Over the years, I spent a lot of time in The Limited, the retailer that recently announced it was closing all 250 of its remaining stores nationwide. It wasn’t the first stop in our trips to the mall with my three daughters, but it was a retailer we’d frequent as we perused the mall during a Saturday of shopping.
Leslie Wexler, the founder of The Limited, opened the first store in 1963. In the decades that followed, he innovated in so many ways: merchandising and sourcing, assortment, stocking new merchandise every few weeks (versus every four to five months, as was the norm). By 1995, The Limited had grown to 700 stores, and in 2007 Mr. Wexler sold 75% of his company to a private equity firm—a very smart move for him.
So what happened? Why is The Limited another casualty on the retail landscape? Was it reduced foot traffic in malls? Fast fashion and discount retailers such as Zara or H&M? Not keeping up with the tastes of millennials? Amazon? Too large a footprint for shoppers to navigate? Too much debt? What was it that sank The Limited?
I’m sure it was some combination of all those things, but there is always one smoking gun at the root of the demise of such a powerful brand. Sears, Circuit City, K.B. Toys, Borders, Woolworths, Linens ‘n’ Things—they each have their own story, but they also share one thing: the momentum of success.
The momentum of success is the collective wind in the sail that propels a business forward. This momentum is a combination of the founder’s personality; the conditions that existed at the time of the founding that created the initial success; and the institutionalizing of systems, processes, procedures, cultural norms, contracts, financial structures, employee handbooks, real estate contracts . . . and on and on. Organizations calcify around the factors that made them successful. It’s natural, normal and often keeps the initial momentum going, sometimes for a hundred years or more. Look at Coca Cola, IBM, P&G and Exxon Mobil—all companies with momentum, continued success and continued relevance.
It helps if you have a product for which there is seemingly evergreen demand—oil, caffeine, clean clothes . . .
But it’s more than that. The taxi monopoly; the local mall; the TV-, radio-, newspaper-advertising machine; and the national bank branch system are just a few examples of industries that are under pressure to adapt and to adopt a new business model—no news there. However, what is worth remembering can be summed up in these two quotes:
“Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left.”—Andrew S. Grove, Only the Paranoid Survive.
“If you want something new, you have to stop doing something old.”—Peter Drucker
It’s easy to look at another business in retrospect and see what they missed. What’s harder is for us to look at our own organization with the fresh perspective of a curious, smart and ambitious novice.
I suggest we ask ourselves these important questions:
- What is it about our success that is attractive to an insurgent, hungry and smart competitor? What chunk of our business is most desirable, and how could it be stolen from us?
- What is the new thing that we want, what do our customers want, and what do we need to stop doing? How must we change our thinking to seize what’s next?
I’m going to continue to ask and answer these questions about my business and for our company. But first I’m going to ask them of myself.
Leslie Wexler, it seems, asked and answered these questions when he wisely sold The Limited in 2007.
What questions will you ask, and will you answer them in time?