One of my favorite stores, Borders Books, is folding this week. It's ironic that a business that sells so many stories, would fall prey to a such an old tale of tragic business leadership. I am certain Borders has sold the works of many business and leadership authors which warned of dire consequences for organizations who could not, would not, or did not evolve to meet the demands of an ever changing market. Inadequate foresight, sense of urgency, and strategic decision making by the leaders at Borders doomed a 40 year old company which, at it's peak, had billions in revenues, billions in assets, and nearly twenty thousand employees around the world.
Borders is finished. That's the bad news. The good news is you might learn something that could keep your organization from a similar fate. So, what can you learn? Here are some thoughts and leadership questions to consider.
Do you know how your industry, customers, and competition will change in the future and how these changes will impact your competitive advantage?
Borders entered the e-reader game very late. They lost touch with their customers and how the impact of technology would change their customers' preferences. They did not understand how quickly readers' preferences would change, how this would impact their business model, and how it would change the competitive landscape. The leadership team displayed poor foresight.
How are you changing your company? What is compelling about your business? What will be compelling about your business in the future?
The market and consumers always want more - they vote with their wallets. Business leaders must possess a manic sense of urgency to improve, evolve, and innovate. The market rewards positive change; the market punishes dull, old, and stale ideas. The leaders at Borders were not paranoid enough. They did not embrace change as a culture nor could they imagine how the advances in technology would impact their business plans - they moved too slowly. In a highly competitive market, you are either the quick or the dead. They were not quick. The leadership team did not infuse the organization with a sense of innovation and urgency necessary to meet the demands of the market.
How do you make important decisions? Are you creating success today and creating foundations for future opportunities?
Borders attempted to invest and grow the value of the company using a traditional "sticks and bricks" business model. They identified untapped markets and invested in more stores despite the fact that more people were shifting to the Internet for purchases. The leadership team invested in what had worked in the past and failed to create a bridge to the future. They compounded the problem by outsourcing their e-reader business to Amazon. Retail expert Howard Davidowitz recently commented in an interview with Yahoo Financial, "I think the biggest thing Borders did wrong is when they turned over the online business to Amazon. This finished them off because they gave away their future." The leadership team made strategic choices which put the company on a path to failure.
These major leadership mistakes also saddled the company with the inevitable weight that eventually drowns most inefficient retail companies - too many stores and too much debt. It's a sad and predictable leadership cycle for organizations that do not appreciate the principles, practices, and methods of sustainable leadership which lead to sustainability.
Take note - change your leadership, infuse your organization with timeless leadership/business principles, and be the leader who is remembered as a valuable steward that nurtured, grew, and passed on a sustainable organization to the next generation of leaders.