Business transformation strategy that doesn’t go from A to B

Business transformation leaders have always been known for their planning. However, transformation is not always achieved by going from A to B. As teams rush to define one future state after another, they may already realize something strange: there is no way to define the future in advance.

We live in the present, not the future. In planning, people can only make a reasonable guess about a future state, test it, and see whether it holds.

Whether transformation involves workforces or technology, the process is not supposed to be a perfect progression from A to B. If all your future states came true, it would imply 100 percent control over your destiny. You would possess a supernatural ability to make every future event come true.

However, this does not happen in the real world. No strategic plan offers 100 percent certainty. Mapping out a path from A to B does not mean these events will definitely happen. They are simply scenarios that are ripe for testing. No matter how realistic our mental maps appear, that doesn’t make them truer in an objective sense. They might happen, or they might not. There is no way to know in advance.

Strategy was never about going from A to B. It’s about learning to overcome barriers and seizing opportunities in the process.

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The return of Red Lobster: Strategy as ‘taking a detour’

We encounter all kinds of setbacks in our lives, and yet the show goes on. Let’s say you’re on the metro on the way to an important meeting. You had planned the day. You’re on the train only to find out it’s been delayed. Rather than wait indefinitely, you exit the station to catch an Uber or taxi. In the end, you make the meeting.

If we analyze actions and expectations, people encounter hundreds of setbacks. This becomes obvious when you attempt to learn something new. When one path doesn’t work out, we simply take another.

This same lesson applies at the corporate level, especially when a turnaround seems unlikely. Some organizations appear to reach a point of no return, only to emerge into new opportunities. One such example is Red Lobster.

The endless ‘all-you-can-eat’ crabs saw the franchise run at a loss. Red Lobster’s customers fell by 30 percent since 2019. During the 2023 financial year, it reported US$76 million in net losses, and the chain had already closed over 100 locations. Red Lobster announced Chapter 11 bankruptcy but garnered enough interest from new investment firms. Within four months of signaling its bankruptcy, it found new investors and a reorganization plan.

Red Lobster secured additional funding from a new investment firm (RL Investor Holdings) and struck a deal that allowed it to operate independently. Damola Adamolekun was appointed as the new CEO. He recognized shortcomings in the business model and planned to invest more than $60 million in funding.

Filing for Chapter 11 bankruptcy might come across as a broken strategy, but it can signal something far from it. Filing for bankruptcy allowed Red Lobster to signal to potential bidders in the market. A restructure may have been what was required.

If anything, strategy is supposed to bend, not break. Even when a company is faced with financial decline, there are still opportunities that others can see. Red Lobster was indeed heading towards financial distress, but even so, such an iconic company still had opportunities for other firms. Red Lobster remains the “first really successful casual dining chain in America at scale.”

While heading towards bankruptcy gives the impression that its strategy is broken, let’s look at it from an outsider’s perspective. Products that fail to meet expectations can still be attractive acquisition targets. This wasn’t the first time private equity firms took an interest in Red Lobster. They saw its financial struggles as a chance to partner and make needed changes.

A significant part of the financial decline came from the ‘all-you-can-eat’ offering. This promotion stemmed from tradition rather than strategy. Red Lobster ran a similar promotion in 2003, which also resulted in losses. Bringing in a new CEO may be what’s needed to challenge this tradition.

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Experiencing setbacks to achieve excellence

Transformation is built on imperfection. These imperfections are not bad things. They might include setbacks that can lead to new opportunities. Trying to define the future is the job of a fortune teller. In the real world, planning for a future state doesn’t automatically mean it will occur. A future event is another way of saying a scenario that needs to be tested.

Defining a future state can be tricky. What often happens is that planners try to wish the future into the present. They are human, after all, but just because someone says so doesn’t make it any more true. That future event might happen. It might not. Even when it does happen, there’s no guarantee the next future event will.

Transformation is not always achieved by going from A to B. We have seen that even the most distressed companies can turn themselves around. Red Lobster is just one example within the restaurant industry. It has gone through several acquisitions, which is not unusual in their industry. 

A setback alone is not enough to conclude that a strategy is broken. At any given time, an organization has a portfolio of solutions that can be developed further. What a solution is today will not be what it is tomorrow. When a predicted event doesn’t occur, it can create the impression that the strategy itself is broken. In reality, the strategy may simply be bending. Each product, solution, or vertical may be waiting for a new home.

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