Who’s Next?

Discussion
Aug 29, 2011
Carol Spieckerman

Through a special arrangement, presented here for discussion is a summary of a current article from the LIMA (Licensing Industry Merchandisers’ Association) retail blog.

In a major departure from the past, retailers aren’t just layering fresh talent onto conventional configurations, but are purging legacy players, re-jiggering traditional reporting structures and, in some cases, leaving top posts vacant for extended periods of time until the right people come along. The moves promise to accelerate what I believe is a shift by major retailers from a defensive position to an offensive one in the fight for connected customer engagement.

Breaking the Mold

J.C. Penney’s June announcement that former Apple retail chief, Ron Johnson, will take over as its new CEO has retail pundits pondering whether he will reinvent the department store as we know it. A more immediate possibility is that the more-than-a-century-old company will reinvent its entire leadership structure. Since the announcement, longtime Penney CMO Mike Boylson has gone into early retirement, while extended advanced retirement packages were offered to an undisclosed number of additional headquarters employees. Candidates for the program must be over 55, have more than 20 years of employment experience, and be participants in the company’s pension program. While touted as a cost-cutting measure, Penney is clearly seeking to transform its personnel prototype. The company’s corporate address on Legacy Drive could soon become something of an inside joke to suppliers who call on the account.

Vast Vacancies

Sears Holdings Corp has tested the limits of executive-level absence in retail ever since hedge fund manager Eddie Lampert took over in 2005. This month, the company announced the appointment of Monica Woo as VP and chief marketing officer, a post that had remained vacant since January 2010. Lou D’Ambrosio joined the company as CEO in February, ending a three-year search for a new chief executive. Ms. Woo’s background as chief marketing and strategy officer of U.S. online grocer FreshDirect and Mr. D’Ambrosio’s previous stints at Avaya and IBM are additional indicators of retailers’ newfound penchant for techy types. In the interim, Sears resisted any pull toward homegrown solutions.

From Site-to-Store to Site-Reports-to-Store

In mid-August, Walmart announced a major reorganization of its global online operations, which will see e-commerce managers in the U.S., U.K., Japan, and Canada reporting directly to store executives, rather than to its global e-commerce team. Walmart’s California-based global e-commerce unit was just created in 2010, with Eduardo Castro-Wright appointed to head it up after being replaced as president of the U.S. store business. In effect, Mr. Castro-Wright left the Bentonville-based stores unit for online, only to have online report back to the stores. Two e-commerce executives departed in the wake of the realignment: Raul Vasquez, who had been in charge of developed markets, and Steve Nave, who oversaw Walmart.com. In the wake of the shift, Walmart.com may finally evolve from a set-apart anomaly to a synergistic unit whose site-to-store scale puts something over on Amazon.

Retailer organizations are starting to look as shiny as the gadgets they’re selling to shoppers. Are you ready for the change?

How would you rate the value of bringing in new players versus hiring from within when it comes to filling executive vacancies at retail? How critical is a “technology” background in retailing today?

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15 Comments on "Who’s Next?"


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Dick Seesel
Guest
9 years 8 months ago

The debate between “promoting from within” and “hiring from outside” goes back for many years. A healthy outcome involves both approaches: Insiders are likely to have a better understanding of the company culture and legacy (especially if it’s successful) and their promotion gives other insiders a clearer sense of a career path in the organization. On the other hand, outsiders are likely to bring a fresh perspective and new “best practices” to an organization, especially (in the case of JCPenney, for example) if the company needs to be shaken up.

Perhaps the more important debate is the nature of the outside hires’ backgrounds. As the article suggests, it may be less important to bring traditional retail expertise to another retailer and more important (especially at the CEO level) to have supply chain, marketing or IT experience. The smart CEO will ensure that the direct reports running stores and merchandising have the knowledge base that he or she may lack.

Dennis Serbu
Guest
Dennis Serbu
9 years 8 months ago

I have seen many disasters created by bringing in otherwise qualified managers who do not understand the industry. This is not a place for on the job training. There are many rebels in the ranks who could foster the right kind of change. It might be wiser to promote them. Selling refrigerators is not the same thing as selling groceries.

Cathy Hotka
Guest
9 years 8 months ago

Retail has several odd habits including rejecting candidates from outside the vertical and failing to assign top executives to key interest areas like customer experience. Now should be a good time for retail companies to retain new executives, since the uptick in the economy has caused retail execs to be more open-minded about moving to new jobs.

Warren Thayer
Guest
9 years 8 months ago

A mixture of both insiders and new players is always wise, and technology is obviously more important today, regardless of how tech-oriented the company is at the time. I like the idea of leaving some jobs open until the right person shows up. And, if the vacancy continues more than a few months without severe hardship, companies should probably just eliminate the position and put more people on the front lines. Everywhere I’ve been, and most companies I know, are loaded up with “vice presidents of the letter W” whose function is unclear.

Bill Emerson
Guest
Bill Emerson
9 years 8 months ago

There’s a lot of history here, starting with Eddie Lampert, who came with no retail experience. We’ve written many times in this space about how well that’s working. Then there’s Bob Nardelli at Home Depot. Other than the colossal personal self-enrichment for Bob, it was the best thing that ever happened – for Lowes.

Contrast this with the performance of two major retailers that rigorously adhere to a “grow from within” strategy. Even in the current environment, TJX and Bed, Bath, and Beyond continue to grow, continue to be profitable, and continue to gain market share.

There’s no question that bringing fresh blood into an organization can be helpful, particularly in the technology segment. But anything that affects the brand and/or the company culture is, in my view at least, much better done from within.

Doug Stephens
Guest
Doug Stephens
9 years 8 months ago

If ever there was a time when “staying the course” was a bad idea, it’s now. Companies are in desperate need of innovation and differentiation for survival and this often requires bringing in new thinking from other categories and industries.

As for the knowledge of technology as a requisite, I’d put it up right there with finance, supply-chain management, and leadership as a mandatory competency in today’s world. That is not to say, all CEO’s need to be propeller-heads but they do need to have a thorough knowledge of how technology can be leveraged to create internal and external advantage.

Ian Percy
Guest
9 years 8 months ago
I’ve mentioned Dr. Peter Robertson’s book “Always Change a Winning Team” before in this space. His concept is that each phase of the organization’s life cycle requires a different kind of leadership. The leader who gave birth to the organization is rarely the one who can build it. The one who builds it is rarely the one who can transform it. JC Penney is trying to ‘leap the curve’ and launch themselves into a new ‘S’ curve, a new life cycle. Usually to do that you need to reach outside for leaders who have a gift for revolutionizing organizations. Those from inside have usually been part of stabilizing and maturing the current organization and could have the tendency to maintain the status quo they helped build. You need to bring in leaders suited to the ‘oncoming’ stage of the life cycle. Most organizations hire leaders suited for the ‘current’ stage. That’s like trading in your car for another of exactly the same year and model. You might get a few new gadgets but basically you’ve… Read more »
David Livingston
Guest
9 years 8 months ago

First a good technology background is a must. Promoting from within or hiring from the outside is a delicate balance. Generally a CEO wants to have people close to him that he knows and trusts, even if they aren’t the best qualified. It’s important that the CEO feels secure and not worry someone will sabotage him. Some people will simply not blend in well with new management. In the end everyone will be happier if they part ways. Of course, you have to keep many of the rainmakers, even if they are troublemakers.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
9 years 8 months ago
Users and do-ers. Management (the users) must know enough technology to not be bamboozled by the voodoo i.t.-ers (the do-ers), but they don’t have to be proficient programmers, either. At the (now gone) Fleming Foods, all management had to attend classes on the politics of the i.t. department. We called it “voodoo training.” I am a strong doubter of the value of what’s known as “legacy memory” in retail companies. While it’s valuable to a point, reliance on it for major decisions and hiring is the equivalent of running on the beach. It feels good but it’s extremely slow. Or as Charlie Brown put it, “It’s like wetting your pants while wearing a dark suit. It gives you a nice warm feeling and nobody notices.” Bring in the new players whenever you can. Give them a chance to get up to speed. Don’t burden them with legacy nonsense, and give the legacy dinosaurs a chance to contribute, leave, or fossilize. Don’t feel compelled to promote from within. Retail waits for no man. Instead, it’s about… Read more »
Gene Hoffman
Guest
Gene Hoffman
9 years 8 months ago

Successful retailing is a timely, detail business that needs continual innovation and is led by leaders who love people, hard work, change, have a fear of failing and insatiable desire to win. Such young people do not cotton to traditional retailing or its pay levels.

Thus retail should focus on recruiting industrious creative people who like to be around people, who have the need to improve, be willing to pay the price to stay ahead of technology’s cusp, have the courage to innovate and the willingness to be responsible for their awakening actions … and want to be very best.

Once aboard, promote and heavily reward those who are positive “difference makers.” If this practice still creates a void along the way, then bring a new player or two who have the characteristics mentioned above.

A new paradigm is begging to be created in food retailing.

Lee Peterson
Guest
9 years 8 months ago

For the most part, I’m a firm believer in promotion from within — if you are unable to find a replacement for any position inside your own company, you have some major issues like recruiting, training, talent retention, delegation and most of all trust that go way beyond filling a need.

Having said that, in the case of two of the companies mentioned (Penney’s / Sears), it could be that the bureaucracy is so thick and the systemic issues listed above are so broken, there may have been no other choice. If that is so, those are moves of desperation vs. innovation or, better put, a Hail Mary pass for survival. We’ll see soon enough.

Bob Phibbs
Guest
9 years 8 months ago

One could make many of these same arguments about politicians – need for new bold thinking, but also needing to know how to get things done. There are plenty of managements that threw out the old – Circuit City and the Los Angeles Times come to mind – where new didn’t equal better, in fact the opposite.

There are plenty of other visionaries besides Steve Jobs and Ron Johnson, but are they able to disinherit all the baggage of legacy brands?

Mark Burr
Guest
9 years 8 months ago
Technology is in every part of retailing today, in every part of the store, no matter what segment of retail. If you can’t understand it at least at the conceptual level, you will lose quickly. You don’t have to be a ‘techie’ but you have to be able to communicate, understand its use, its implications, and its opportunities. A good mix of inside and outside hiring is always good. However, many retailers do not foster mentoring and coaching of great associates to achieve the opportunity to be as successful as possible promoting from within. We’ve had many discussions here about retailing as a career. From my view, it’s a huge missed opportunity by so many not to be fostering, coaching and developing great people to grow within their organizations. Retailers are too often willing to allow their businesses to be a stepping stone, a short-term position and a lack of growth necessary to foster great careers for both young people entering the work force and for capturing talent in transition from careers as a result… Read more »
Ralph Jacobson
Guest
9 years 8 months ago

The retail industry is all about “promotion.” Regardless of what industry background the executive has, the person must be innovative or surround themselves with innovative thinkers to drive unique, compelling promotions. Promotions for the employees. Promotions about the employees to the marketplace. Promotions about the brand. Promotions on products and services.

There is no need for an IT background, however the comfort level for technology must be high. Too many retailers are still struggling with the profitable, effective utilization of IT inside and outside their stores.

Technology needs a true strategy, just like all other key business functions.

Adrian Weidmann
Guest
9 years 8 months ago

Understanding technology has become an important dimension for an executive at retail. I have seen too many IT professionals manage their agendas by taking advantage of the lack of technical understanding by CMO, COO, CFO and CEO. I have often stated that “they don’t know what they don’t know.” This leads to blindly accepting technical reasons and/or excuses why something can’t be accomplished. In this environment where shoppers are taking control and becoming digitally empowered, it is imperative that executives bridge the gap between the CMO and retail IT, either directly or by way of expert counsel.

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