Posts Tagged 'Succession planning'

Ralph Lauren hires outside the luxury box

The management transition has begun at the company Ralph Lauren founded years ago. He’s hired the head of the Old Navy division, whose previous background was at H&M. Here’s my comment, from RetailWire:

Time will tell whether Mr. Larsson’s evident business acumen extends to the importance of brand image at Ralph Lauren. More than almost any company crossing multiple retail channels, Lauren has maintained a focus on near-luxury (and higher) lifestyle merchandising. Most people know what the Lauren brand stands for, which is a credit to Mr. Lauren’s vision and consistency over the years.

You have to assume that Ralph Lauren was sold on Mr. Larsson’s own vision for the company, not simply his ability to manage fast fashion or global sourcing. But clearly some kind of management succession at a big public company like RL was bound to happen, and probably overdue.

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Unconventional choices in the CEO succession race

Kohl’s recently announced that its “chief customer officer,” Michelle Gass, is taking over the helm of the merchandise organization. This puts her in position to become the chain’s next CEO, despite her relative lack of “general merchandise” background. (She spent most of her career at Starbucks.) She may compete against the “chief operating officer” to be named, who will have oversight of stores and logistics. It’s an interesting recent topic for discussion at RetailWire:

Kohl’s has had only three CEOs in the past 35 years, and all of them have been promoted from within. (Full disclosure: I worked for Kohl’s for 24 years, until 2006.) So it’s important for the company’s board to be thoughtful about the most important decision it can make, and to weigh the merits of store-operations vs. merchandising backgrounds…among other things.

The broader question facing huge national retailers (and not just those who are publicly traded) is how to identify the right forward-looking skill set for an effective CEO. Is it simply the traditional retail background of “merchant” or “store”? Or do more intangible skills like leadership, brand building and change management in an omnichannel world matter more today?

Among recent examples, JCPenney went for the more conventional choice of a CEO with a strong background in store operations. Target, on the other hand, opted for a CEO from the CPG industry with less grounding in a traditional retail career path. The next few years will be interesting to watch at both companies, but the early read is that Brian Cornell is acting like the change agent Target needed.

Walmart’s new CEO: Reading the tea leaves

A succession plan at a huge, visible company like Walmart or GM is worth watching closely. In Walmart’s case, the horse race between William Simon and Doug McMillon (who got the job) appeared competitive, but lagging comp sales in the U.S. threw the advantage to Mr. McMillon. Here’s my opinion from a recent RetailWire commentary:

Bypassing Mr. Simon signals that Walmart is not as happy with its U.S. business as the article suggests. Mr. McMillon’s challenges include continuing to grow the company’s e-commerce and international businesses, but he also needs to figure out how to restart the domestic volume beyond its food and commodity categories heavily dependent on its most economically stressed customers. It sounds like the new CEO is well prepared for the job, especially having the “home-grown” credibility so important to the Walmart culture.

For Best Buy, advice is cheap (part 2)

Here’s a more recent RetailWire post about the CEO search at Best Buy:

It’s past time for the Best Buy board to conduct an independent search without undue influence by its founding CEO. You can make a case that Best Buy needed a fresh pair of eyes before it hired Mr. Dunn in the first place. His failure probably had less to do with his ethical issues than the lack of a transformative vision.

I wouldn’t be so quick to forecast the demise of Best Buy, however. They are still the dominant big box player in their market segment (maybe the only player, outside of Apple) — and their PC business will get a lift this fall with the introduction of Windows 8, if history is any predictor. But the new CEO had better move the company forward to thrive five and ten years from now, even in the face of lightning changes in the consumer electronics business.

Un-changing of the guard at Urban

After a tough year, Urban Outfitters reported that its CEO is being replaced (at least for now) by his predecessor, the founder of the company. It’s hard to know where this move will lead, but my RetailWire comment suggests that it can be tough to fill an entrepreneur’s shoes:

It’s obviously a period of uncertainty for Urban, not just because of its recent sales performance but also because of a failed transition at the top of the company. It’s also hard to say whether Mr. Hayne (the founder and former CEO of the company) is in place as a transitional figure before turning over the reins, or plans to stick around for awhile.

We’ve seen this sequence of events in many other companies: The founder can’t find a suitable successor, or he is unwilling to walk away. Without knowing the internal politics at URBN, it’s clear that the company is losing share in an environment where many other junior/trend retailers are doing well.

Remembering Steve Jobs

Among many other observers of the passing of Apple’s Steve Jobs, I made a couple of comments at RetailWire approaching the issue from two angles:

As I mentioned in August, Steve Jobs brought an uncanny taste level and design skill to his company’s product development — along with remarkable brand-building ability. It’s an almost unique combination in the business world, so it’s hard to replicate as a management lesson. The biggest “lesson learned” lies in Apple’s future: How did Mr. Jobs develop a succession plan and a team that will allow the company to thrive in the absence of his talent and personality?

Surprisingly, retailing has not benefited as much as you might expect, because most retailers have not fully embraced the model of the Apple Store:
1. Keep the assortment simple, focused and appealing;
2. Use technology to make the store more efficient;
3. Make the store design and associate skill set part of the overall branding message.

JCP hires an Apple innovator (part 2)

A followup comment based on the news that the new JCP CEO was not originally given store responsibility…and some subsequent backtracking by the JCP board:

News flash (from today’s Wall Street Journal): The JCP board has now decided that Ron Johnson will have full responsibility as of next February 1st. Functional areas like stores will only report to Mike Ullman for a three-month window, starting when Mr. Johnson assumes the CEO title on November 1st. Apparently the board met over the weekend and pushed this timetable, since many board members were caught by surprise when they learned about the original transition plan.

Some lessons learned here:

1. If your company has “activist” board members who push the hiring of a new CEO, don’t leave them in the dark about a transition plan;
2. If you are hiring a new CEO, don’t muddy the waters with unclear lines of authority;
3. If you are hiring a CEO in order to reinvent the store experience (among other things), give him or her the responsibility needed to be a change agent from day one.

Penney is left with a short-term black eye in terms of corporate governance, and is also lowering expectations about when Mr. Johnson’s impact on the company will start to happen. (Current timetable: Fall 2012.) JCP didn’t need to let this happen, and to lose a lot of the positive momentum gained last week with the original hiring announcement.

 


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