The business world often expects us to decide and act fast. Yet, books describing newer research challenge the effectiveness of speedy decisions and actions. So, there seems to be a conflict. Does the newer research actually imply that fast paced executives should slow down and become more deliberate in their thinking?
Executives who decide Continue reading “Does Speed Kill? The Choice Between Making Fast Business Decisions versus Deciding More Slowly” »
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:
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.
The Winning Moves patterns of business success repeat over and over again. If you understand these patterns, they can be a valuable guide to successful strategic choices. Based upon my 25+ years of research, these patterns result from studying strategic moves to identify differences between the successes and the failures. As time progressed, I kept adding more information, and it has indicated that the patterns had staying power.
My method of studying a large number of moves differs from the approach used by many other researchers. Yet, my findings are often confirmed by and/or are consistent with the findings of prominent researchers in academia and in industry. For example, much of the research in Jim Collins’ current best-selling book Great by Choice, co-authored with Morten Hansen, confirms the patterns that I identified and have been discussing here on my website over the last several years. Additionally, work on adjacencies by Zook ties in with my findings. So does work in academia, such as research at the University of Virginia.
The extensive and ongoing nature of my research into business success patterns led to the development of an overall framework, put together by examining a number of diverse, but highly interrelated pieces. By understanding these interrelationships, my research not only identifies the patterns, but it also does a great deal to explain them. Similarly, my work has offered explanations of the findings of other prominent researchers. And, when other prominent researchers seem to disagree with one another, my framework can sometimes offer insights showing why their studies do not actually conflict if you more deeply understand their findings.
To recap, the Winning Moves patterns are powerful, recurring, look at both success and failure, have received some outside validation, can offer meaningful explanations, and are a very valuable tool when companies are making strategic choices. That’s why this website is created around a philosophy based upon the Power of Patterns. And, as I discuss companies and current business news in this blog, in my newsletters, and in my reports, I illustrate how applying these patterns brings superior results. For example, in my
previous blog post, I discussed how Macy’s success with Black Friday entails Winning Moves that adhere to the patterns. But, I’ll also share examples of other situations where ignoring the patterns leads to failure.
Finally, it is important to remember that, while these patterns are so integral to business success, the patterns are not necessarily obvious to everyone, especially in light of business practices that have been widely accepted relatively recently, but may not be based on these patterns. In fact, several of these patterns are still unclear to many. So, the patterns are often misunderstood and misused. As the understanding of these patterns becomes more widespread, there is greater potential for them to be used effectively. The patterns are not a magic bullet. But, once you see how powerful these patterns are, you’ll know why they are so essential for business success.
A November 26-27 Wall Street Journal article described what Macy’s did to successfully run its day after Thanksgiving Black Friday sale based on knowledge. In my 25+ years researching business success and failure patterns, I have looked at how businesses use knowledge. The way Macy’s used knowledge about Black Friday fits patterns of business success that I find in my research. Thus, Macy’s made Winning Moves in its approach to Black Friday. And, what Macy’s did offers valuable lessons about the use of business knowledge.
Businesses succeed when they build on their strengths. Knowledge contributing to the understanding of the dynamics of the business is an important component of strengths. Formal market research studies are one source of knowledge, but they are hardly the only source. That’s why my March 2010 newsletter titled “Should Starbucks Do Market Research? Yes, But…” stresses the importance of paying attention to less formal sources of knowledge as well. Basically, knowledge can come from various sources ranging from extensive experience, to formal research methodology, to simply paying attention to what works and what does not.
Macy’s approach to Black Friday is an excellent approach to building knowledge. It incorporates a stepwise, evolutionary approach, which my research–and increasingly the research of others–finds associated with business success. It makes the effort to look for indications of what works and what doesn’t. And, what works is applied more broadly to the business.
Even back when opening at midnight for Black Friday was still rare, there were indications that it was very successful for the few who did so. In fact, I can personally attest to the fact that when the Premium Outlet Mall in Aurora, located on the far periphery of suburban Chicago, was one of the rare places opening at midnight for Black Friday, traffic on Interstate 88 approaching the mall was virtually at a standstill. Traffic backed up, not only on the exit ramp near the mall, but for a good part of the way to the previous exit, located four miles east, as shoppers approached the mall around midnight. Thus, Premium Outlets seemed to be doing well as an early adopter of midnight opening for Black Friday.
In the aftermath of the early adopters’ success, Macy’s tested its midnight opening for Black Friday. The Wall Street Journal article described what Macy’s did. Macy’s ran the midnight openings test last year in just six locations. Those midnight openings were both successful and informative. Then, after these early indications of success, Macy’s took its knowledge building a step further. It held a November 16 sale, so it could see what promotions worked best. In its knowledge gathering, Macy’s not only looked at which products were selling, but also at who was shopping. With this information from its pre-Thanksgiving sale, as well as with what it learned from last year’s six location test and from staying open 24 hours right before Christmas last year, Macy’s determined what promotions to run on Black Friday and who to target. As a result, Macy’s did very well on Black Friday.
Based upon my research into Winning Moves, what are the lessons from Macy’s Black Friday? Paying attention to what works and what does not, and applying what works in ways that fit your business is a Winning Move. The way Macy’s used this to target the teen market is also a Winning Move. Taking a stepwise, evolutionary approach, like Macy’s did, is a Winning Move. And, Winning Moves are what drive business success.
The book jacket of Great by Choice, the recent best-seller by Jim Collins and his co-author Morten Hansen, features four bullet points highlighting their latest surprising provocative findings. Their research findings, which are from a nine year study comparing a sample of great companies with not-so-successful companies, showed that companies become great as a result of the choices they make.
Speaking of choices, as you may know, the phrase “Strategic Choices for Successful Business Growth” appears on the banner of all my non-blog web pages and has been there now for almost five years. That’s because in my 25+ years researching business success and failure patterns in the moves made by companies, I have found that the right strategic choices lead to Winning Moves. And, as those of you who have been following my website for some time may know, many of Collins’ latest Great by Choice findings are what I have been discussing and advocating here on my website over the last several years. Thus, Collins’ research appears to confirm some of mine, though our methodology differs.
Not Too Much Risk, Less Innovation, Not Too Fast, and Not Too Much Change
In fact, as I explain below, Collins’ book jacket’s four surprising provocative findings bullet points parallel what I have been saying here on my website as a result of my research. His four bullet points cover risk, innovation, not acting too fast, and not changing too much–all of which have been major topics here on my website. So, if you want to better understand the provocative surprises in Jim Collins’ Great by Choice research, my material may help you.
Collins’ First Provocative Surprises Bullet Point–Risk
According to the first provocative surprises bullet point on Collins’ book jacket, the most successful companies are not the biggest risk takers. Again, if you have been following my material, you know that I’ve written a great deal about risk in my Winning Moves® reports and newsletter articles over the last several years. Based upon my research, my material emphasizes that success is associated with reducing risk down to more prudent levels, not with taking bigger risks.
My material on risk includes my January 2009 newsletter, which points out that high risk does not lead to high reward, and explains how even the greatest successes commonly attributed to high risk actually are not as risky as generally thought. For example, I point out that Richard Branson, known for his risk taking, reduces risk by always looking for ways to protect against the downside. This is essentially the kind of productive paranoia that Collins talks about.
In my July 2008 newsletter, I use my research about risk to explain how to interpret a University of Virginia corporate growth study’s finding that less risk was associated with greater success. Also, since my research finds risk reduction so important for business success, my November 2008 newsletter refutes the common wisdom that stagnating companies suffer from too little risk taking. My position is that these companies don’t need more risks, but merely need to stop stagnating and start evolving again.
Collins’ Second Provocative Surprises Bullet Point–Innovation
Another provocative surprises bullet point on Collins’ book jacket tells us that innovation is not the trump card. My report titled Evolution, Not Revolution: How to Innovate Without Destroying Your Company, which was on my website since early 2007, has a pull quote saying, “Innovation is not necessarily the key to growth that common wisdom often thinks it is.” My report also discusses how a so called revolutionary innovation only looks revolutionary to those who have not previously experienced it (this can include eventually disrupted companies specializing in older, pre-innovation technology). But, for those who actually work on developing the innovation, it entails several smaller evolutionary steps, not the revolutionary breakthrough that others may see. My discussion of this resembles what’s in Collins’ book, when he discusses Apple and points out that what looks like a big breakthrough is really a series of iterative steps.
Collins’ Third Provocative Surprises Bullet Point–Not Too Fast
Collins’ third provocative surprises bullet point, tells how moving too fast can kill success. Again, this parallels the position I have been emphasizing on my website as a result of my research, which finds that a more gradual, evolutionary approach leads to success. Yet additionally, my January 2011 newsletter points out that, while most successful evolutionary growth is slower, there are some rarer instances when relatively fast growth can be evolutionary and successful.
Collins’ Fourth Provocative Surprises Bullet Point–Not Too Much Change
Finally, Collins’ last provocative surprises bullet point says that successful companies change less in response to a radically changing world. Again, this reflects the evolutionary growth framework that I have been advocating as a result of my research. Throughout my website, I encourage gradual change and discourage huge leaps into new areas. Among the places I do this are my Evolution, Not Revolution special report and my July 2011 newsletter, which discusses Southwest Airlines. Yet, regarding Collins’ bullet point about changing less: it is important not to confuse the changing less that makes companies great with the barely changing stagnation that occurs when companies fail to evolve.
In summary, the provocative surprises bullet points on Jim Collins’ Great by Choice book jacket encompass what I’ve been pointing out for some time, based on my 25+ years researching business success and failure patterns. Since many of you will find Collins book of interest, I encourage you to read it. But, over the years, my material has been discussing these kinds of findings, along with their explanations and ramifications, as well as related areas. So, stay tuned to this Winning Moves® Blog for more of that to come.
Note: Phyllis Ezop, Ezop and Associates, this Winning Moves® website and blog, and the Winning Moves® reports and newsletters are not affiliated with Jim Collins.
