Why leaders invest so much in failing strategies

British retailer Marks and Spencer (M&S) was a high-street king in the 1980s, with more than 500 stores, 13 million weekly shoppers and a £1 billion+ annual profit. But the clothing, homewares and food seller has struggled more recently, with plans to close 100 of its 300 outlets by 2022, leading to thousands of job losses.

What happened in two decades? M&S stuck rigidly to selling British-made garments as oversea competitors such as The Gap, Zara and Hennes & Mauritz (H&M) brought new fashions from around the world to the UK. The management also placed too much faith in its St Michaels brand – based on M&S founder Michael Marks – investing in print and TV adverts for new store openings rather than branding or new products.

Good advice from analysts to ramp up advertising and accept credit cards, as other high-street chains were doing, went ignored. Meanwhile, M&S continued buying most of its textiles from the UK while foreign competitors sourced theirs for cheaper from abroad. Between 1998 and 2001, the company’s pre-tax profits plummeted from £1.15 billion to £0.14 billion.