Why successful companies so often hesitate to change until it is too late

If a frog is placed in boiling water, it will jump out to save its life.

But if placed in cold water that is slowly heated, the frog won’t perceive the danger and eventually it will be cooked to death.

The boiling frog problem is a great metaphor for why successful companies often don’t see the danger before it is too late, because they don’t notice gradual changes in their environment. One customer is leaving, and the reaction is “don’t worry, it is just one and they will come back when they realize they need us”.

An unconventional competitor entering the market place, but… “not a serious threat, they are still small and their profits are not anywhere close to ours.” One day it all blows up and at the time it feels like a big shock to everyone, but in reality it started a long time ago with slowly slipping standards. This is the principle of gradualism; incremental changes over time tends to go unnoticed.

The boiling frog highlights one of the biggest challenges in successful organisations where profits : How do you detect early signals that the market is changing? How do you confront problems before they become obvious?