Changes in Change

The only thing that says constant is change. Or at least that's the theme of many books, articles and speeches. However, what is generally not fully acknowledged is that change itself is not constant, but variable.

A few years ago Wal-Mart moved into a neighboring town. That was change. However, it was very predictable. Predictable for me--I could get to Wal-Mart in 15 minutes instead of 30! And predictable for them--typical blueprint, same building materials, normal start-up process, etc.

In short--predictable to execute with predictable results.

This is our favorite type of change. Students move predictably (we hope) through school grades. Buildings are built to carefully drafted blue prints. Machines preform to predetermined specifications. It is tempting to think that all change can be logically designed, planned and executed and should have predictable results.

If only that were the case.

A couple years ago another change took place at my local Wal-Mart. Apparently the bean counters at Wal-Mart headquarters in Arkansas determined that according to their models Wal-Mart would do better if it offered a "cleaner" store. Instead of a mass variety of different products crammed onto the shelves it would offer a smaller selection of carefully targeted items. Think about it--why force customers to scan through 14 dish soaps when Wal-Mart buyers can pre-select the three best soaps for the customer?

Wal-Mart is a good operator so not surprisingly the change was carefully planned and beautifully executed. As a customer I didn't even realize what was happening until the products I loved stopped showing up in my local Wal-Mart. Visits to other nearby Wal-Marts confirmed that products I wanted simply were not available anywhere in the Wal-Mart system. As time went on the lack of products became more and more pronounced. Instead of switching to the "better" alternatives I started shopping at competing stores. Perhaps I'm an isolated anomaly, but guessing from the way Wal-Mart stock has performed the last couple years SKU reduction hasn't exactly been a smashing success.

Change can be roughly grouped into these categories:

• Predictable to execute with predictable results (opening a new branch store)
• Predictable to execute with unpredictable results (new strategy like SKU reduction)
• Unpredictable to execute with predictable results (farming)
• Unpredictable to execute with unpredictable results (new internet startup)

Before starting down the road to change, think about the kind of change you are attempting. Each type requires a very different set of tools to successfully navigate.

Disclosure: I am a huge fan of the index fund and do not own any individual Wal-Mart shares.