If you aren’t tuned-in to ad agencies, and if you don’t live in Chicago, you might well have missed a furor that erupted in early December regarding America’s largest retailer.  Wal-Mart made a switch in ad agencies last fall, moving their $500million account to DraftFCB.  But then, shortly after making the switch, Wal-Mart fired the company’s head of marketing and fired the agency.  Wal-Mart then, and now, was unwilling to offer an explanation.  They hid behind a veiled claim of "ethics violations," using besmirching language to imply wrong-doing while offering no facts.

Since then, Susan Chandler at The Chicago Tribune has unearthed a pretty good explanation of what went on (see article here.) [Like lots of news stories, it takes some time and research to start piecing together what really happened.] Seems more than a year ago Wal-Mart hired a new 35 year old marketer to help change the Wal-Mart image and promotion program.  Given how Wal-Mart’s growth prospects, and stock price, had stagnated since 2000 this appeared like a very good idea.

The new marketer started moving Wal-Mart away from selling on Price, Price and Price.  As my old marketing professor said "Price is nothing but a blunt club that has no meaning.  Skilled marketers use other tools to create customer value and over time make a lot more money."  So this new marketer’s actions looked like a good move to actually help Wal-Mart get back on the growth track.

She actually had Wal-Mart underwriting fashion shows.  And launched advertising in Vogue magazine.  And she moved much trendier merchandise into the stores.  She also started Wal-Mart selling higher margin products, such as wine, gourmet coffee and sushi.  She did this in selected stores, testing her ideas.  In effect, she set up her own White Space and began working on a new Success Formula to replace the old, tired one at Wal-Mart.

But, she made a small mistake.  She didn’t really have Permission to use Market Challenges to create a new Success Formula.  Wal-Mart had not (and still has not) Disrupted itself.  The company has not agreed that it’s Success Formula needs to change, and its leaders have not expressed any need for a new Success Formula.  Operating in denial of the marketplace Challenges which have let Target, Kohl’s and JCPenney take away customers and sales, Wal-Mart really wanted the new marketing head to Defend & Extend the old Success Formula.  She may have thought she had White Space, but she didn’t.  While she had resources, she lacked Permission – Permission to attack old Lock-ins and Permission to develop new solutions.

So the top brass at Wal-Mart fired her.  And they fired the ad agency.  It’s easier to deny Challenges, and fire those who take on Lock-ins, than it is to Disrupt your thinking and commit to White Space.  It’s easier to live in Lock-in than use White Space to find a new and better Success Formula.

Wal-Mart has had many "industry experts" support these actions.  According to the Tribune, once the firings were done the Chairman of a retail consulting company (Howard Davidowitz) said "Wal-Mart’s lifestyle advertising is all wrong.  It shows in the sales."  Uh, with 99% of the company stuck in doing wat it’s always done, you don’t suppose the weak results are dure more to a failing Success Formula than some new White Space efforts?  The consultant is as Locked-in as Wal-Mart’s maangement.  Even this outsider was willing to give the new marketer permission to try new things.  Supporting management may help him get future fees, but it isn’t doing the investors or vendors much good.

Or, take this quote from George Whalin, another "industry expert," – "They [Wal-Mart] don’t attract 25-year-old trendy women.  Their customers are older women.  They’re not skinny-jeans buyers…. They [Wal-Mart] lost their minds."  Maybe the need for new customers is the problem, George.  You think it’s a poor idea to attract younger customers?  It’s bad to expand your customer base?  To upgrade your product lines to higher margin items and to improve your competitiveness against your fastest growing and most successful competitors is "losing your mind"? Not only is Wal-Mart Locked-in, so are the "experts."  If they won’t support White Space, with Permission to develop a new Success Formula, how do they suppose Wal-Mart is to turn-around its sales trends?

As this firing happened, Wal-Mart had its worst November sales in a decade.  How does Wal-Mart talk about this performance?  According to the company spokesperson, "We have found the thing that appeals to everyone is price… We will continue to emphasize price leadership." 

Reinforcing the old Success Formula isn’t going to solve Wal-Mart’s competitive problems.  If you keep doing what you just did, you’re going to get what you just got. Without Permission to Disrupt Lock-ins and create a new Success Formula, all the size and resources of even a Wal-Mart won’t create success.  Too bad for Wal-Mart’s top marketer, too bad for the agency, too bad for shoppers looking for an improved Wal-Mart, too bad for vendors that want Wal-Mart to do more than beat them up for lower prices, and too bad for investors.