Reflect on Success and Failure for Better Strategic Planning
All organizations that are successful over long periods of time are learning organizations. This requires that the management team learns from its experience. It’s worthwhile, periodically, to take some time to reflect on both your successes and your failures, because each has something to teach you about what works and what doesn’t work. The most important thing to question is why you succeeded where you did…and also, why you failed. Do not make the mistake of focusing on one over the other, because they both offer great learning opportunities.
One of the most difficult things to do in reflecting on success and failure is to separate the effects of good decisions and good situations. This is important, because we want to learn to make good decisions under any circumstance, but circumstances are unlikely to co-operate by repeating themselves. A good example of this can be found in Disney’s efforts to restore profitability in their theme park business after 9/11. The situation caused almost all of the decline in profitability, yet the management team made many shifts in strategy hoping to find a better way to make money with the park operations. In the final analysis, profitability returned as the economy resumed growth and people resumed traveling to the Disney parks. This return to profitability was so fundamental that it would have occurred almost anywhere in the Disney theme park operation, even in cases where poor choices had been made. On reflection, it would be easy to confuse increased profitability in this case with good strategy, but many strategies would have resulted in increased profitability in that situation. A good example of this was to remove the turnstiles from Disney’s entertainment complex. Suddenly, this complex — which was characterized by live entertainment on the street, a New Year’s Eve celebration every night, and a great party atmosphere — became an extension of the Downtown Disney development, with a growing number of shops owned and operated by outside vendors who lease the property from Disney. This looked like a good idea financially, but the complex now has little to distinguish itself from the popular Citywalk complex up by Universal Studios, and attendance at the individual nightclubs has suffered. Certainly, this change also should be examined in light of Disney’s overall strategy, but the point is still clear: increasing profitability at Pleasure Island does not mean the complex isn’t losing market share.
Likewise, Wal-Mart’s same-store sales numbers suffered as the economy recovered – not as a result of poor strategy, but rather because some consumers, who shifted to buying at discount stores when the economy got tight, shifted away when things improved. In my mind, these are both cases of what I think of as “living by the sword and dying by the sword”. In your own strategy, if you succeed by riding the pendulum one direction, think about how you can succeed as it swings back