The iconic British toy company Hornby Railways which had been in business since 1901 was facing bankruptcy in the early 1980s. Headquartered in Kent, England, Hornby’s was a feature in James May’s Toy Stories about iconic manufacturers of children’s toys. Under the new CEO, Frank Martin, the company decided to change course and focus on collectors and hobbyists instead of children toys. Martin believed that making scale models were more interesting than toys reaching a larger, more disposable income group—adults. And adults love nostalgia, as the trains reminded them of their childhood. The change of strategy became an instant success and saved the company from sinking.
In the past, Hornby Railways had a losing strategy. Martin was smart and brave enough to alter their thinking and culture. The decision to change is never natural—traditions and past beliefs always get in the way of making the right choices. I’m sure he had many naysayers telling him that Hornby and children go hand in hand. (If that were true, then why was Hornby going broke?) I’m also confident that Martin had many longtime employees telling him this is the way the company has always done business and it worked in the past. Those “remember when” conversations are the first step towards failure.
Frank Martin was willing to look at his problem through a different lens. He challenged the status quo while framing a question which was very similar to what Jeffrey Yass, said about strategy...“The biggest risk is that you have a losing strategy when you think you have a winning one.” Being realistically optimistic guards against making this mistake.
Planning a strategy is much like writing. The best work never comes in the first or second drafts; it always comes in the third or fourth. Once you plan, there must be someone in your inner circle who will tell you all the reasons why it might fail. If everyone agrees, then don’t believe the plan is full proof. Go back and re-evaluate because as Bill Walsh once expressed, “When we are all thinking alike, no one is thinking.”
Spend as much time working on why a strategy may fail as you do developing one.
And always follow the carpenter’s only rule: Measure twice, cut once.
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