Target Corporation recently announced that it will cut several thousand jobs as part of an overall $2B cost savings plan. The problem, it seems, is the company has failed to adapt to changing consumer habits. Hmmm…remember Radio Shack? Same thing. It failed to adapt itself to the changing use of consumer discretionary time.
But it seems like the same old story with these companies. They act like the problem appeared yesterday and today they have to make dramatic cuts.
Target’s problem, just like Radio Shack’s, is it failed to see or react to external changes that had been occurring for years. How could they have been that much asleep at the switch?
I wrote several weeks ago that Radio Shack failed to do the necessary in favor of the convenient. Same thing with Target. Any idiot could see consumer tastes are changing. But Target leadership chose to do the convenient (read:same old same old) and should have done the necessary. But it didn’t because the necessary would have been unpopular and the entrenched cronies wouldn’t want to face that. And now it has no choice but to do the necessary-draconian cuts that will wreck the economic lives of thousands of people-people who don’t deserve it. And the morale and productivity fallout from these cuts could very well jeopardize Target’s very existence.
So now the new CEO is the only one in a position to make such dramatic change. And that is because he is new, he is an outsider, and he doesn’t care about Target’s past-nor does he have to defend what he did or didn’t do in the last decade.
But what about the senior executives that have been there for decades? What was their role in bringing Target to such a desperate place? What happens to them? Will they be on the list of headquarters job cuts? You know the answer to that. And that is one of the reasons so many entrenched management teams won’t do the necessary-because they know they don’t have to. They know other people will pay for their mistakes, but not them. That is what is wrong with big corporations today (well that’s not all that’s wrong).
How can the Target CEO expect to fix Target with the same cronies that broke it? Oh sure, the Board canned the old CEO, but his cronies probably did most of the damage.
What is the lesson here? First, don’t wait for a crisis to do what is necessary. Do it before it becomes a crisis. I guarantee you any time you do the necessary, it will be unpopular. But so are massive layoffs. Second, if you are a newly minted CEO and you need to make big changes, don’t think for a minute you can leave the guys in place that wrecked the company to begin with. Get rid of them first, or they will block you at every turn.
And that is my advice to the Target CEO-clean your own house first, before you take it out on the little guys. Replace every person on your executive team, no matter what that costs, or how long it takes. If you leave the old cronies in place you will lose the respect of every single employee-and that will be the death knell of Target.