If ever we needed a reminder that even the mightiest can slip, it came this week in a Wall Street Journal piece about Wal-Mart’s troubles.
The article chronicled how the corporate giant “veered away from the winning formula of late founder Sam Walton to provide ‘every day low prices’ to the American working class. Wal-Mart, the world’s biggest retailer by sales, instead raised prices on some items while promoting deals on others” as it tried to counter rivals such as Target and woo more affluent shoppers.
The result has been a disaster—lost market share in the U.S. and, as the Journal put it, a loosening of the company’s “once-unassailable hold on suppliers.”
[EXPAND More]No one can blame Wal-Mart for sensing a change in the market and, in turn, trying to adjust what Peter Drucker called its “theory of the business.” In fact, many companies run into deep trouble because they’re far too slow and timid in responding to change.
“Some theories of the business are so powerful that they last for a long time,” Drucker wrote. “But being human artifacts, they don’t last forever, and, indeed, today they don’t last for very long at all. Eventually, every theory of the business becomes obsolete and then invalid.”
But what may be most impressive is the way that Wal-Mart has admitted it went off course in seeking to revamp its theory. “Company executives acknowledge having miscalculated and are adjusting their strategy again,” the Journal reported—in this case, by restoring their old product mix and pricing formula.
Owning up to a mistake like this doesn’t come easy. Many executives would have reacted by “doubling-down” with “increased marketing budgets and an escalation of commitment to the new recipe and failed business plan,” Steven Berglas suggests in a new article titled “Blame Game” in Leadership Excellence. Hubris, after all, is a potent force.
But Drucker taught that owning up to mistakes—and learning from them—is essential for those leading any organization. “The one man to distrust . . . is the one who never makes a mistake, never commits a blunder, never fails in what he tries to do,” Drucker wrote. “He is either a phony, or he stays with the safe, the tried, and the trivial.”
What do you think? Will Wal-Mart be able to regain its grip on the market because it has quickly acknowledged the error of its ways?[/EXPAND]