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“Those who cannot remember the past are condemned to repeat it."
“History doesn't repeat itself but it often rhymes.”
"It's like deja-vu, all over again."
Humans, as a species, have a weakness when it comes to history. Namely, we don't remember it, let alone learn from it. From big, big things, like war, international relations, and politics, we see the same "greatest hits"—or rather, the greatest mistakes—done over and over again. From century to century, national leaders and politicians have fallen into the same traps, succumbed to the same pitfalls, and ended up following the same paths as their predecessors. With almost any occurrence—no matter how odd or seemingly random, it is possible that somewhere in the world and somewhere in time, another leader has made the same kind of mistaken decision under very similar—sometimes eerily analogous conditions—albeit the occurrence happened with different parties, periodically unique circumstances, and technologically different parameters.
Now, we as Americans, particularly us modern Americans, are particularly susceptible to being weak in the history department. There are many reasons to criticize the current emphasis on STEM education in our schools. However, one of the unmistakable consequences of focusing so much on science and math is that other subjects like history, civics, political science, and geography have fallen in emphasis. So, we are making ourselves even weaker in the memory department and sending the message that history matters less and less in today's world. Add to this the fact that we have now come to rely on that device that we carry with us at all times to be able to instantly search for anything at any time. And for younger Americans, anything that happened in the pre-Internet, pre-social media, pre-iPhone era seems to them like ancient history—and of little value.
In area after area of American life, we thus see both leaders—and ourselves—continually making mistakes that might have well been avoidable had one taken into account the available lessons of the past. Whether we are talking big picture, important things, like politics or investing, or small things, like sports, gambling, movies, etc., we tend to make missteps that well might not have needed to be taken had we been cognizant of what happened in similar circumstances to others in the past. We Americans will fall for a candidate's campaign promise to do this or to do that and voting for him or her on that basis (knowing well the odds that he or she might actually follow through on the promise for this or that—or both). We Americans will also buy a ticket to see the sequel to a movie that was not that good in the first place, hoping that the second, third, eighth iteration might actually be good.
Likewise, this same phenomenon happens over and over and over again in the world of our personal business. Yes, there are those Americans among us who will be bold enough to start their own restaurant, ignoring the fact that the six restaurants that preceded us in that same exact retail space failed. Yes, there are those Americans among us that will fall for the latest investment scam, believing that you can make 25 percent returns annually risk free or actually buy real estate with no money down, no matter your credit. And yes, there are those Americans who will switch to yet another online dating service, thinking that this this is the one that will find them true love—because thats what the beautiful couple in the TV commercial said!
Now, the same thing takes place in Corporate America, where it is assumed that big companies will have really smart people making informed decisions based on the best possible research done by the best people. Oh, if that were always—or even mostly—the case. The truth is that even with the best of intentions and the best of resources, top corporate executives are indeed—people. They, like us, put their pants on in the morning one leg at a time. They, like us, have the same cognitive limitations that can hinder them from making the absolutely perfect decision for a given set of circumstances at a given point in time. And yes, they, like us, can ignore—either willfully or unintentionally—historical parallels that may well be relevant to the current situation, history that may well have enabled them to appear prescient and chart a course away from danger and demise toward a sustainable future for their company.
So let us consider the current sad, sad state of Sears. CBS Sunday Morning recently aired a very good, informative look at "The Fall of Sears," highlighting things about the company that very few under the age of AARP-eligibility could even conceive of today. That is, it would be impossible without looking at the history of this once proud icon—yes, icon—and technological pioneer—yes, pioneer—that was a dominant force for decades in American retailing. And yes, we are talking about the same Sears as the one at your local mall that is having a 70 percent off of everything "Going Out of Business Sale" right now!
Now this is not just one more of the hundreds of articles out there that is going to "dance on the grave" of Sears and say, "See, I had that!" or "Hey, I told you so!" It is not another article to throw the now-former CEO, but still current board chairman (hey, that's just the way these things can work!) Eddie Lampert deservedly "under the bus!" If you want to read or need to research the downfall of Sears, those articles will be just a click away in your Google search when you add words like "fail," "failing," "failed," or any other synonym in that family in the search box. And there are plenty of analysts—pros and otherwise—who will offer their opinions as to why Sears is indeed going to be one of those corporate names that will soon end up on the proverbial "ash heap of history!"
But what is remarkable to me is not the short-term failures of Eddie Lampert, who commanded the final drive of Sears into oblivion, but the really long series of missteps along the way that ended-up ruining Sears—a company that once was the dominant force in American retailing.
As a management professor and consultant, I can tell you that "back in the day" when I walked uphill through the snow to my management courses in college, Sears was one of the companies that was always pointed to as being exemplary! They were always included in the list of companies that we had to do case analyses of in management classes. They were not only the largest retailer in America, the Amazon or Walmart of their day, but they had a proud history of revolutionizing the way Americans shopped through the use of technology (and yes, the Sears catalog was just as innovative and important in its day as Amazon Prime is today!). The fact that you could drive to a Sears to pickup almost anything at the catalog desk was as great an innovation back in the day as the fact that today, you can order anything you could desire, literally anything you desire, from Amazon and have it delivered to your door. And now, of course, you can literally drive to your local Walmart or Target after placing your order online, in your pajamas, of course—and pickup your order without ever leaving the comfort of your SUV! What a country!
And yet Sears was once dominant, once the retailer of America's choice. If you look back to Sears' "Golden Age," their stores were the symbol of American happiness and success. One could go into a Sears store in the 1960s, 70s, or 80s and see, well, literally America. And if what you wanted was not actually in their store, you could most likely order it from their massive catalog and pick it up at the counter of your local Sears store. And Sears not only had their massive stores, but they also had a far larger network of local stores where you could pick-up almost literally anything you might need for your life.
It was fictional of course, but when the Brady Bunch wanted to celebrate as a family, where did they go? Well, Sears, of course!
As a management student, predicting in the 1970s or 1980s—perhaps even into the 1990s—that Sears could—or even would—be not only eclipsed as America's preeminent retailer, but would figuratively be "circling the drain" as a company, well, you likely thought you were looking at a "C" or "D" grade on your case analysis! However, the fall of Sears was very predictable. Now grated, it was not certain, but it was possible—even likely—in retrospect. And believe it or not, that same fate, stagnation, decline, and eventually, an ignominious end, could well be facing today's corporate behemoths—like Amazon, Google, and even Walmart. That will almost certainly be true if the corporate leaders of today do not take the opportunity to learn from the mistakes made by Sears and other companies that have fallen from titanic heights to not only struggle, but ultimately fail in their ability to compete with not only newer entrants coming into their markets, but with fast-changing and evolving markets.
The weakness, the Achilles' heel, of any company as it grows—and today, as the tendency toward bigger and bigger is better and better—is that the company becomes less able to make change happen the larger they get. The analogy I would use is a simple one. Think of an oil tanker. Think of how hard it would be to make a turn in a ship of that sheer size and with that massive weight. Now, compare that to how fast and nimble a much smaller boat can make turns and changes in course...
And if your competition is the equivalent of the best of speed boats, well, you had better watch out!
The central problem facing the management of all companies as they grow (and especially as they grow and grow and grow...) can be summed-up in one word: inertia. Inertia was Sir Isaac Newton's first law of motion for a reason—because it governs all other motions and movements. The bigger a company becomes, the harder and more difficult it is to make and implement changes. In other words, executives face more and more challenging circumstances as their organization grows in size to make turns—much akin to the challenge the captain of a giant tanker ship faces in trying to make a change in his or her course. Even if top management sees the obstacles appearing ahead, the technological changes occurring, the demographic shifts happening, the new competitors arising, they often simply can not make the necessary adjustments, let alone an entire course correction, that may be needed.
With Sears, there can be no doubt that the series of top executives—not just CEOs—that came before Eddie Lampert were not in their positions because they were fools. They had to see the rise of Walmart, Target, Home Depot, and Lowe's and other chains encroaching on their turf. They had to see the rise of the internet and online shopping. They had to have massive staffs compiling information on the changes in retailing, the internet, demographics, the economy, etc. that were impacting Sears, but they made a series of wrong decisions in response to the probably very, very good data that they had at their fingertips. Of course, no mistake was bigger than Sears combining with Kmart—a marriage of failure that may be unrivaled in the history of American business.
And yet, no matter how they tried, Sears simply could not adapt fast enough or effectively enough. They were outflanked by competitors that presented better alternatives in the marketplace, both in the physical and online retail environments. Yes, Sears spent billions making changes to its stores, but it wasn't enough. Yes, Sears spent billions trying to bulk-up its online storefront, but it wasn't enough. Yes, Sears was willing to dispense with the very concept that it had used to revolutionize retailing in its heyday—the catalog, but it wasn't enough. In the end, everything that Sears tried to do was not as good as what its newer, more agile competitors offered to consumers, and so in the end, the company suffered from a long "death march" to its sad current state as it nears the likely end of its corporate life.
And so now, in business school classrooms across this country and indeed, around the world, students are doing case analyses on the leading companies of our age. They are examining the operations and competitive standing of the Amazons, the Apples, the Googles, and yes, the Walmarts and I guarantee you that their first thoughts are something like: "Whoa! They can do no wrong!" However, that is exactly wrong! That is falling into the trap that not just students, but real top executives fall into, of being "prisoners of the moment." Sears is sadly now a case that will be studied in business schools for all the right reasons to examine all the wrong decisions that were made in its slow, steady decline from the pinnacle of American retailing to a dead corporation, leaving in its wake tens of thousands of lost jobs and empty hulks of stores that will challenge malls and shopping centers around the country for redevelopment.
What both business students and managers today must realize is that history does provide us with an excellent source of information on how some companies indeed were able to ride with the changing tides and survive—and even thrive, while many others have failed to do so. And so yes, looking out 10, 20 even 50 years, we could well imagine future scenarios where Amazon goes away, where Google fades, where Apple is no longer as shiny, where Walmart could decline, and on, and on, and on. Rather than thinking that the dominance of firms today make them impenetrable, we should understand the lessons of history that their dominance—and more importantly their size—make them more—rather than less—vulnerable to effective competition and changes in technology, demographics, social patterns, the economy, etc. After all, we know longer fly on Pan American or TWA, even though they were once the dominant carriers in the U.S. airline industry, and so too can changes like these impact every industry and every corner of commerce.
The key is to recognize the challenge of "bigness"—and to try and respond with ways to keep a company as nimble as possible, even as it grows in size. This is perhaps the toughest thing to do in corporate management, and there is no one playbook to follow in this regard. Trying to turn the supertanker will not get any easier, and with bigger and bigger companies than ever today, the challenge of "bigness" will become even more critical—and tough to overcome. But we can learn from Sears and other companies that have failed to make the right decisions in this regard, and hopefully, there is a chance—a chance—that today's corporate titans can make the right moves to avoid the same fate as Sears. History though says that this will be a difficult, difficult maneuver!
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