Earlier this year I commented on a decision by Panasonic to rein in R&D; investment in flat-panel televisions and instead expand its reach into the entry-level market (see “Is Panasonic Kissing Its Future Goodbye?”).

The company appeared to be eyeing significant market share opportunities offered up by the 2009 conversion to digital TV in the U.S. It was a bold move, because while it’s easy to cash in your brand equity and go down-market, once the decision is made it’s nearly impossible to reverse course.

Last month another famous brand made that fateful choice. Liz Claiborne, Inc. agreed to license its namesake brand exclusively to J.C. Penney, ending decades-long relationships with department stores like Macy’s, Dillard’s and Bon-Ton. The Claiborne brand has long been in decline, and a Macy’s spokesperson said the retailer could no longer justify expanding the line because of customer confusion between it and the “Liz & Co.” sub-brand that was being sold exclusively at–you guessed it–J.C. Penney.

The Claiborne brain trust may have created their own problem by overextending the brand, a common manifestation of the loss of focus that afflicts many stalled companies. That said, this new decision may work out. It’s not the first time J.C. Penney has partnered with respected, high-profile designers (Polo Ralph Lauren and Nicole Miller, to name two), and Penney is doing better than many of its rivals in this tough economy.

As with Panasonic’s decision, however, this one will be interesting to watch, and will serve as yet another object lesson for any company struggling with stalled growth. Going downscale–where all the value-conscious buyers are these days–can be extremely tempting. But if you do it, make sure you’re extremely comfortable with your decision. There’s no turning back.

It’s a classic When Growth Stalls scenario: start with a fast-growing and profitable company; add an aggressive new competitor that begins to successfully woo the same customers; watch as the previously flourishing company loses its nerve, its focus, and its consistency, leading to languishing sales and lackluster results.

When Gap, Inc. launched Old Navy in 1993, the spare retail chain sporting affordable merchandise and wacky ads was an immediate hit. Rather than risk losing focus at brand Gap (which was near its zenith atop the retail world), parent company Gap, Inc. used Old Navy as a counterforce to the big discount stores that were trying to ride on Gap’s fashion coattails by ripping off its designs.

Within four years Old Navy sailed past the billion-dollar revenue mark, accounting for nearly half of Gap, Inc.’s top line and some 40 percent of its profits. Offbeat commercials featuring has-been celebrities made the chain the talk of the retail industry, as well of teens and young families that comprised its core market.

Enter H&M;, the trendy Swedish retailer, which opened its first U.S. store in 2000 offering discount apparel with a more fashionable edge. Fearing that H&M;’s success marked a sea change in the industry, Old Navy shifted its focus from the basics to more trendy, upscale merchandise. It didn’t work. Sales fell by more than a billion dollars between 2006 and 2008, with last year’s same store sales sinking an incredible 17 percent.

It was then that Gap, Inc. decided to do something about it. As the Wall Street Journal put it, “Returning Old Navy to its roots was the central theme of Gap’s remaking of the brand.” The Journal quoted Old Navy’s interim president, Tom Wyatt, as he reflected on the brand’s original recipe: “We got tired of it. The customer never did.”

Eighteen months ago Old Navy recommitted to its original focus and began redesigning more than a thousand stores, hoping to leverage consumers’ renewed frugality in this toughest of tough economies. Year-to-date 2009 revenue is up 1 percent, due largely to a third quarter same store sales increase of a healthy 10 percent (the first rise in five long years). Pardon the pun, but Old Navy seems to have righted its ship.

There’s no guarantee that, having returned to its former course, Old Navy can count on smooth sailing. The retail industry is too dynamic to let any successful company alone. But Old Navy’s experience is one more point of evidence that when even the most successful concept runs into a rough economy, a tough competitor, or some other external threat, destructive internal dynamics can turn it into its own worst enemy.

What do you with a hotel brand that’s become outdated, irrelevant, and in some ways a signal to stay away from the properties to which it’s attached? If you’re InterContinental Hotels Group (IHG), owner of the Holiday Inn franchise, you take a zero-tolerance approach to revitalization.

A November 13 Wall Street Journal story reported that IHG is preparing to pull the Holiday Inn flag from as many as 300 hotels in North America whose franchisees won’t spend as much as $250,000 per property to overhaul their lobbies, signage, lighting and bedding, among other things. Said Kevin Kowalski, SVP of brand management for IHG, “On the compliance date, Feb. 1, those hotels will get a failure letter and so will their banks.”

Those are tough words, and they back up a tough policy announced back in 2007–before the recession made financing for such renovations difficult to acquire. But IHG has little choice if it’s to keep the damaged brand from sliding into oblivion. It has a responsibility to restore the Holiday Inn brand on behalf of the other 2,400 properties, 1,400 of which were substandard and whose owners have embarked on the required remodeling.

Once one of the nation’s leading hotel chains, Holiday Inn milked its half-century of heritage for too long, allowing many of its properties to show (and smell) their age. IHG is doing the best it can to address the brand’s long-eroding reputation, having stripped the name from hotels accounting for 125,000 rooms around the globe, according to the Journal. As it does, it continues investing in all-new properties that will aid in revamping the brand’s reputation, as well as its Holiday Inn Express sub-brand.

I can’t say that Holiday Inn makes list of hotels I might choose for my next vacation or business trip—I’ve been disappointed (disgusted?) the handful of times when I’ve had no choice but to stay in one in the past. That said, knowing that IGH is drawing a line in the sand, I’ll consider giving the brand another shot. That kind of commitment is worth rewarding.

GM gets its share of knocks these days (see “GM, Is That All You’ve Got?”) and deservedly so. But when the company does something right, however small, it should get its props.

Last week I spotted a full-page newspaper ad featuring little more than a beauty shot of the 2010 Cadillac CTS Sport Wagon and the simple headline, “Sorry About The AppleCart.”

It took me a minute (just one, mind you) to realize what the ad was trying to say. When I did, I was pleased–not only because I was then in on the joke, but because GM in this case actually respected the intelligence of its customers.

I have no doubt that some people who see the ad won’t get it, at least not at first. And if they have anything to do with GM, Cadillac or its ad agency, they’ll make their displeasure known. But Cadillac buyers aren’t dummies, and by reflecting an understanding of that in its advertising the brand makes itself look smart.

Is the concept brilliant? No, as is typical for most automotive advertising. But the fact that the people who created it managed to keep the headline from being explained, dumbed down, or killed entirely is a credit to them.

Not a day goes by without more news about Detroit’s beleaguered automakers. While each new development is notable in and of itself, I find it more telling to take a few steps back and look at the big picture.

Below are a few clips from selected Wall Street Journal articles I’ve run across over just the last few days. Take a minute and scroll through them. They tell a fascinating tale.

First, GM continues its inability to focus, revealing a growing lack of consensus between management and the board:

“In a dramatic change of course, General Motors Co. backed out of a deal to sell the company’s European operations to car-parts supplier Magna International Inc., and now plans to spend billions to restructure the money-losing business itself.”

“The decision…was made at a board meeting Tuesday in which the company’s directors strayed from the plan of Chief Executive Frederick “Fritz” Henderson, who had spent months negotiating the Magna agreement.”

“The Opel deal is the second major transaction to fall apart for Mr. Henderson in little over a month.”

“Whereas Mr. Henderson’s predecessor, Rick Wagoner, had often won in the boardroom by relying on the support of long-serving directors, Mr. Henderson appears to be tiptoeing through land mines of strong opinions by adjusting his game plan.”

“Carl-Peter Forster, who worked for GM for more than nine years, is quitting as chief executive of GM Europe. The decision follows a vote by the company’s board of directors on Tuesday to scrap a plan to sell control of the German Opel unit…”

“Despite his dissent of late, Mr. Forster was long viewed as a strong asset on GM’s executive roster and his departure serves another blow to Mr. Henderson, who has seen his management bench shorten since the company’s exit from bankruptcy.”

Across town, Chrysler is making fairy-tale sales and market share predictions to try to convince investors (that means you, taxpayer) that it will repay the $9 billion it owes us by 2014:

“The company said it is counting on a slew of new models to spark a surge in sales over the next five years and drive its revival.”

“Chrysler—which has seen its sales plunge by half in the last few years—predicted revenue will rise about 20% a year, from $42.5 billion in 2010 to $67.5 billion in 2014, and said it would break even in 2011.”

“To hit its financial targets, Chrysler expects to double its world-wide sales, from 1.3 million cars and trucks in 2009 to 2.8 million in 2014, and predicted its U.S. market share will rise from about 6% in 2009 to 11% in 2014.”

Meanwhile, Detroit’s only private automotive company, Ford, has gone about regaining its focus, finding its nerve and sticking to its game plan.

“Last week Consumer Reports gave the company quality ratings comparable to those of Honda and Toyota.”

“On Monday, Ford reported its second consecutive quarterly profit—and more impressively, a swing from a $7.7 billion cash burn a year earlier to positive cash flow of $1.3 billion in the just-ended third quarter…”

“The company gained a percentage of market share in the first 10 months of this year, no easy feat in an ultra-competitive market.”

“The company’s turnaround actually began three years ago with decisions that amounted to zagging every time that General Motors zigged, which was remarkable for a company whose strategy for decades was to follow GM.”

“While GM kept its unwieldy assortment of eight brands, Ford sold Jaguar and Land Rover, cutting its brand lineup down to a manageable size.”

“What’s more, shedding brands and shunning the mortgage business has helped Ford focus on quality, where it had slipped badly early in this decade.”

“Consumer Reports said last week that 90% of Fords, Mercurys and Lincolns rate average or better in quality, right up there with Honda and Toyota.”

“When the economy recovers and car sales increase, Ford could be in great shape.”

The automotive business is complex, but it doesn’t have to be that hard. Focus, nerve, consistency, consensus—no matter the industry, all tend to diminish when growth stalls. And all are essential to getting it back.

At the moment, Ford is the only one of the Big 3 to be paying attention.

Retail sales are projected to decline this holiday season for the second year in a row, an occurrence unprecedented in the entire history of the federal government keeping statistics on such things. Online retailers will continue to face stiff pricing pressure, as they have for more than a year. Free shipping has become almost the ante in such a competitive environment.

That’s why Amazon’s shipping program, Amazon Prime, is so impressive. For a company that ships 100 percent of its products, finding a way to neutralize pressure on shipping costs is no small thing–especially when it’s competing with Walmart, which offers its online customers 97 cent shipping on many products, or the option to pick up their orders at a nearby store for free.

Two million people have become members of Amazon Prime, paying $79 for automatic two-day shipping on all of their purchases. Not surprisingly, they tend to be Amazon’s most frequent customers, which means they’re still getting a pretty good deal. But the program helps ensure they’ll turn to Amazon first when they have a new purchase occasion, and the numbers indicate they increase their spending with the company some 20 percent after signing up.

Just goes to show you that innovation isn’t the exclusive purview of the R&D; department. While many online retailers have thrown in the towel on shipping charges, Amazon found a way offset them while increasing order flow. The company took one of its biggest lemons and turned it into a refreshing beverage.

Makes me wonder about the bitter aspects of my industry and how how my company might do something to sweeten them up. What about yours?

One of the most common (and destructive) internal dynamics that tends to arise when growth stalls is a loss of consensus among the management team. Because of the longstanding and complex relationships involved in family-run corporations, the issue can be especially problematic for them.