When performance is below expectations, there is an immediate temptation to blame the people responsible. If you push your thinking further to understand why they made the decisions they did, you may improve your ‘mental model’ of how your business works.
It is easy to get stopped at superficial causes, and one of the most comfortable is “somebody screwed up”.
Several times, our first store in anew cityunderperformed because it had a bad location. The knee-jerk response was to take aim the poor person in charge of the location decision. But much more insight into the underlying drivers of the business came from asking why he had chosen a poor location. For our first store in anew city, we had no corporate relationships with local developers, real-estate agents or local government. Competing established retailers were able to judge new locations very accurately, and made sure we only got ones that were unlikely to work out. Even if we hired the best store selector in thenew city(and why would they join us?) the first stores are still likely to underperform.
People form part of a wider business system. Looking beyond an individual’s poor decision to understand the environment they were operating in, provided us with insight into a powerful way that city-level scale impacted our profitability.
As another benefit, you can retain good people put into bad circumstances.
Next time you are tempted to explain a poor performance as a people issue, stop for a moment. Is there a structural or strategic explanation that would help you understand your business better?