Three Steps Toward Target’s Next CEO
By Kathy Gersch, executive VP, Kotter International
Early last week, Target joined the ranks of retailers searching for their next phase of leadership. Whether Gregg Steinhafel’s removal as CEO is tied to too much-criticized leadership during Target’s recent data breach crisis, or the failure of a number of strategic initiatives during his tenure – including a less-than-successful expansion into Canada – is a matter of debate. What’s clear is that Target is in good company in its search for a new chief as it joins the likes of J.C. Penney, American Eagle Outfitters and The Bon-Ton Stores Inc. in the hunt for new leadership. But neither American Eagle nor J.C. Penney has been very successful in their searches, with the latter still looking for candidates after more than six months.
Attracting the right CEO candidate is a challenge, and many retailers are searching for similar criteria – deep retail experience, a proven track record of success against competitors and the ability to address both digital and brick-and-mortar business challenges – and they are all pulling from a limited pool. But even after a new leader is chosen, Target will face an uphill battle to accelerate transformation at the organization and restore both employee and consumer confidence in the brand that has been in decline even prior to the data breach crisis following years as a darling of the industry. There are steps the board and new CEO can take to minimize the disruption of this process and get Target back on the right footing.
First – Pick Your True North
To attract the right talent from a very limited pool of candidates, the Target board needs to learn from the difficulties of Steinhafel’s tenure, and provide a clear picture of the opportunity for Target for potential future leaders. In recent years, Target appeared to have lost its way strategically, chasing multiple strategic initiatives at once, without full commitment to any. The company will need to make a sharp correction with the next CEO and provide a clear and compelling strategic vision that encapsulates the big opportunities still ahead for Target, enabling the CEO to steer true.
They need a truly transformational leader that can balance the short- and long-term needs of the company. This leader must ensure the organization’s capability to exhibit excellence in execution today to staunch the decline in the brand and its financial performance tomorrow. At the same time, there must a balance with the passion and vision necessary to drive change quickly in order to secure a future for Target in a sector that has dramatically shifted in the past five years. The direction set by the Board will set the tone for the next CEO, and shape his/her strategic agenda for the retailer in the years to come.
Second – Get Everyone On Board
Once a new CEO is in place, their first task will be to rally the troops. The current troubles around the data breach, coupled with the departure of CIO Beth Jacob and now Steinhafel, have created a false sense of urgency in the culture, driven by a desire to move away from problems rather than toward solutions. With a focus on opportunities, such as small-format stores and improving the omnichannel Target experience, the new CEO can generate authentic urgency. This requires engagement of the entire organization, not just a few at the top.
The next Target CEO will have the opportunity to articulate a transformational vision for the company – defining what it has been in the past and differentiating what it can become in the future. Done correctly, that vision for change can excite and engage staff. True urgency creates engagement and can help employees feel connected to, and part of, the change process, thus making them eager for change, rather than intimidated by it.
Third – Loyalty and Innovation, Faster!
The second stage of the transformation will need to focus on getting customers back into Target stores and shopping at Target.com. Continuing to demonstrate care for customers, particularly the victims of the data breach, will be one part of this process. Target has made some progress here already, but not enough. The focus on implementing a chip-and-PIN card system for additional customer security demonstrates the company’s commitment to security in the future, but that alone is insufficient. The next CEO should look to empower front line employees in stores across the country to exemplify the company’s commitment to customers, recognizing that these staff members are Target’s best brand ambassadors.
Cutting the red tape that can bind employees’ hands in a large organization such as Target has a secondary benefit as well – it can help create speed. Target’s interim CEO, Tom Mulligan, has said the company needs to move faster, and in continuing to revamp multiple product categories, is now focused on pilots of more new initiatives in more stores. The best way to make that vision a reality will be to empower the staff on the ground, who know best the dynamics of their store and their particular customer set, to be able to participate in the development, launch and evaluation of pilot programs. If employees’ sense of urgency around Target’s opportunities is properly leveraged, the new CEO could develop an army of volunteers across store locations to trial new product initiatives and innovative techniques, helping to inject the much-needed speed into Target’s operations.
This three-part process – painting a clear picture for the role of the new CEO, defining a transformational vision for the future, and empowering staff to innovate and regain customer loyalty – can be the building blocks to restore confidence in the Target brand. Done with integrity and transparency, each of these steps can help reassure Target shareholders that the company has turned a corner and convince the markets that Target is once again on a path to sustainable future growth.
Kathy Gersch is an executive VP at Kotter International, a firm that helps leaders accelerate strategy implementation in their organizations.
Weis Markets taps former Walmart exec as SVP, ops
Weis Markets has appointed David Gose as the company’s SVP of operations.
In that capacity Gose will oversee the day-to-day operation and management of the company’s stores. He reports to COO Kurt Schertle.
Prior to joining Weis, Gose was senior director and regional general manager of Walmart Ohio where he oversaw 92 stores and more than 30,000 full and part-time associates. He has more than 24 years of retailing experience. Earlier in his career at Walmart, he worked as a district manager in the company’s Midwest and Northeast/Mid-Atlantic divisions.
Gose earned a degree in business Aadministration from Ohio University.
Ace strong in first quarter
Ace Hardware president and CEO John Venhuizen called the company’s first quarter the "best for both revenues and net income in its 90-year history," thanks to strong performance in its core categories.
The co-op reported total revenues of $1.1 billion for the first quarter, up 16.8% from the same quarter last year. Net income was $24.4 million, up from $4.4 million in the year-ago quarter.
"While the frigid winter certainly helped our Q1 business, I’m pleased to see our winter categories were less than 20% of our overall growth as all core hardline departments were up sharply and contributed significantly to our increase," said Venhuizen.
At Ace Retail Holdings, the co-op’s retail arm created with the late 2012 purchase of the Westlake Ace Hardware chain, sales increased 9.8% to $43.7 million. Once again, increased sales of winter goods bolstered sales.
During the quarter, the co-op added 84 new stores to its ranks, while canceling 35 stores. That activity brought the company’s global total store tally to 4,878.
The 3,100 Ace retailers who share POS data showed same-store-sales growth of 5.2%, the company said.
Regarding the company’s first-quarter acquisition of Maine-based regional distributor Emery-Waterhouse, the company said the move "serves as a catalyst to leverage wholesale purchasing power."