Page 140 - MS Year in Review 2020

questions, including “How does this fit with our business?” “Do we know how to

manage this type of business?” etc. Then, the external economic crisis involving
the decline of markets made the situation worse; but it was not the precipitating
cause of the crisis.

A second lesson involves managing the expectation of success. The crisis facing

Westfield was caused by inadequate planning, but this was combined with
overconfidence due to a history of previous success. Westfield had the desire to
expand and had experienced nothing but previous success.

A third lesson is to be willing to admit that a bad decision was made and move

on. The decision to exit the media business took courage, but it also minimized the
impact that this decision was having on the company’s financial performance and
success. Making a commitment to something and sticking with it is “human nature,”

but sometimes sticking with something can eventually take the company completely
down. The unwillingness of Sears to abandon its historical core retail business even
after it proved to no longer be viable is an example of sticking to something even

after it becomes obvious that it is doomed to failure.

A fourth lesson is to never abandon a “winning formula for success” – although as a
company grows and as new opportunities present themselves, it may need to be

adjusted. At Westfield, the winning formula was its use of “small incremental steps
and investments to get on the learning curve.”

A final lesson from this case study is to “learn from our mistakes.” When the crisis
is “over,” ask what you should have done differently, and plan to remember that in
the future. Build this learning into the systems, processes, and culture of the

company so that it can be used to minimize the probability that a crisis of the same
type will occur in the future and so that it can be also be used as the basis for

addressing future crises. Although the diversification into the media business was a
significant business failure for the Lowy family and Westfield, the Lowy's and the
company did learn some lessons that were ultimately to prove invaluable to

Westfield’s future success.

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