Sears: What’s the Lost Opportunity Cost for a Squandered Super Brand?

It’s understandable and only human to focus on the calculator when revenue stagnates, dwindles or looks like it might do either. In business, however, the circumstances signal that we must exercise our actual humanity and invest like mad in what we have built. This isn’t everyone’s reflex, but the alternative is to descend irretrievably into the death spiral of left-brain-only leadership. For all its incessant focus on ensuring the business remains in the black, the attitude only leads to financial ruin—everything the left brain fears.

In the Wake of Sears…

Jeff Bezos must have loved whoever it was who got rid of the Sears’ catalog. Only an unforced error of such magnitude would ever have ledt a berth in its wake wide enough for a Bezos type to set up shop and threaten to rule the planet. It was probably the same person who decided to neglect or mistreat Kenmore, Craftsman, Diehard and all the other brands that grew in prominence over decades’ time in the Sears super brand’s wake.

The wake of a super brand can be powerful — even in the “wake of the wake,” after the brand has all but died. As recently a decade ago, I went looking for a DieHard battery. Even though I hadn’t replaced a vehicle’s battery in years, DieHard was the brand that came to mind. I still believed the well-earned reputation. DieHard batteries died hard. I’d seen it for myself years before that, on my old car. I saw the Bruce Willis film series Die Hard. The brand’s Wikipedia page suggests I may not have been looking in the right place, but distribution had clearly waned at the time. I couldn’t find a DieHard battery, reluctantly went with Interstate… and got mad at Sears.

Icons Painting Themselves into a Box

My co-founder and our CEO, Nick Biron, wrote about the general topic of challenges in brick-and-mortar retail several years ago within the context of the decline of box stores, so I figured it was high time to level-up and post this follow-on piece on Sears, the mother of all super stores — in other words, the next level up from box stores, and in ways their progenitor. If you think of the mother as the first of its kind, then you might contend that Montgomery Ward or Macy’s is the mother of all super stores. That is fair enough. Even so, Sears is the illustration, the one that succeeded arguably the most iconically in this now-contracting arena.

I decided to look into this meta-mystery of who got rid of the Sears catalog? Who treated all those brands so badly? Where and how did Sears go wrong? And, yes, I was looking for a single person, a solitary villain responsible for all the apparent stupidity. And, as in all such pursuits, I learned that reality was complicated, found plenty of blame to spread around, and fell far short of finding all the answers. There was one person who stuck out, however. The inflection point for the Sears brand seems to be when Arthur C. Martinez, COO in 1993, thought “the catalog division was now obsolete with most of Sears customers a short drive away from the many Sears retail locations,” according to Quora,

Arrest him! We must make an example of his behavior.

No, really, we must.

Use Your Brain

No, let’s not. Interestingly, a prominent school of thought appears to be that Martinez led a successful turnaround of Sears. I’m not saying he didn’t, but look at what happened later. And how can we expect or require that someone paid to focus on the nuts and bolts of the enterprise be particularly concerned with its je ne sais quoi?

It figures, after all. Of course a COO nearly 30 years ago, in a traditional industry such as Sears’, would be apparently left-brained and institute left-brained solutions to turn the business around in a way that makes sense to the left brain. Leave it to a person whose job requires a preoccupation with operations. How would you possibly expect such a person to recognize something about to fail critically outside that sphere — the brand? I’ve chatted with modern COOs who have a holistic understanding of brand, but we mustn’t leave the future of the business to any stakeholders focused solely on its day-to-day operations — even as we must, obviously, listen to them.

Why? The left and right brain see the organization from different perspectives, and you need both to succeed. In 2019, Accenture published “Striking Balance with Whole-Brain Leadership,” a report drawing on results from a study of more than 200 C-suite executives and more than 11,000 employers and customers. According to the findings, executives at the C-level who adopt a whole-brain approach to leading “see a positive bottom-line impact and realize on average 22 percent higher revenue growth and 34 percent higher profitability growth.”

Presumably, their whole-brain leadership means these executives manage to balance and combine their left and right brains’ propensities and inclinations. It sounds like a kissing cousin of the idea that organizations must appreciate and tend to both hemispheres of human capital management, the concrete and the abstract.

Is the Value of a Brand Quantifiable — or Predictable?

It’s a legitimate argument to say the discontinuation of the Sears catalog, an effort to eliminate what the COO at the time saw as unnecessary cost, was the inflection point leading the company to its present just-barely-going-concern status. Yes, myriad factors have hobbled brick-and-mortar retail. By the same token, however, the catalog was a legacy analog from the 19th century for e-commerce. With more foresight and, presumably, appreciation for the intrinsic value of the catalog as an innovation, Sears might have kept the catalog business open and positioned itself to capture yet-to-exist market share a quarter century later.

This is a stretch and arguable. And what organization has that prescience? What’s inarguable is the value in the Sears catalog was more than the revenue it generated. So was the value in Kenmore and Diehard and Craftsman. And these all remain memorable brands in their own right under the Sears super brand, but have been probably irrecoverably weakened by a thousand tiny cuts — some outsourcing here, some corners cut there, and so on. Again, a fixation on making the numbers work distracted Sears from investing smart money in the brands and ideas that had propelled the company to dizzying profitability in the first place.

The ideas behind those brands and the catalog itself (i.e., the root of the Sears super brand) brought immeasurable abstract benefit to Sears. But these assets were not financially quantifiable. Or, they were, and the balance sheet at the time clouded leadership’s comprehension of their nonetheless great potential and innate value. In other words, it’s readily apparent stakeholders in leadership who fixated solely on the general ledger wielded much power and couldn’t see the value beyond the output of these brands that accounting could quantify (i.e., a conversion of an incalculable abstract benefit to a calculated number based on the value of those ideas to someone else). And where are those brands now, as a result? They’re nothing special. Their worth was always intrinsically intertwined with the mother brand, Sears—now with her children neglected and shells of their former selves.

Messing with DNA

Does this blog adequately deconstruct the fall of Sears? No, it covers only one small piece. For additional analysis elsewhere, take a look here and here. Additionally, there’s a tale to tell around how Sears treated its workforce as things began to go sour. We didn’t touch on any of that. Perhaps we will later. It’s a case study in concrete and abstract HCM. Meanwhile, the tie-ins with Sears and the ideas of the left and right brains of the C-suite and abstract and concrete ways of looking at organizations’ value are undeniable, and so we explored them here.

What’s interesting is that abstract value to the consumer is ever malleable and transformable. Any business that’s fallen on hard times in the concrete would do well to analyze how any brand it has or thing it does that defines the company might be repurposed or reinvented to remain part of the organization’s DNA and generate concrete value again, in a new way.

It’s a circle. And it may be that Sears dropped the catalog and otherwise neglected itself out of apathy or a fundamental miscomprehension of the business’ soul. Mismanagement of the company left it in a lurch, bereft of a vision to capitalize on the formidable DNA of the company. It’s almost as if exclusively left-brain leadership was like a harmful free radical doing irreparable damage to this DNA.

Sense and Cents

What was the lost opportunity cost for Sears? A second act of world domination? Vegas odds are, we’ll never know. Sometimes your leadership understands dollars and cents, but not common sense. The massive success of Sears began with an idea, not with a balance sheet. In organizations where stakeholders from the financial side of the house rise to the upper echelons of leadership, the risk for disaster can be high unless the right-brained leaders can establish a toehold in decision-making and grow their influence. Why? A brand’s intrinsic value, its primordial and innate potential for success, never expresses itself as a line item in the general ledger.

Share your comments: