Remaking Strat Planning turned out to be the most significant accomplishment of that six-month period before I took over the company. I knew that it would have an immediate practical effect, but the announcement that they would no longer have such an iron grip on all aspects of our business had a powerful, instantaneous effect on morale. It was as if all the windows had been thrown open and fresh air was suddenly moving through. As one of our senior executives said to me at the time, “If there were church bells on the steeples throughout Disney, they would be ringing.

Terry Lundgren ran into stiff resistance while executing his strategic plan in the years of his Reinvention stage. As noted earlier, he was appointed CEO of Federated Department Stores in 2003 with the express mandate to make bold moves to expand the business. After just three months at the helm, Lundgren faced a golden opportunity: purchasing the legendary Marshall Field’s chain. The acquisition would take the company a grand leap forward, and he would become the steward of another of the nation’s most beloved retail brands.

Another factor at work here, though, is the status quo bias, a powerful and widespread psychological force in business. The concept was introduced by researchers William Samuelson and Richard Zeckhauser, who showed in studies with many kinds of decision-makers, including managers, that “when making an important choice, people are more likely to pick the option that maintains things as they are currently.” When you’re enjoying success, your status quo bias is reinforced, which might be just fine. But given that after five, six, or seven years, market conditions will surely have evolved, it usually won't be fine to stick with the status quo later. When responding to those changes would involve making a substantial alteration to or even reversal of a winning strategy or to operational engineering you have orchestrated, the status quo bias makes recognizing the need for change and making the case for it to your team and board a good deal more challenging.

For acquisition, he shared, “We would look at almost anything that came up within the industry for sale, and we had four factors that drove our decisions. One, we would only buy number one or two share brands in their category. We did not believe we could take a dying brand and turn it around. Two, we wanted to buy businesses that had higher gross margin than out company average, so would help our gross margin. Three, we looked for asset-light companies. We didn’t want to buy a company with lots of factories or ones for which we’d have to build new factories. We preferred to bring operations into our own facilities. And four, we went for products that had some sort of advantage versus the competition that we could leverage with our marketing, sales, and operations muscle to make better.” That formula guided the well-measured acquisition of numerous leading brands during his tenure, including Spinbrush, OxiClean, Orajel, Batiste, and Vitafusion. These were businesses that his own business leaders had the expertise to run, and he folded them into Church & Dwight’s existing operations. Focusing on employees with R&D expertise, they kept, on average, only 10 percent of employees, many of whom joined the team at headquarters. “We doubled the size of the company,” he reported, without adding substantially to the number of employees.

He was curious about why Crocs wanted PE investment, given that the company was actually well financed, with strong cash flow. “They knew Crocs needed a strategic change,” he recalled, “and they felt that the best way to set the company on a positive new trajectory was to seek a minority investor from the private equity community.” Sales of the distinctive colorful clogs had been slumping, and the share price had been pummeled. Some industry arbiters thought the quirky brand had peaked, proving to be a trendy flash in the pan.