By going back to basics, Wal-Mart experienced a recent uptick in profits. Based upon my 25+ years researching business success and failure patterns, going back to basics is a valuable turnaround strategy for companies that strayed from their roots. And, Wal-Mart is successfully following that pattern.
A May 18, 2012 Wall Street Journal article (“With More on Shelves, Wal-Mart Profits Rise”) reports that Wal-Mart’s profits, customer traffic, and average purchase all rose. The article points out that Wal-Mart brought back over 10,000 items and even entire departments like fishing. According to the article, “a back to basics approach in apparel yielded the company’s first increase in quarterly comparable sales in that category in six years.”
According to my 25+ years of research, Wal-Mart’s improved business performance follows powerful patterns. Like many companies facing slower growth and mature markets, Wal-Mart was lured by the temptation to make major changes intended to reignite growth. Yielding to the temptation, Wal-Mart had moved away from its basics. As is generally the case when companies abandon their roots, straying from its basics was not good for Wal-Mart.
But now, Wal-Mart has made a Winning Move. Wal-Mart followed a common success pattern and reversed its fortunes by going back to basics. As a result, Wal-Mart successfully attained improved bottom line results.
In fact, struggling companies that have abandoned their roots should always consider going back to basics. It is an extremely effective turnaround strategy. And, Wal-Mart’s recent experience is just one more example of how well going back to basics can work.
So, what is the lesson here?
Pay attention to your strengths, both in good times and in times of struggle. When you want to improve your business, do not be too quick to abandon your business roots. Instead, recognize what took your business to where it is today and build on that. Don’t abandon that unless the company has already evolved in a stepwise fashion to a position where those roots may no longer be an essential aspect of the business. And, if you have already abandoned those roots and are still struggling, back-to-basics is a powerful turnaround strategy.
Furthermore, the back to basics lesson from Wal-Mart’s increased profits illustrates that many business success and failure patterns endure through time. My March 2011 newsletter article “Some Things Do Not Change” discussed how Wal-Mart repeated K-Mart’s mistakes in straying from its roots. Now, the way Wal-Mart successfully corrected its missteps by going back to basics repeats a common pattern and again shows how some things do not change.
Readers who would like to learn more about how some things remain the same might be interested in my special report “Do Things Change or Do They Stay the Same?”
