RIP Toys R Us – Avoid a Similar Fate in Your Organization

Toy’s R Us is dead – at least in the United States. According to CNBC, “Toys R Us is planning to either close or sell all of its more than 800 stores across the U.S.”

The debate is underway about what killed Toys R Us.

  1. Was it poor strategy and execution? Including specific issues like store selection and website functionality…. (Business Insider)
  2. Did Private equity strip assets and saddle the company with debt? (CNN Money)
  3. Was it Amazon? Target? Walmart? (USA Today)

Did something else kill Toys R Us? Was it a combination of all three?

These are interesting questions to ponder and there is little doubt that the case studies are being written as I type. In fact, there’s a good chance that I will use one of them at a future class that I teach at Vanderbilt University.

More important than future academic exercises is the opportunity for you, right now, to assess your business using the causes that people are applying to Toys R Us situation.

Here are a few questions for you and your team to consider. I highly encourage you to print off this list, take it to your next meeting, and ask your people. You may be surprised with the answers.

Strategy and Execution

  • How confident are you in the strategy you are currently pursuing?
  • When was the last time you visited it (really visited) and considered the market, customers, government regulations, and other environmental issues?
  • How clear are you and your team members on the strategy you are pursuing?
  • Do people at the frontline understand how their work connects to the strategy?
  • Are people clear if they are winning or losing?

Assets and Debt

  • What documents do you look at to assess your financial situation? Some organizations have very sophisticated systems, other don’t. Understand the source of the information to include currency and accuracy.
  • Do you have a firm handle on your assets?
  • Do you have a firm handle on your liabilities?
  • What’s the ratio for the two? Is that position sustainable?
  • What should you do based on what you learn?

Not sure how to gather and calculate this information – here’s a quick wikiHow to get you started.

Competitors

  • How would you describe the nature of current market rivalry? Who are you competing against? What are they doing? How have they changed?
  • How hard is it to get into your market? Are there barriers in place to make it more difficult? What can you do to make it harder for future competitors to compete?
  • What technological shifts are changing the competitive environment?
  • Where can you gather more competitive intelligence to make better decisions?

Of course, there are many more things you can look at in assessing your business. I encourage you to continually do this.

 

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