Laughing all the way to the bankruptcy
In 2004, a senior Blockbuster executive sat across from Reed Hastings, who had flown to Dallas to pitch a partnership. Netflix would run Blockbuster's online brand; Blockbuster would promote Netflix in its stores. Hastings was asking for $50 million. The Blockbuster executive laughed him out of the room.
At the time, Blockbuster had 9,000 stores, 60,000 employees, and $6 billion in annual revenue. The executives at the top believed what the numbers told them: they were dominant. What the numbers didn't tell them - what no one at the top was asking about - was what their own customers were actually saying on the way out. That late fees were generating resentment so deep it had become a cultural punchline. That their frontline staff had heard it for years and had long since stopped bringing it up, because nobody upstairs seemed interested. By the time Blockbuster's leadership recognized what was happening, Netflix had 4.2 million subscribers and was accelerating. Blockbuster filed for bankruptcy in 2010.
Blockbuster’s failure wasn't a strategy failure at the start. It was a perception failure. Leadership believed they understood their business. The people closest to the customer knew differently. And the gap between those two realities - unacknowledged, undiscussed, sitting in the room like furniture everyone had stopped seeing - is what actually killed them.
Elephants in the Business
This problem is not just an isolated Blockbuster problem. It is a leadership problem that plays out every day. Research from Gallup consistently shows that fewer than 3 in 10 employees strongly agree that their opinions count at work. A 2022 Harvard Business Review study found that 74% of employees said they held back important information from their managers because they didn't believe it would be acted on. Leaders, in the same studies, routinely report that they have an open-door culture and that their teams speak freely. The gap between those two sets of answers is the gap that compounds quietly over time, until it’s too hard to ignore.
We call it the elephant in the business. Not the elephant in the room, that phrase suggests everyone sees it but nobody mentions it.
The elephants we find in organizations are often things that leadership genuinely doesn't know are there, because the people who see them have concluded it's not worth saying. A product that customers have quietly stopped recommending. A key person the whole team knows is a flight risk. A process that made sense when the company had twenty people and quietly became a bottleneck at two hundred. A competitor move that frontline sales people spotted months ago and assumed someone upstairs was already tracking.
The truth is that leaders don't lose touch through carelessness. Leaders become out of touch because the systems around them are designed, structurally, to filter information before it reaches them. People tell their leaders what they think their leaders want to hear. Problems get solved one level below where they should be escalated. The longer someone has been in the chair, the more curated their view of the organization becomes.
Take the first step
The first step isn't a big one, but it is a specific one: before your next all-hands or leadership meeting, ask three people who are not on your direct team - frontline, mid-level, new to the organization - one question. Not "how are things going." Ask them: What's the one thing you think leadership doesn't fully understand about what's happening on the ground right now? Then listen. Don't defend it. Don't explain it away. Just write it down. Do that with three different people and compare what you hear.
If the answers surprise you, that's your signal.
If the answers don't surprise you - if everything people say confirms what you already believed - that's also your signal.
Get a clear picture
This is the work we do in the Elephant Blueprint™, a core component of the Built for What's Next™ program. The Elephant Meeting™ is a structured session designed to surface what leadership doesn't know it doesn't know - the gaps between organizational reality and leadership perception - and to translate that into a clear picture of where the business actually stands, before you make your next big move.
Whether you're preparing for growth, a transition, or a sale, you cannot plan accurately from a position you haven't verified.
If you're ready to find out what your elephants actually are, reach out to us at contact@leadershipinfocus.ca.
