"The Fruits of Success Contain the Seeds of Destruction"
To business theorist David K. Hurst, the 48-year emergence of Walmart into a mature large scale enterprise is similar to what happens in a forest ecosystem. Walmart began in the 1960s with two dozen small outlets in rural Arkansas. Today it is the biggest private employer in the U.S, with 1.4 million employees and more than 4,300 stores.
In an article in Strategy + Business, Hurst explains how forest succession, the processes of evolving change in an ecological community in the temperate zone, begins in an open patch of land where all plant life has unfettered access to sun and rain. He says weeds and wondering creatures that spread seeds, which he calls the entrepreneurs of the ecosystem, thrive because they have ready resources and no competition. As they flourish and compete, the plants and shrubs that have the best infrastructure-the deepest roots to get water first and leaves and branches that get the light-begin to dominate, and the growth of their competitors is stunted. Shrubs are then succeeded by soft wood trees, such as conifers that shed their needles on the forest floor, making fuel for fire, which allows their hard seeds to germinate. In the climax phase of forest succession, hardwood trees, such as oak, will overwhelm the pines. Their accumulated leaves create a layer of damp mold on the forest floor, which inhibits fire and lets acorns germinate.
The appearance of the hardwood trees used to be considered a sign of ecological equilibrium, Hurst observes, but now scientists know it isn't. It's the climax phase of the cycle. "Reduction in the variety of organisms in the ecosystem leads inexorably to a lack of resilience in the face of change," Hurst writes. "Too many trees of the same species and similar age are vulnerable to the same challenges, such as wind, disease and insect attack. The conditions are now right for a sudden catastrophe that will sweep away mature growth and open up the system for renewal."
So far, Hurst writes, Walmart's adaptability has helped the organization avoid the hazardous parts of maturity. Hurst concedes analysis cite many reasons for the company's success-ranging from entrepreneurial and logistical prowess to predatory pricing and the abuse of labor laws. But he thinks the ecological analogy is especially useful.
In the early years, traditional wholesalers didn't want to make small deliveries to remote rural spots, so Walmart developed its own distribution infrastructure and innovative logistics system. For example, Walmart adopted a cross docking system used by the military, in which goods received from suppliers are quickly shipped to branches, with minimum use of warehousing. Hurst notes founder Sam Walton often identified his store sites from the air. Architect Jesse LeCavalier, describing the network of modern sites in a Design Observer article, writes that 60 percent of the U.S. population lives within five miles of a Walmart, and 96 percent is within 20 miles. The predesigned buildings are adapted to local environments, and surrounded by acres of rural and suburban parking.
While Walmart's growth would put it in the hardwood phase, it has diversified as well as adapted to remain resilient, Hurst says. Its original discount stores are gradually being replaced by newer supercenters that sell food and multiple services along with conventional merchandise. Hurst says a new category of smaller neighborhood Walmart stores is similar to the ecological "shrubs" in that these stores produce only modest profits but inhibit growth of such rivals as dollar stores.
Hurst, the author of The New Ecology of Leadership: Business Mastery in a Chaotic World, offers an ecological perspective for business success:
- Think of organizations as movements rather than structures
- Realize change and disruption are inevitable. Prescribed burns and release of "pulses" of water from dams to renew rivers are examples of interventions to manage natural systems
- Pursue change on the edges, in open places, where variety can thrive on a small scale, with little competition.
- Remember the fruits of success always contain the seeds of destruction.
- Creation requires destruction. Look for openings in turbulent markets, where information is scarce and navigation unclear.