How organizations could handle environmental uncertainties: a case study of Walmart

In this blog post, I discuss how organizations could deal with environmental uncertainties, especially those resulting from the influences of technology. After describing the reality of technological changes, I describe the history of Walmart with emphasis on how technology might have helped them remain relevant in their line of business for over five decades, despite the constant changes in their operating environment. After that, I discuss the implications of technology and how organizations could deal with environmental uncertainties.

 

Overview

This is the year 2018. As I present my thoughts, I feel a sense of awe in the sudden realization that when compared with prior human civilizations, ours have unprecedented and phenomenal access to data, information, technology and more. I believe that today’s technology could easily have made some of our past ancestors worship us as though we were gods. If you told a person from the 9th century that someday, an object would literally move people en masse from one continent to another, such a person would probably have asked you to share the next joke. More intriguing is the realization that the rate at which technology is projected to grow (Smart, 2015), holds varying implications for today’s organizations.

 

Walmart’s history and the role of technology

By looking closely at a 56-year old company named Walmart, a few things could be learnt about how organizations could adapt, evolve and stay relevant in the face of the unavoidable consequences of environmental uncertainties.

Walmart was founded in 1962 and at the time, the only way customers could buy from them was by walking into their only store (Walmart, 2018). With this, the only way Walmart could sell to more people was by opening more stores (Walmart, 2018). Considering the financial resources which such undertaken would require, Walmart resorted to the securing public funds; they became a publicly quoted company in 1971, and by their first decade, they had 51 stores (Walmart, 2018). By their second decade of operations, they had earned an annual sales revenue exceeding one billion dollars, opened over 200 additional stores, had 21,000 associates and opened foundations through which they could give back to society (Walmart, 2018). Two lessons are apparent here: (a) leadership set a clear objective, and (b) this objective was achieved by leveraging on people, specifically, through public funds.

By their third decade of operations, Walmart would eventually leverage technology to achieve their objective of selling to more people (Walmart, 2018). Walmart had implemented the following: (a) a computerized point-of-sale system to replace cash registers, (b) a private satellite communication system to enhance communication via voice, data and video technologies, and (c) a supercentre that began automating their sales process (Walmart, 2018). This bold technological move produced 1928 stores and 371,000 associates; approximately 600% and 1600% growth in the number of stores and associates respectively, from the previous decade. In addition, they had already opened a store in Canada and were preparing to expand outside America (Walmart, 2018).

To consolidate their objectives, Walmart introduced online shopping, opened stores in China and earned over 100 billion dollars in sales revenue, within the fourth decade (Walmart, 2018). Today, Walmart is still leveraging technology and has also improved this strategy by merging it with innovation through their culinary and innovation centre (Walmart, 2018). The story of Walmart demonstrates how organizations could respond to changes resulting from environmental uncertainties by leveraging technology.

 

The implications of technology

It is evident from Walmart’s history that their ability to adopt technology arguably, early enough, provided a leverage for helping them better manage unavoidable and inevitable environmental changes (Walmart, 2018).

Smart (2015) suggests that changes in fields of Nano and information technologies are currently the key drivers of technological changes in other technical areas such as engineering, resource, cognitive, social, health, economic, political, and security. Ultimately, technological changes would cause disruptions in how organizations communicate, handle business operations and evolve (Smart, 2015).

Evidence suggests that technology remains a critical factor in influencing how organizations innovate (Schumpeter, 1939; Mensch, 1982; Dismukes et al., 2005, as cited in Hassani, Silva & Al Kaabi, 2017). This is undoubtedly one of the critical implications of technology for organizations because, without consistent innovation, I believe an organization would ultimately become irrelevant. Specifically, I think that environmental uncertainties resulting from technological advancements and others could influence how organizations innovate in the areas of identifying customer needs, creating, developing and marketing products and, selling their products or services (Smart, 2015; Walmart, 2018). When considering the possible adoption of technology, Smart (2015) urges leaders to exercise caution with investing in or adopting the most recent technologies; he suggests that the latest technologies are quite often introduced with excessive hype. They tend to undergo much refinement at the expense of the initial buyer until they eventually become better suited for use (Smart, 2015).

 

How organizations can deal with environmental uncertainties

Malgeri (2010) defined foresight as identifying environmental trends and developments in order to anticipate opportunities and problems which could arise from these trends and developments. Malgeri (2010) also suggests that foresight is a deliberate action which if deliberately performed, could enable leadership to make more informed predictions and also better prepare for the future of their organization.

Walmart’s history shows that for over five decades, they have maintained the same objective of remaining a retail giant by selling to more people (Walmart, 2018). This objective has been sustained even after the passing of their founder and despite the number of people who may have joined and ultimately, left the organization (Walmart, 2018). This attests to a leadership that can make its vision, mission and objectives relevant to upcoming generations. It also suggests the existence of a stable organizational structure that is rooted in stewardship and foresight.

To better handle environmental uncertainties, first, organizations must have a broad sense of stewardship and foresight imbibed into its leadership (Malgeri, 2010). Top management must as a matter of necessity, encourage employees to share thoughts and views that could benefit the organization by helping all stakeholders better appreciate how current and possible future trends within its operating environment, could impact on company operations (Malgeri, 2010).

With its foundation rooted in stewardship and foresight, top management should routinely develop creative, adaptable and measurable strategic plans that would guide how the organization operates (Malgeri, 2010). Such plans should have active input from employees in order to maintain a “value system that ties individuals’ emotions and motivations to the needs of the organization” (Malgeri, 2010, p. 42).

Lastly, organizations can learn from Walmart by embracing technological changes which are unavoidable and adopting technology as leverage for actualizing their vision, mission and objectives.

 

 

References

Hassani, H., Silva, E.S., Al Kaabi, A.M. (2017). The role of innovation and technology in sustaining the petroleum and petrochemical industry. Technological Forecasting & Social Change, 119, 1-17. Retrieved from https://doi.org/10.1016/j.techfore.2017.03.003

Smart, J. M. (2015, April 8). John Smart – leadership of tech change – wfs 2013. Retrieved from: https://www.youtube.com/watch?v=QhdWqLNUJns

Walmart Inc. (2018). In Our history. Retrieved from https://corporate.walmart.com/our-story/our-history