WalMart prides itself on great execution.  For years management has bragged about the company’s ability to get things done quickly and cheaply.  But now the company has run into problems.  Revenue growth has slowed, and the future is very unclear.  A five year stock chart shows declining equity value of about $80billion.  WalMart is finding out that when innovating, it’s execution skills are greatly lacking.

This week it was reported (see Tribune article here) that WalMart is going to report that it’s November sales actually FELL for the first time in a decade.  This is just the latest in a string of bad news.  Included is the fact that WalMart is planning to cut back its expansion plans in response to its declining year-over-year same store sales.  The company’s foray into more trendy fashion goods has flopped, with those products being pulled.  It’s taking on the drug retailers with flat price generic pharmaceuticals – largely to a market yawn.  Net – WalMart monthly sales are up only half of Target‘s (who’s 5 year chart shows they found the $80B Walmart lost).

Readers of this blog know I’ve long stated that WalMart‘s future is dicey for investors and employees.  Totally Locked In to its strategy of low cost, management has pruned any skills at innovation.  Long gone are the people who in the 1960s helped Sam Walton pioneer the innovations to drive the low cost strategy.  So now, when it needs to innovate, WalMart doesn’t have the right people to do the job.  To paraphrase an old southern expression "even if the mind is willing, the flesh is weak."

WalMart desperately needs to change.  But to do that the company needs to implement White Space.  It needs to first own up to its Challenges.  It needs to tell employees, vendors, investors and customers that they see a need to change and fully intend to.  Then management needs to put in place a team that has the permission to develop a new Success Formula, reporting directly to the CEO (outside the existing management system), and fund that team with enough resources to really try something different.  All these piecemeal ideas are getting lost in failed implementations by an organization too massive and tightly directed to do anything more than run the old Success Formula.  The White Space group needs permission to develop a new store concept.  To test things their own way and prove out the new Success Formula – not just a new tactic here or there.  And then, instead of trying to push the tactic into the massive WalMart the company must migrate the traditional stores toward what works in the new Success Formula.

WalMart has done this right before.  Sam’s Club is a huge success – a pioneer in the club store concept.  There WalMart followed all the rules of White Space and created a Success Formula that worked. 

If they will hire some new managers, and give them the kind of White Space they gave the Sam’s Club team, WalMart could migrate toward a more successful future in a matter of months.  But if management keeps doing all these tactical actions they’ll only succeed in confusing everyone.  Much to all of our dismay.