Walmart, Fake Smiles, and Woodshed: the Subject-Object Strategic Fallacy

5 Strategy Mistakes I Made as a CEO — and How I Help Others Avoid Them. Part 3

Many CEOs I’ve worked with said “my strategy” or “our plans,” but they had no idea how little of it they really own.

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Walmart, a company that re-invented American retail, entered the German market in 1997 by acquiring two local chains: Wertkauf and Interspar.

Walmart isn't just a retail chain — it's a champion of efficiency, a ruthless machine that has squeezed hundreds of mom-and-pop stores and even some big-box retailers out of business in the US. It seemed reasonable to assume that frugal Germans would love Walmart’s ‘everyday low price’ strategy.

But in 2006, Walmart quietly sold its 85 stores to Metro AG and said auf Wiedersehen to Germany.

The difference between a nail and a customer

Imagine you’re building a woodshed. You’re a subject – you’re the one who acts. The wood, nails, and roofing materials are the objects – you act on them. The hammer, saw, and pliers are the tools you use to act on those objects.

You might also have a strategy or a plan — a blueprint — for the woodshed.

You grab your hammer, the nail doesn't argue back, and the wood doesn't have cultural preferences about how it wants to be assembled. And if you're even a bit better than me at woodwork, chances are your woodshed will be built as planned. But what works for a carpenter doesn’t necessarily work for a CEO.

We often treat business strategy like a woodshed plan — where we're the subject, customers are the objects, and employees are just tools.

Nothing could be further from the truth than that idea.

Your customers and employees are equal co-owners of your strategy: they may change it in ways you couldn't imagine. And their actions can be unpredictable. They are subjects, not just objects.

That's what Walmart failed to consider when entering the German market.

Failure instead of Blitzkrieg

There’s no shortage of explanations for Walmart's fiasco in Germany. But the real story reveals exactly what happens when you treat people like lumber and nails.

Quote: “Walmart employees are required to start their shifts by engaging in group chants and stretching exercises, a practice intended to build morale and instill loyalty. Fiendish as it sounds, Walmart employees are required to stand in formation and chant, "WALMART! WALMART! WALMART!" while performing synchronized group calisthenics.”

But Walmart’s German employees weren’t exactly thrilled about jumping around at 6 AM like caffeinated cheerleaders.

Another issue was the smiling. Walmart requires its checkout people to flash smiles at customers after bagging their purchases. But the German people don't usually smile at total strangers.

Cashiers felt awkward smiling, and customers felt just as awkward watching their strained, unnatural smiles.

But Walmart’s bosses from Arkansas stubbornly refused to hire local managers for their German branch and tried to impose the familiar practices in the other country.

Conclusion

Customers and employees rarely take an active part in shaping strategy. The real authors of the strategy—top executives and business consultants—assume they understand what customers and employees need and factor that into their decisions.

But when companies invite me to help them with strategy, it’s often after a few failed attempts to do it on their own. These failures usually happen when customers or employees unexpectedly interfere with the strategy’s execution and turn everything upside down.

You can choose between two options, and both are equally efficient:

1. You can spend a few months researching employees' and customers' needs before you even start crafting your strategy.

2. You can define your strategy as a general direction but keep the details as flexible as possible—so if your customers or employees act in unexpected ways, you’ll have enough room and time to adjust.

The second approach is riskier and is only suitable for small and medium-sized businesses. Large companies are often slow to react. By the time they notice the problem, it may already be too late.

If you’re facing challenges with understanding the needs of your customers or employees, feel free to drop me a message — happy to help.

Read other articles in this series here, here, here, and here.