Updated August 10th, 2018.

The tears of children everywhere ran in rivers when Toys R Us shut down operations earlier this year. It wasn’t for a lack of consumers wanting to buy toys – the National Retail Federation reported that US holiday sales, including a burgeoning toy market, grew at a rate of 4 percent last year to a total of $658.3 billion and remains on track to grow another 6 percent by 2019.

The tragic end of this corporation resulted from an organization not adapting fast enough to the changing needs of their market. Essentially, it came down to a lack of unlearning.

“The tragic end of this corporation resulted from an organization not adapting fast enough to the changing needs of their market. Essentially, it came down to a lack of unlearning.” [email protected]_heather Click To Tweet

As far back as 2014, management at Toys R Us recognized the need to unlearn and transform in response to the challenges customers were experiencing in the new omnichannel shopping world. However, competitors from both the brick-and-mortar retail and ecommerce world had already adapted, and they were never able to make up for lost time.

Here are a few more examples of how management adapted to market shifts – successfully or unsuccessfully – and how your organization can learn (and unlearn) from the mistakes of others.

The Sun Sets on Encyclopedia Britannica

They once ruled the waves of young minds curious about the world, but the once mighty management team at Encyclopedia Britannica succumbed to the digital competitors in 2010, when its final, massive 32 volume series rolled off physical printers.

They had an amazing run starting with a 3-volume set in 1768, pre-dating the United States and even public education in Great Britain. It ended in bankruptcy in 1996, even though they would continue printing editions for another two decades, so you can’t really blame Wikipedia. According to Salesforce, Encyclopaedia Britannica’s print sales dropped from 100,000 units in 1990 to 51,000 in 1994, and just 3,000 in 1996 — a staggering 97% decline over six years.

Britannicalearn.com, their answer to the Digital Revolution certainly still brings the joy of knowledge to many children, but the irony is not lost on me that a significant percentage of the today’s kids only know about print encyclopedias from online encyclopedias. “We just didn’t want to be defined anymore by that print set,” Michael Ross, SVP of Digital Learning said. “It’s not brand-compliant, and it distracts the marketplace from what we’re doing.”

What really ended the publishing run of this institution was the democratization of knowledge. Few people actually cracked the spines of these august compendiums. It was enough to know that it was there. It was Microsoft’s Encarta that made knowledge cheap, even though the quality of research and depth of study was not all a scholar could hope for. The combined might of search engines and Wikipedia (launched 2001) freed the flow of information around the world in the mid-1990s, with the kind of rapid updating an annual printed volume could not match.

The takeaway for brands facing volatile sea-changes in their industries is this: What has saved others is having an established methodology for experimenting rapidly with new products, services and business models before a similar technological change knocks the pins out from under their revenues.

Lesson: Discover where you actually add value in today’s marketplace. You can’t rely on past successes. Many organizations today are missing three critical capabilities needed to thrive in the century ahead:

  • An established methodology for experimenting rapidly with new products, services and business models

  • A commitment to empowering your organization’s most creative people

  • An impetus to engage again and again in the innovation process – managing it with discipline and accountability

Incorporating those capabilities efficiently requires time, dedication, and guidance by those who have already gone down that path.

“Lesson: Discover where you actually add value in today’s marketplace.” [email protected]_heather Click To Tweet

Macy’s Falls Out of Fashion Before Reclaiming the Runway

America’s growth as a global power is closely mirrored in the story of Macy’s. In the 1840’s, the US only extended as far as the Mississippi River, not including Florida or territory north of the Illinois/Missouri line. Macy’s consisted of four stores in Massachusetts. By 1875, there were 37 states and Hawaii was considering joining up, while Macy’s added its first partners outside the family. A hundred years later, the store was an American tradition and the New York store was on the National Registry of Historic places. It all crashed in 1992, when the overextended and luxury heavy network of stores had to declare bankruptcy. A new generation of consumers had arrived and the web was just about to be born. Macy’s experimented with new acquisitions and closing underperforming stores, culminating in 2017 when it cut more than 10,000 jobs in an effort to save $550 million per year. Now the enterprise is headed in a new direction, concentrated around new media and experiential marketing. Jeff Gennette, Macy’s CEO and president, said “All things are on the table with respect to keeping the digital growth going.”

Lesson: Senior leadership needs to agree on what success looks like first. Concentrate on leading indicators like cycle time, morale, and productivity. Before your change management team takes on the hard work of scaling successes, you will need hard proof that innovation can benefit teams all across the org chart. The thorny issues in the final stage of change – the deep systems within the company that need to unlearned and relearned – will require all the political capital you can bring to bear.

IKEA Self-Assembles a New Way of Thinking

The modernist Swedish furniture retailer is often held up as an icon of flat management structures that actually perform well in the real world. Yet behind their placid, stoic exterior, IKEA is in the midst of a massive transformation project. The chain turned shopping into an event, with clever in-store experiences such as Swedish meatballs and wine or a casual rock-climbing wall here and there. What they couldn’t crack was how the new consumer wanted to bring the IKEA experience home, and stay positive as they built complex furnishings from hard to read instructions. As Christian Appelt, Innovation Enablement Manager at IKEA, expressed it, “We needed guidance to help us challenge our thinking. Many people in the organization came to us, wanting to move faster and be more innovative, but didn’t know how to get there.” They introduced Lean Startup concepts at the company meeting in 2016 and have seen a shift in management’s approach to innovation from the ground up.

Lesson: Don’t waste time getting lost in project execution debates before your entire team is united around the “why” of what they are doing. Desire cannot be manufactured, only nurtured. If you don’t address the systems and structures that cause people to fall back into old habits, changes will only be temporary and innovation will die out. A self-sustaining cycle of innovative thinking can keep the spirit of learning and unlearning alive no matter what that future brings.

Lesson: Don’t waste time getting lost in project execution debates before your entire team is united around the “why” of what they are doing. [email protected]_heather Click To Tweet

Thank you to Heather McGough for contributing this piece. If you want to bring the entrepreneurial spirit to your large organization, Lean Startup Company’s Education Program can help.

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