Are outsiders required to tackle disruption?

Discussion
Photo: Getty Images
Aug 06, 2018
Tom Ryan

An article from Forbes detailed how a number of retailers are making executive hires outside their sector or even industry to bring a fresh perspective to managing the ongoing digital disruption.

The hires this year cited in the article include:

  • Janey Whiteside, who spent two decades at American Express, becoming Walmart’s first chief customer officer;
  • Darcy Penick, the former CEO of Amazon’s fashion subsidiary Shopbop, becoming president of Neiman Marcus’s Bergdorf Goodman unit;
  • John Gehre, former head merchant at H-E-B, joining The Container Store as EVP of merchandising and planning, the retailer’s first executive hire from outside the company;
  • Helena Foulkes, EVP of CVS Health and president of CVS Pharmacy, becoming Hudson’s Bay Co.’s CEO.

“I think it is the natural and right progression, given the size and scale of the transformation that is underway,” said Chris Walton, a retail consultant and former VP of Target’s Store of the Future, told Forbes of the trend of outside hires.

In Walmart’s case, Ms. Whiteside’s hiring marked the first time the discount giant appointed a female chief marketer or one recruited directly into the position from outside. Walmart U.S. CEO Greg Foran and e-commerce chief Marc Lore said in a note to employees provided to Reuters, “Janey will play a critical role looking after our brand and thinking through the customer journey – from acquiring new customers to their shopping experience and resolving any issues they may have.”

An article last year from Drapers on surprise hires at Marks & Spencer and House of Fraser likewise noted that boards have become more open to outside hires because they’re more likely to embrace new business models.

“In an era when retail seems to be struggling more to keep up with its own innovations, such as ecommerce or logistics developments, we need to look a little more creatively at skillsets,” Mary Anderson-Ford, managing director at recruiter AquaRetail, told Drapers.

Outside hires have been on the rise overall as many industries are facing disruption, but the track record for outside hires in retail seems mixed. For every Hubert Joly (Best Buy) or Brian Cornell (Target) that have been beneficial, a Ron Johnson (J.C. Penney) or Stefan Larsson (Ralph Lauren) make headlines.

DISCUSSION QUESTIONS: How would you rate the pros and cons of hiring a CEO or key executive from outside the sector or outside the industry? Generally, when do such external hires make more sense versus an internal hire?

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Braintrust
"Tomorrow’s leaders must engage a start-up mentality without throwing the legacy model out with the bathwater."
"Hidden in plain sight within retail organizations are rising stars, without a C-Suite resume."
"Diverse thinking in the C-suite and throughout an organization yields more swings on bat with respect to innovation."

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16 Comments on "Are outsiders required to tackle disruption?"


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Anne Howe
BrainTrust

External hires can bring a ton of value to a retail organization, but they need to have the ear of the entire C-suite so they can be effective disruptors. Additionally, I believe there are many effective ways to facilitate great input from current employees, given a safe and open environment in which to offer disruptive and innovative ideas.

Ron Margulis
BrainTrust

This is a total crap shoot. Most of us remember the hatchet job Bob Nardelli did on Home Depot and then Chrysler after starting his career in the industrial sector at GE. Ron Johnson’s efforts at J.C. Penney failed miserably after he succeeded with running the Apple stores and at Target. I’m sure there are a few positive examples, but they don’t stick out like the bad ones.

Lyle Bunn (Ph.D. Hon)
BrainTrust

The biggest challenge to the new executive hire is their determining who they are going to listen to. As they gather the strands of credible input toward gaining focus on new directions, opinions will be tested. How this happens is key to the new executive winning the confidence of the team. Managing the tensions between the immovable objects and the overwhelming forces will add to brand value and EBITDA, or erode it away.

Peter Charness
BrainTrust

Such hires make sense when things are going well, and there’s plenty of time to acclimatize a bright individual with good perspective. When the retailer is in trouble, bringing in an outsider can and has been a major mistake.

Neil Saunders
BrainTrust

To be blunt, none of the hires listed are really “outsiders.” Going from American Express (a financial consumer company) to a consumer-facing role at Walmart is hardly revolutionary. Neither is going from a fashion role at Amazon to fashion-centric Bergdorf Goodman. And while H-E-B is very different from The Container Store, a merchant can flex from one to the other with relative ease.

Arguably, the only radical move is from CVS to Hudson’s Bay — mainly because CVS is such an awful retailer with seemingly few skills and very little imagination or flair.

Ray Riley
BrainTrust

Nearly everything is taking a “direct-to-consumer” approach, and technology has enabled this among democratizing many roles across sectors and industries that were formerly held by agencies, brokers, middle men, etc. Much of this has all happened in the last 12 years, and much of these advancements and changes not only are directly applicable to retail, but have had a stun-gun effect on retail. I’ve witnessed internally in previous organizations big outside hires, but because of the retailer’s 300+ store footprint, these individuals couldn’t understand how to pull all of the gears and levers within their function to get the machine moving at that scale. They had a lot of proven theory in a controlled environment in their previous work, but there’s nothing controlled about retail — particularly if you’re leveraged with physical stores.

David Katz
BrainTrust

It’s a common misconception that legacy leadership fails to identify non-linear innovations, that they’re myopic, stuck in the “old” way of doing things. 
In my experience, this is plain wrong. The real problem is that most non-linear innovation does not serve current customers, it disrupts the legacy process — which drives the bulk of the sales and cash flow — and it is often a big distraction for little immediate gain. Conversely, start-up leadership is inspired by disruption. And startups are usually free from the encumbrance of comp sales and increased profits that the legacy models face.

Legacy and start-up business models fiercely compete for limited resources — A-level talent, capital and technology. Legacy innovation is usually “deliberate,” and top-down. Whereas startup innovation tends to be “emergent,” and bottom up. They don’t play nicely in the sandbox together. Tomorrow’s leaders must engage a start-up mentality without throwing the legacy model out with the bathwater. It’s a rare, and important, management skill.

Brandon Rael
BrainTrust

There’s a delicate balance that companies have to consider when bringing in senior talent from outside the organization. We’ve seen organizations benefit significantly by adding the right senior leadership, yet one of the main considerations when doing so is determining if the executive is the right cultural fit for the company. Do they have what it takes, to blend in, lead, inspire and drive the company to the next level?

When considering cultural fits, organizations have to realize that culture isn’t the enemy of strategy and performance, but an equal player in the game not to be underestimated. Culture does indeed eat strategy for breakfast, lunch and dinner, so companies should tread carefully when they choose leaders from the outside.

Shawn Harris
BrainTrust

Outside hires bring a fresh point of view. Diverse thinking in the C-suite and throughout an organization yields more swings on bat with respect to innovation. Quantity counts when it comes to idea generation to drive innovation, or to develop thoughtful responses to disruptive forces. External hires can inherently bring a fresh take.

Ralph Jacobson
BrainTrust

Fresh, unbiased perspectives should always be welcomed at into strategic roles in any company. Seasoned decision-makers can add immense value to organizations when they don’t possess the inherent prejudice of the industry. I think this is a great thing to leverage.

Denis Kelly
Guest
9 days 15 hours ago

The only true judge is winning. Or growing both bottom line, top line and increasing shareholder value. There is no set blueprint so it is up to the boards to try what, and who, they want. However, the last line of this article is the most telling. If you want to understand what works and what doesn’t and who wins/loses one must look at the unsuccessful hires, as well. A great sports analogy is “nobody wins the world series in spring training.” Translation: anyone can look good on paper but results are what matter.

Rich Kizer
BrainTrust

Bringing outside hires into today’s embattled retail environment makes total sense, IF the the new officer approaches it in a particular way. The outside hire should not make changes immediately, but talk with everyone in the organization before unloading. A C-level person visiting and speaking with local managers and associates on the front line, as well as all management levels, is the key to success. I would hope the new officer would send out all the executives for a day or two per month to all the locations to work. Upon their return each month, there would be a “dose of reality” meeting which would start the change strategies needed. And the entire organization is involved and works together — that’s buy-in, which will mean success.

Ricardo Belmar
BrainTrust

Retailers that successfully transform themselves are doing so primarily by enabling new business models, or channels as we used to call them, that extend their business into new areas without losing sight of their core customer. Sometimes this works best by tapping into leaders from other industries who have done similar things even if they had no relation to your product area. It’s not a guaranteed success, however, as we’ve seen examples where this doesn’t work — although in most of those cases it’s either because the new leader brings in too much change too rapidly (Ron Johnson), or it’s because the organization just isn’t ready for the change and experiences culture shock (Stefan Larsson). It’s not necessarily because the new ideas are flawed, but oftentimes timing is everything and it’s too easy to be overcome by the waves of change in those cases and lose sight of where it’s taking the business.

Ian Percy
BrainTrust

One of the best books on leadership styles and behaviors is “Always Change a Winning Team” by Dr. Peter Robertson. His point is that it gets down to matching leaders with the next stage of the lifecycle the organization is going into. For example, leaders who are superb at building an organization are not necessarily good at reinventing one. This is why most brilliant entrepreneurial/visionary types are rarely capable of taking a company to maturity. Witness Tesla perhaps.

Sadly, most organizations think about “disruptive” leadership far too late — most need disruption before they need disruption. No one admonishes people to “think outside the box” when things are going well, it’s usually only when they are in trouble. Again too late.

It’s been said for a long time that most of what companies need to learn is found outside of their industry. That’s true, but just being an outsider isn’t the magic bullet. The magic bullet is intelligent leadership fit.

Patricia Vekich Waldron
BrainTrust

Outside points of view can always help an organization that is open to new ideas. Unfortunately, many who make this decision are in crisis mode when it is difficult for anyone to make a significant impact.

Cynthia Holcomb
BrainTrust
Vision is an elusive quality, not always understood or hiding in plain sight to those in the C-Suite. Years have passed since C-Suiters experienced the hands-on touch and feel of being on the retail floor. Would today’s C-Suite know to hire Steve Jobs over Ron Johnson? Retailers have had their eye off the ball for 20 years watching paint dry, as Amazon boldly and singlehandedly disrupted retail globally. Retailers are still trying to play catch up, trying this or that to find a fix! Amazon embraced technology as a vehicle to reach millions and millions of individual people with their brand and products. Let’s face it, exemplary retailers have a talent, built on hands-on, real-world experience, enabling the mastery of the Art and Science of retail. What is missing from retail is not knowledgeable retailers, but big picture, tech-savvy retailers. The “new idea” to disrupt retail via C-Suite hires from other C-Suite big corporations is missing the mark. There is an adage I have observed over my years in retail: companies would rather throw money… Read more »
wpDiscuz
Braintrust
"Tomorrow’s leaders must engage a start-up mentality without throwing the legacy model out with the bathwater."
"Hidden in plain sight within retail organizations are rising stars, without a C-Suite resume."
"Diverse thinking in the C-suite and throughout an organization yields more swings on bat with respect to innovation."

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