In what Senior management teams change, so strategy implementation can be likened to a marathon relay. In this light, examine critically the following explanations of Habitat’s decline, being particularly aware of timing:

Question

What will be an ideal response?

Answer 1

? The predictable consequence of ageing and predatory competition
? Continued implementation a static, inflexible strategy that was unresponsive to critical transition
points in time.
? Poorly understanding and implementation of a suitably adaptive strategy
? Just bad luck.
That managers and senior executives age and generally become more conservative seems an inescapable
fact, which argues for organizational renewal by assigning existing staff to new positions that challenge
them and by regularly infusing the enterprise with new blood. To the extent that Habitat may have failed
to do this, coupled with the massive impact of IKEA ‘doing a Habitat’ more effectively and cheaply,
goes a long way to explain Habitat’s decline.
One may argue that Habitat could have implemented many of the changes that IKEA did, much sooner,
effectively anticipating this new threat. However, it would have required a shift from its high street
locations, seen as a key part of its retail success ‘formula’ or ‘recipe.’ So Habitat can equally be
criticised for having an inflexible strategy that failed to respond to external change. A key lesson
therefore is the need to consider changing a successful formula before it becomes obsolete, requiring
strategic judgment of a high order. Of course, hindsight makes specific transition points much more
obvious than they perhaps were at the time.
Further, the sequence of mergers in the 1980s seems hard to explain and justify in retrospect. They must
have been driven by grandiose retail ambitions presumably held principally by Conran himself.
Whatever their merits, it cannot be denied that post-merger integration of ‘back office’ functions such as
buying, store rationalisation, development and refurbishment, HRM etc. must have diverted considerable
energies from the main task of providing goods that consumers desired at a price they were willing to
pay. As a designer, Conran seems to have had little enthusiasm for this critical ‘detail’ aspect of retail
management, which would send the wrong signals to middle managers (contrast with Leahy at Tesco).
However, it is also the case that once IKEA was well-established, Habitat’s position in the market
needed revision, a task that even under the Kamprad family’s supervision has proved too difficult.
Arguably, the only position available to it has been to move significantly up-market, bringing it into
competition with the furniture and homewares departments of more exclusive department store chains
such as House of Fraser and well-established independent furniture stores in many provincial towns and
cities. Sadly, the Habitat image was intended to be one of present-day chic, not enduring ‘heirloom’
quality (exemplified by Ercol furniture). IKEA itself experimented with higher quality furniture lines in
the early-mid 1990s and found them incompatible with consumers’ expectations of the brand. So it
seems that history reveals that no ‘suitably adaptive’ strategy exited for Habitat, suggesting that perhaps
the anthropomorphic life cycle analogy has some validity when applied to enterprises. Whilst luck or
serendipity sometimes contributes to fortuitous strategic changes, bad luck is a poor explanation,
glossing over failures of strategic choice and leadership.