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 / Autumn 2012 / Issue 68(originally published by Booz & Company)


Why Walmart Is Like a Forest

• Remember that the fruits of success always contain the seeds of destruction: Success tends to perpetuate itself, leading to the growth of large, slow-moving systems and homogeneity, which then leads to a lack of resilience and vulnerability to catastrophic change.

• Creation requires destruction: Look for openings on disturbed ground — turbulent markets where information is scarce and navigation is unclear. What economists call market failures, entrepreneurs call opportunities.

The destructive close of a mature forest’s cycle demonstrates this last point. In the lodgepole pine forests of the Western mountain ranges in North America, fire ends the climax phase. The lodgepole is a self-pruner: As it ages, it drops its lower branches on the ground. Older trees also become vulnerable to attack by bugs, and are turned into standing firewood. As the fuel builds and the forest becomes more tightly connected, fire becomes inevitable, culminating in conflagrations like the massive Yellowstone fires of 1988.

But forests need fire. Fire tests the system and breaks down the tall hierarchies (old trees) that monopolize the resources, recycling them into nutrients. Indeed, fire marks the completion of one cycle for the forest. It creates the open patches that attract the entrepreneurs. It makes way for variety to reenter the system, both in the form of the seeds and weeds and in the creation of multi-aged stands of the dominant species. Such an ecosystem is once again loosely connected because resources can flow through it in many ways. It is no longer vulnerable to being wiped out by a single event, and the perpetual cycle of forest succession begins again.

The Western world, led by the United States, is going through a testing time. We often hear talk of “creative destruction,” but without an appreciation of how the process actually works. Our response to today’s challenges will determine whether we can renew ourselves and create a sustainable future or whether we will go into a long decline. We could do much worse than to take our cues to action from nature itself. 

Reprint No. 00120

Author Profile:

  • David K. Hurst is an adjunct professor at the University of Regina’s Graduate School of Business and a contributing editor of strategy+business.
  • This article is adapted from Hurst’s latest book, The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press, 2012).
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