“What makes a decision great is not that it has a great outcome.”
~ Annie Duke, World Series of Poker champion and researcher/author
I’d like to start with a cautionary tale.
There was once a company that literally exploded out of nowhere.
And when it exploded, it came to literally dominate the national conversation.
I’m talking about one of the biggest real estate companies in the world – Walmart.
Did you know that? Did you know that Walmart owns HUGE amounts of real estate around the globe? We all know the super centers (which propelled their growth), but for every super center (and Neighborhood Market, Sam’s Club, etc), there is a vast network of distribution centers, offices for support staff, and so forth. With over 2 million employees, you can imagine the amount of space that requires.
The interesting bit is that Walmart is very aware of the risks associated with such a large physical footprint. They watched major competitors completely implode under the weight of their real estate (especially Kmart).
With that said, while they kept their eye on the ball with regard to physical real estate, they were caught flat-footed with regard to digital real estate. They made the mistake of thinking “.com” was an add-on – not their future.
Enter Amazon.
Within a handful of years, Amazon has also literally exploded out of nowhere.
And it shoved Walmart to the side when it came to e-commerce. HARD.
So hard that Amazon now sits exactly 1 spot behind Walmart on the Fortune 500 list (Walmart is #1 and Amazon is #2). Without anywhere near the physical space that Walmart has.
How did this happen? Was it simply a case of Walmart leaders being ignorant about the power of e-commerce?
Nope.
Walmart leadership is smart (I know this from personal experience working with Walmart). They are quick to learn and incredibly hard-working.
Sounds like the perfect leadership formula for success, right?
Well, now we get to the cautionary part of this tale.
Walmart was guilty of resulting.
Resulting is a SIN
For a short reminder, resulting is the term that describes the tendency to judge a decision’s quality based on its outcome, rather than the quality of the decision-making process. Bad outcomes do not mean that the team is horrible. Neither do great outcomes mean that the team is special. But when we commit the sin of resulting, we ignore the decision-making needed to truly be a high-performing team – and ultimately deliver sustained success.
Walmart looked at its super center model and thought “We are doing GREAT – therefore, we are SPECIAL.” But then it needed a different kind of talent to build a competitive e-commerce business model that could compete with Amazon. And 15-20 years ago, that talent despised Walmart. To them, Walmart was not “special.”
In the San Francisco/Silicon Valley where I lived at the time, Walmart was actually called “evil.” I was told as much by the handful of folks who decided to “try” working for Walmart at the time (and I was basically told the exact same thing by people who refused to answer any Walmart recruiter’s email). Between worker rights, the treatment of suppliers, and a host of other issues, Walmart’s social reputation had overwhelmed the smart, quick, and hard-working ethos of the company.
Walmart.com literally fell behind in its execution because it couldn’t recruit the people needed to execute.
End scene.
There are SO many lessons from this story that we could dig into. I’d like to share 3 of them.
Resulting leads to bad strategies
First, the sin of resulting leads to bad strategies. Strategy is not just about the outcome. It’s all of the decisions that are made in order to achieve that desired outcome. Further, once that outcome is achieved, a great strategy will leave you in a better position than you were before. In other words, if your strategy is “achieved” but you are now left in a situation where you are painted into a corner, you were not thinking strategically. You were guilty of resulting.
From Walmart’s example, the incredible pace of growth was exposed and not helpful once it had to recruit new (and different) talent. The decisions made to deliver the “result” had produced toxicity that literally poisoned their strategic recruiting process.
Resulting leads to an erosion of value
Second, the sin of resulting leads to an erosion of value. In other words, if the stock price hits the target, but people cash out and leave as soon as they can get what they can, there’s a problem. If everyone leaves in waves right after bonus checks go out, there’s a problem. Short-term “successes” that are immediately followed by an exodus of the talent that delivered the short-term “success” is an indicator that the actual business doesn’t have sustainable value. Over time, whatever value that company is promising to deliver to its market will erode into mediocrity – or worse.
From Walmart’s example, it has literally taken years for Walmart.com to kind-of/sort-of catch up to Amazon’s capabilities in e-commerce. Further, Walmart’s overall valuation is still just a fraction of what Amazon is worth, and Walmart’s overall profitability is currently half of Amazon’s. The value that Walmart had decades ago has eroded greatly.
Resulting leads to weak effectiveness
Third, the sin of resulting leads to weak effectiveness. I’m amazed at the amount of self-justification that senior executives generate in the name of “results.” When we commit the sin of resulting, we actually start to weaken our effectiveness. We actually start to generate waste. Leaders, if you grind through your people, telling them to “do more with less,” you are actually generating waste. If retention is a major concern because you can’t attract talent to replace what is exiting, you are generating waste. If you see the workplace data that says today’s workforce is stressed beyond belief and simply shrug, you are generating waste. Please don’t be surprised when chronic waste eventually cuts your company’s effectiveness off at the knees.
From Walmart’s example, the amount of money that was thrown into the pit of e-commerce over the years is staggering. Further, that strain pulled resources away from other critical parts of their business (especially international), that slowed their momentum and caused them to take a hard look at themselves. Again, it has taken years to correct their mistakes and even now – has the average reaction to hearing “Walmart” dramatically improved?
With ALL of that said… it doesn’t have to be this way.
Instead of resulting, we can invest in GREAT decision-making. We can inspire a DIFFERENT way to do business. We can be THOSE leaders.
And I’ll be digging into how to do that in the next few blogs. Come join me.
Holomua. Onward and upward.
PS I’d like to add an extra comment about this cautionary tale. While I have not worked with Amazon personally, the contacts that I do have tell me that it’s the only place that made them feel horrible at work. There have even been articles written about it. So while Walmart isn’t perfect, neither is Amazon. Both have weak people – and both have great people. That’s typical of large companies. See my blog about “Why Your Culture Can’t Be Fixed” to see what I have to say further about that topic.
Originally published at https://www.linkedin.com/pulse/cautionary-tale-tim-ohai-6lq6c
An extra thought:
“The young (master) knows the rules but the old (master) knows the exceptions.”
~ Oliver Wendell Holmes, Sr.
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