Why do some organizations full of competent, smart, hard-working people sometimes fail?  The headlines about failed organizations often discuss what happened but rarely get into the “why” behind it.  As a former executive of Borders, I noticed media coverage consistently discussed missing the digital revolution as the core reason behind the Borders’ bankruptcy and liquidation, but the real question on everyone’s mind is why the company got off track.

Borders was founded in Ann Arbor, Michigan, in 1971 by Louis and Tom Borders. While students at the University of Michigan, they created what was then a revolutionary system to track book sales and inventory. The book inventory system could analyze a huge number of titles across thousands of subjects. The system tailored assortments to local tastes and projected specific demand by store. The concept was built around being able to provide the customer with the books they wanted, when they wanted them, in an inviting atmosphere with comfy chairs, a café, and nice music playing. It was a place where customers could escape from their daily lives to gain some knowledge, relax, and be entertained. And it was a huge hit with customers; Borders grew like crazy as a result.

For an organization that started with a strong sense of purpose, we lost our customer-centric focus and purpose as the book industry began to transform. We scrambled to develop new strategies and over time we became an organization focused mostly on short-term financial decisions – often at the customer’s expense. We made small decisions – like changing the customer return policy to save a few dollars – that looked good on paper, but resulted in more customer goodwill lost than it was worth.  We decided to introduce a loyalty card program simply because Barnes and Noble had one and we felt we needed one to compete. This program involved sending emails to our customers multiple times a week in an attempt to drive traffic to our stores through couponing. While this resulted in “pops” in sales, the long-term negative impact was detrimental. Our customers grew numb to the large number of emails in their in-box every week.

The bottom line is that we lost our focus on the customer, our purpose for being, and most importantly our people. Toward the end of our tenure, it was necessary to focus on short-term results but there was an extended period where we had an opportunity to turn it around. I failed to fully appreciate the importance of giving all employees a sense of purpose.  I assumed the “burning platform” alone would drive the change required.  We should have collectively spent more time listening to our front-line employees to gain better insights into what customers wanted and possibly even taken it a step further to include the front line in the discussion around Borders’ strategic direction to renew our purpose.

I’m not saying that we should have spent hours locked in a conference room artfully crafting a mission or vision statement.  In fact, I find most vision and mission statements rather ineffective.  I doubt the Borders brothers spent much time worrying about having a vision statement in the early days.  However, it was clear they were driven by a collective purpose.  This purpose helped Borders understand why it existed, its reason for being, as a living, breathing part of the culture. I found this 2011 HBR blog takes a humorous approach in poking fun at mission statements and explaining the importance of having a mission or purpose.

June 20, 2012


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