Our Bold New Plan to Suck Less

“If you do not change direction, you might end up where you are heading.”

- Lao Tzu

It's a crisp fall day in 2002, and I’m enjoying my second cup of coffee in my office at Sears’s sprawling corporate campus outside of Chicago. The last eighteen months have been exhausting for me and my team, but on this particular morning, I’m feeling pretty good.

The previous afternoon we had presented our long-term transformation plan to the Sears board of directors. Our recommendations were thorough and expansive, but we knew we might face resistance. Putting our plans into action would require billions of dollars in investment and many complicated and painful changes. If successful—and there were hardly any guarantees—it would take years to fully realize the benefits. To move from design and testing into comprehensive action, we needed the board’s full-throated assent.

We got it.

They were ready, they said, to do what had to be done. They would invest real money to recapture Sears’s promise and reboot the storied retailer, positioning it for a better future.

From a personal perspective, this felt like a huge achievement. The previous year, I had been promoted to vice president of corporate strategy and joined the company’s senior leadership team. I had several responsibilities, but by far the most important and vexing one was helping craft a turnaround strategy for Sears’s long-suffering department store business. Although Sears had once been the biggest, most valuable retailer on the planet (as you probably know), for more than a decade the company’s retail market share, competitive situation, and financial performance had declined dramatically.

The blows were coming from all sides—and had been for many years. Discount mass merchants like Walmart, Target, and Kohl’s were stealing away more value- and convenience-oriented customers. So-called category killers like Home Depot and Lowe’s in home improvement and Best Buy in appliances and consumer electronics had become formidable, rapidly expanding competitors. They were starting to erode Sears’s once overwhelmingly dominant (and highly profitable) market position. Our situation was growing increasingly dire.

This wasn’t Sears’s first attempt at a turnaround. Far from it. Multiple past leadership regimes had tried to return Sears to its glory days. They’d done some innovative things, including launching the high-profile “Softer Side of Sears” campaign in the mid-1990s and following that quickly with an early and quite substantial investment in e-commerce. Numerous specialty concepts that were not tethered to regional mall real estate had been piloted and expanded to varying degrees of success. Still, none were stemming what increasingly looked like a potential slow slide into oblivion for what was the first and, at the time, most famous “everything store.”

In late 2000, Alan Lacy was named Sears’s new CEO. He moved quickly to assemble a new leadership team, eventually appointing me to head up corporate strategy. Once again it was time to mount an attempt at a bold turnaround. So we dug into customer data and conducted extensive competitive analysis. With the assistance of a prominent strategy consulting firm, we executed many rounds of consumer research to understand what was most critical to the customers we desperately needed to win, grow, and retain.

As we got further into the process and learned much more about our opportunities and weaknesses, we began piloting multiple tracks across the company to experiment with new strategies. We consolidated and developed new private brands, created new marketing campaigns, and explored a comprehensive redesign of our store operating model, layout, and visual merchandising. All were aimed at dramatically improving customer relevance and driving greater profitability. We were onto something big—or so we thought.

It wasn’t all analysis and experimentation. A few months before we presented our longer-term vision, we’d written a check for nearly $2 billion to acquire Lands’ End, with the aim of enhancing our apparel and home businesses and accelerating our growing e-commerce and direct-to-consumer capabilities. A new big-box, “off-the-mall” concept called Sears Grand was being designed completely from the ground up and would open the next year.

It was an ambitious agenda, and my team had played an indispensable role. And now we had the board’s support to scale up our experiments and roll out the complete turnaround strategy. We’d done just about everything we’d originally set out to accomplish when I started in my new position. Having worked in strategy and innovation for the better part of my career, I know that pitching such an ambitious plan is not usually so successful, no matter how necessary one’s efforts might be.

But back to that fateful fall day. As I sat at my conference table basking in our success, I was suddenly jolted out of my self-congratulatory daydream when one of my direct reports poked his head into my office. John had played an essential role in the competitive and customer analysis, and he was also helping lead the development of our new concept store. He looked dismayed.

“What’s up?” I queried.

“I’ve been reflecting on the strategy we came up with,” he began. “I definitely think it really is the best we can do given the circumstances. But the more I think about it, it isn’t really a strategy to win. It’s just a strategy to suck less.”

I was perplexed. What was he talking about? Did he not remember all the fantastic work we had just completed? Did he not appreciate how hard it was to get the executive team’s alignment and ultimately secure the board’s support? We’d nailed this thing. We were going to be the saviors of Sears.

But then—slowly at first, and then all at once—a sinking feeling started to consume me.

Questions I had repressed or denied began to fill my head. Even if everything we had planned was flawlessly executed, were our actions bold enough to meaningfully differentiate ourselves from our competition? Could we possibly move fast enough to close the gap that had developed and widened because of our slowness to act for so very many years? Fundamentally, were we actually leaping to a new leadership position or essentially running to stand still?

My veil of denial began to part.

Shit.

John was right.

The above is an excerpt from the Introduction of my latest book Leaders Leap: Transforming Your Company at the Speed of Disruption .

By now it's probably not news to you that since then Sears has gone from being a rather formidable, albeit troubled, retailer to essentially a non-entity. In fact, when I left the company about a year after our big board presentation--and now almost twenty one years ago to the day!--it was painfully obvious that Sears was beginning a slow, inexorable slide into oblivion.

It's also likely not news to you that Sears is far from alone in being a once powerful and iconic brand that has fallen from lofty heights, whether inside retail (Bed, Bath, & Beyond, Blockbuster, Borders. Pier 1, Radio Shack, Toys R Us) or outside of it (AOL, Blackberry, Compaq, Gateway, Nokia, Palm, Oldsmobile, Saturn).

Today it's depressingly easy to think of companies that seem trapped in the zone of irrelevance and stuck in endless cycles of struggle. Department stores are perhaps the most notable, but there are plenty of other organizations that are members of this band of beleaguered brothers.

Predictably, every so often, new strategies to remake these brands get launched to much fanfare. For example, earlier this year Macy’s announced “A Bold New Chapter.” Similar efforts to reboot once successful retailers are underway at Kohls, JC Penney, Foot Locker, and Gap--just to name a few.

And yet...

And yet despite it being blindingly obvious that the world has changed so very much, these companies are actually changing very little.

Despite a nearly endless amount of consumer choice, these brands seem to believe that a slightly better version of what they've always done will allow them to win back and retain customers that have long since taken their business to far more remarkable retailers.

Addressing known problems in your business is a necessary start, but it is far from sufficient.

Sucking less may close some important gaps, but it won't leap you ahead of the competition.

Meaningfully better execution of a fundamentally broken business model might buy you some time, but it's pretty unlikely to save you from an eventual trip to the retail graveyard.

Being the best blacksmith in town was a really great gig.

Until it wasn't.

?

We talked about this (and more) in the first episode of our special summer podcast series.