Strategic reversals are essentially a U-turn that attempts to undo grossly ill-fitting strategic moves. According to a January 3, 2012, Wall Street Journal article titled “Year of the Oops: Firms Spent 2011 in Reverse”, several companies made reversals last year. This “Oops” article describes last year’s U-turns at Netflix, Hewlett-Packard and Cisco as “high profile reversals from poorly deliberated strategic moves”.
All of these high profile U-turns involved attempts at undoing the consequences of a major shift in business direction. And, these “Oops” reversals clearly fit the patterns I identified in my 25+ years of researching business success and failure, studying the moves that companies make. By paying more attention to the patterns, the three strategic reversal companies most likely could have prevented their major strategic missteps, the subsequent U-turns, and the devastating consequences.
All three reversal companies in the “Oops” article seemed to lose sight of the following key principles that emerged from my study of business success and failure patterns:
- Building on strengths is crucial for success, so avoid throwing away the business that’s based on those strengths–except in rare circumstances.
- Don’t be too quick to think that your circumstances are a rare exception to the above–most of the time they are not, so take a good hard look at your situation if you are inclined to think they are.
- Success in new areas generally requires a series of evolutionary steps, so do not expect rapid success when you quickly make major shifts into new areas–unless you have already gone through those steps.
- Violating the above can be costly, and depending upon the circumstances, it may be difficult to regain what you threw away.
Principles like this are ever so important when considering a major change in direction. Yet, when business conditions get tough, it can sometimes be tempting to think the above principles do not apply. It can be tempting to pursue radically different markets or to make other major changes. But, if you want to do so, do not ignore the patterns. Those patterns are very powerful. And, the three companies that needed “oops” strategic reversals are good examples of what happens when the patterns are ignored.
So pay attention to the patterns. Put more effort into assessing your situation beforehand when considering major shifts. Identify where your company can take, or has already taken, those gradual evolutionary steps. And, you’ll be on the road to making Winning Moves that do not require costly strategic reversals.
