thinking, with plenty of what-ifs. Much of this will be kind of wild. Yet the process will help guard against disruption.
According to Travis: “At Blockbuster, we clearly saw the rise of DVD delivery, vending, and online streaming, but even when those signals grew strong, they could not drown out the soothing mantra of the status quo: Nothing can ever replace the in-store video buying and renting experience. Until something did.”