Game Stop, Blockbuster, Floods & You:
Eyes Wide Open
By Whitney Houston
GameStop + Reddit + Robinhood= Disruption.
It’s a formula that made headlines around the world, and not just in the business press. To oversimplify: A group of retail (individual) investors organized through online forums, such as Reddit, decided to snatch up stock in GameStop. The retail chain of video game and gaming supply stores had been struggling for some time and a number of investors had shorted the stock. Meaning, they placed massive bets that the stock would go down in price, not up.
This tsunami of GameStop investors caught the captains of Wall Street flat footed. The stock closed at US$17.25 per share on Jan. 4. On Wednesday, Jan. 24, it closed at US$347.51 per share, an increase of more than 1,914%. Yesterday, Feb. 1, 2020 it closed at US$225.00. Although the GameStop mania appears to be easing—the fallout, I believe, is just beginning. Hedge funds and other investors lost billions of dollars.
Black Swan
Some could suggest this was a Black Swan event for the short sellers and Wall Street. This term, referring to the completely unexpected discovery of Black Swans after the Western world thought that all Swans were white, was popularized in business by Professor Nassim Nicholas Taleb. It means no one could have predicted or planned for this sort of disruption and it catches everyone by surprise.
Borders Books, Blockbuster, and Tower Records; the people that led these companies were just as smart and dedicated as any group of similarly talented business leaders. Yet, their firms either could not or—famously in the case of Blockbuster passing up buying Netflix—would not adapt to disruption.
Scientists knew a pandemic was a real possibility; there are 100-, 500-, and 1,000-year flood cycles; California will get hit with a massive earthquake, but in all these cases the date of such an event is a set of probabilities. It is a question of “if” and “when” that will happen in a given lifetime. Many times, our response is just to ignore the danger and pretend everything will always – just – work – out… yet history and reason tell us otherwise.
These different types of disruptions – Black Swan event, business innovation, and natural disasters, etc. – are why understanding and practicing the S Curve of Learning™ is so important for organizations and individuals.
Be Diligent
In all these cases Guardrail #4 from the Personal Disruption Framework comes into play: Battle Entitlement. When you think you have it made, are on top of the S Curve of Learning™, are the captain of all that you see, that’s the time to become concerned. The entitlement is that you, your team’s, or your company’s position is permanent and, whatever risks are out there, “This will never happen to me, my team, or my company; we are too smart, too talented, or too on top of our game to get caught like ‘those’ people.”
Am I suggesting you should become paranoid? No. Diligent? Yes.
We must all understand the following: you and I, just like everyone else, can and most likely will be disrupted.
Ask Questions
Asking open ended questions is key to Battling Entitlement in this context. Some questions to consider: how flexible am I, my team, or company to respond to unexpected events; what are my emotional, spiritual, and financial frameworks to help support me through the down times; who can help me identify blind spots that might put me or my organization at greater risk; what assumptions am I making about the future and are those still accurate, etc.?
One area that may provide a fair amount of valuable insight, is your response to COVID-19. While it was likely clunky—as it was for most—it was a response nonetheless that most likely yielded valuable lessons. What can you learn from this? How might this experience impact your planning moving forward? Just as important, how do you manage during ongoing ambiguity?
Disruption Happens
The world, for good and ill, has a great deal of disruption. It doesn’t take seniority, careers, retirement plans, medical bills, college tuition, weddings, or any other thing into consideration. Disruption happens. The best way to deal with that disruption is to cause it yourself or, if you can’t, Battle Entitlement by understanding that the unexpected can and does happen. The best gift you can give to yourself and those closest to you, is to build flexibility into your plans and expectations – living life, eyes wide open.