On 3/23/2017 8:54 AM, Ken Norton wrote:
Sears was preceded in death by General Motors.
Seems to me too early to count them out. They are betting the company on future plant, equipment and product with huge
capex. (Yes, I have an award around here somewhere for my role in Team Capex (also cap and shirt) at a Fortune 500. If
you are the only one who just does the numbers right, you can look like a hero, as long as you can dodge those whose
recommendations and decisions are not based in reality - or they self destruct.
Capex is this two edged sword for heavy industry companies without a lot of spare cash. Do it right, and the rewards are
huge. Wrong, Up OR Down, and you may lose the company. Most common is some oscillation between the two extremes.
These mega-corps lose the basic fundamentals of Business 101. After a
while, they get totally destroyed by analysis-paralysis.
Yeah, well, it's both simpler and more complicated than that. There's a lot of individual capability and personality
involved, too. Having worked closely with a lot of top managers, well, it's amazing who gets in charge and how long they
can screw up before the piper has to be paid.
For too long, Peter Magowan was head man. Grandson of the Charlie Merrill, who, with his buddies, created the public
company, son of the man who saved it from its first crisis, and took it to new heights, he had two fatal flaws for the
job. One, informed speculation, is that he couldn't see the handwriting on the wall in the middle of the country, so we
held on as the last union operator there long after the others bailed out. He couldn't see it because he couldn't have
his mother see him downsize the company his father had built up.
Yes, he had the right schooling, etc. But, he was largely incapable of abstract thought/logic, a fatal flaw in that job.
I don't know what others may have contributed to his next 'career'. He was a life long SF Giants fan. After being
quietly ousted from everything but a board seat, he bought his dream job, Managing General Partner of the Giants,
leading them to years of poor to mediocre performance.
It's also interesting to see screw-ups who look good and talk a good game get hired to kill or maim other companies.
Highest profile was Julian Day. When KKR finally had to replace Peter Magowan, they brought in the first really,
seriously competent CEO I ever worked with (A highly analytical person, who was never paralyzed by analysis.) He brought
in one of his consultant sidekicks, Julian, as CFO. At that job, he was really good, but that was obviously in part
because his boss kept him out of areas where he didn't know anything. I liked Julian quite a lot, personally, BTW. But
he really didn't understand retail.
But he had this powerful itch to run something big, and he got it - KMart.
(Sound of sinking ship - glug, glug.)
It doesn't take fancy spreadsheets and trend analysis to figure out what 30
seconds of walking into a store will tell you.
It's a weird thing. You can hardly imagine how many supermarkets I've visited, (from alone through with top brass) let
alone how many I sent analysts to "case". Some people see what's really going on, some see what they want to see, some
see nothing but how to spout the pet ideas of the superiors they are with. (I was never good at that.) Some are simply
elsewhere in all but body.
Another problem is when the market changes. A lot of retail managers seem to find it impossible to change standards that
worked for them for years but don't anymore. Even when it's been decided that operations should change, they knee-jerk
back toward the old way.
The typical Sears store is dingy, dark, shelves are empty and the staff
worthless.
Can't disagree there. They make a retailer want to run away, so as not to catch
whatever is wrong with them.
But, man-o-man, when you actually DO buy something
and are at the checkout, do you get sales pitches on twelve different
types of credit cards and other loyalty programs.
And another thing. Sears and KMart (before and after merger) were
notorious for turning their Accounts Payable department into profit
centers by failing to pay suppliers on time or for full amount.
Sounds like a financial guy's idea of how to 'conserve cash', what you do when
you can't figure out how to drive sales.
. . .
Walmart.
Yeah, how do you make magic? I watched a small market every summer on vacation through the period from when KMart had it
to themselves through Walmart's opening and wresting it away. W's prices and merchandise weren't any better, as far as I
could tell, at least at first. Somehow, W made their store more interesting and attractive to shop. Maybe they had the
price edge on staples I wasn't buying.
Mystery Within Enigma Moose
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What if the Hokey Pokey *IS* what it's all about?
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