The NY Post’s article
and others seem surprised that Sears Holdings may not be able to continue as a
going concern. Clearly sale of its Craftsman brand was a signal that Sears was
in serious financial straits.
The acquisition of Sears and Kmart was completed ten years
ago. But twenty years ago, before e-commerce became a major competitor, it was
painfully obvious that Sears and Kmart were in serious trouble. Vendors selling
to both companies at that time were questioning whether they could survive
against Wal-Mart.
Could it be accurate that Wal-Mart’s physical distribution
and information technology systems are so efficient that Wal-Mart receives cash
for its products prior to having to pay its vendors for the purchases? All?
Some? If true, tough to compete against.
Sears’ and Kmart’s business models were unmistakably broken starting
in the 1990s. It is virtually impossible to repair a business model once it is
broken. At minimum it would have required major capital investments in
information technology and restructuring of their physical distribution
operation with its high overhead and slow inventory replenishment. Would there
have been a positive return on investment?
Mr. Edward Lampert was certainly considered a successful
investor when he acquired Sears and Kmart. Possibly he was optimistic that he
could repair both companies. Perhaps taking over as chief executive officer was
a mistake as he apparently had never worked as CEO of a large retail company.
To be qualified to be CEO of a retail, manufacturing or
service company – particularly one as large as Sears and Kmart - one needs to
have started their career in the bowels of a company – at the bottom. Mr. JackWelch is an example of a successful CEO who started at the bottom.
Working ones way up from the bowels gives experience with
all the functions (departments) of a business. How do these functions work
together. Why is cross-functional communication so critically important - while
simple in concept it is difficult to practice. How to submerge oneself into the
lower organization levels to find out the priority problems and solutions
without being a distraction. CEOs who started at the bottom are more calmly
self-confident and make better decisions when they get to the top position.
