Today’s Strategic Alignment Journal post in two sentences:
Crocs deliberately accepted declining sales while it reduced discounts, restricted supply and cleared stale inventory from the market. Its experience shows why the earliest result of a decision does not always tell us whether the decision was right.
When Crocs found itself with too much inventory and slowing sales, discounting offered the most immediate response. Lower the prices. Move the excess stock. Improve sales in the short term.
Crocs chose another course.
The company reduced promotions, limited the supply of some products and removed stale inventory from the market. Its executives understood that these actions would cause sales to decline.
They proceeded because continuing to discount would have created a larger problem.
Frequent discounting can move products, but it can also teach customers to wait for the next sale. It can weaken the perceived value of a brand and allow excess inventory to remain in circulation, taking up the space that newer products need.
Crocs accepted the short-term consequences of correcting the problem.
Sales contracted for several months. The company had anticipated this. The decline was part of the decision rather than evidence that the decision had failed.
We often judge a decision by what happens immediately after it is made.
If sales fall, customers complain or progress slows, we may conclude that we chose incorrectly. Yet some decisions interrupt patterns that have been producing misleading comfort. Once those patterns are disrupted, the situation may look worse before the benefit of the correction becomes visible.
The quality of a decision cannot always be determined by its earliest results.
Crocs was making a choice about the health of the business. That required the company to protect the value of its products, regain control of its inventory and create room for fresher designs. The short-term sales decline was the price of restoring those conditions.
The decision is now beginning to pay off.
The Crocs brand has returned to growth in North America, international sales are rising and more products are being sold at full price.
There is another lesson here. Crocs did not make the decision and then panic when the expected consequences arrived. It remained committed to the reasoning behind the choice long enough to see whether the strategy could work.
This is one of the harder disciplines in decision-making. A leader must distinguish between evidence that a decision is failing and discomfort that was always going to accompany its implementation.
Without that distinction, an organization can reverse a sound decision at precisely the point when it needs to hold its course.
Before making a consequential decision, leaders need to consider more than the result they hope to produce. They must also identify the effects the decision is likely to create along the way.
- Which results should appear first?
- What temporary decline, resistance or disruption should be expected?
- What evidence would indicate that the decision is working?
- What would genuinely justify changing course?
A decision becomes easier to abandon when its foreseeable consequences have been mistaken for unexpected failure.
Crocs understood that protecting the health of the business would hurt its immediate performance. It chose with that knowledge and allowed the decision enough time to do its work.
Sometimes the right decision does make things worse first. The challenge is knowing whether the difficulty is evidence of failure or part of the correction already underway.
Strategic Reflection prompt
What foreseeable discomfort might follow a decision you need to make, and how will you distinguish that discomfort from evidence that the decision itself was wrong?
I’m Giselle Hudson, The Pre-Fixer™.
For nearly three decades, I’ve worked with business owners and leaders across the Caribbean who carry important decisions largely on their own, often when problems keep returning, solutions fall short, or implementation stalls.
When I ask business owners what problem they can’t seem to solve, the answer is usually “people.” So I ask them to tell me more, because people and businesses are rarely as simple as they first appear.
I help them understand what’s really causing the problem before they spend more trying to fix it. And where needed, I help design the solution and guide their teams to put it into practice.
Get Clarity before the Fix.
What are you trying to make sense of right now?
