Years ago, I learned about the boiled frog parable.
If you take a frog and place him in a pot of boiling water, he will immediately try to escape from the pot.
Now, if you place the frog in a pot of room temperature water something very interesting happens, he will happily stay put and not try to escape.
If you then gradually increase the heat of the water the frog is sitting in something very strange happens.
As the temperature slowly increases he will do nothing and gives the impression he is happy and enjoying himself.
As the temperature gets higher and higher the frog gets groggier and groggier until he is unable to climb out of the pot.
Although there is nothing restraining him he will just sit there and boil.
Why does this happen? The frog’s internal system for sensing threats to survival is programmed to respond to sudden change not to slow gradual change.
The boiled frog parable can help us all when it comes to what individuals, companies and countries do when they are confronted with change that happens gradually.
There are many examples of gradual change having disastrous consequences and I’d like to share with you one that has some relevance today.
During his campaign and since becoming president Donald Trump has repeatedly said he is all about building the American manufacturing base supported by his America First approach he has adopted.
In the 1960s, the big US car manufacturers dominated the North American market.
The big three – Ford, GM and Chrysler – failed to see the threat to their survival that Japan posed.
Back in the early 1960s the Japanese car manufacturers had less than four per cent share of the US market.
They failed to recognise the threat when in the late 1960s the Japanese share had risen to almost 10pc.
By the mid-1970s they still failed to respond when the share had risen to almost 15pc.
Eventually in the mid-1980s they woke up to the threat from Japan when their share was now over 20pc.
Even although they woke up to their brutal reality by 1990 the Japanese share of the market had grown to 25pc.
It did not end there and today the Japanese share is over 40pc.
When you look at the financial strength of the Big 3 it does not look good and perhaps this frog will never be able to regain the necessary strength to pull itself out of the hot water it is in today.
Sadly, this story is not a unique story and across the developed world there are many examples of strong industry leaders being dethroned by new upstarts.
Most long-established businesses have built up over the years practices that increase costs and inefficiencies.
The young upstart business is not burdened with the baggage long-established businesses have acquired.
Today, in the environment we inhabit it has evolved from an old analogue world to a digital world.
In our new reality old established companies are, in many cases, struggling to survive.
Many of the new top companies such as Alphabet (Google), Microsoft, Apple, Facebook and Amazon are streets ahead of other long-established businesses.
Hopefully in this new digital world it is not too late for some of the established businesses to “Wake up and smell the coffee”.
Gordon is a former president and chief executive of BMMI. He can be reached at gordonboyle@hotmail.com
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