Retail Boards and Analysts — Consider Yourselves on Blast

Retail needs a new leadership culture — a culture of “do.” All of us, especially Boards of Directors and Wall Street, need to take accountability for it to happen.

As I was preparing to write today’s post, I came across this old clip of Steve Jobs. It is only 1 minute and 59 seconds along. I encourage you to watch it and to ask yourself — is he talking about retail?

Yes, Steve Jobs is 100% talking about retail, and, excuse me in advance, Dennis Miller-style, I am about to go on one hell of rant about it too.

Unknowingly, some 20 years ago, Steve Jobs was not only talking about retail, but he was talking about all industries for that matter. He was addressing the issue of short-term vs. long-term leadership, or as Simon Sinek refers to it — playing infinite vs. finite games.

In the clip, Jobs discusses how monopolies or even companies that have deeply entrenched niches within their industries, in this case Pepsi, often fail to understand Product Management. These companies have little incentive to develop new products because their products are already so strong that there is no return on investment to come up with something new. So you see product innovation in the form of differently sized bottles, new labels, or things of that nature.

Ultimately this puts the visionaries or the product managers within a company in a box, leaving them with little rewarding work to do, while others get rewarded handsomely. The people rewarded are the people who can optimize the product that already exists, the product that has its nice niche within the marketplace — in the case of Pepsi, the people rewarded were the sales and marketing people.

Jobs brings this up because when he brought John Sculley to Apple from Pepsi Jobs failed to realize this phenomenon. Apple didn’t need Sculley. Apple needed someone like Jobs, who could keep them focused on the future, on how the computing and software industries would change, and on how to innovate successfully over the long-haul. Marketing the hell out of the products Apple already had, the successful Apple II, Jobs realized, in retrospect, was not what was going to make Apple the company we all know Apple to be today.

Boards of Directors at retail companies need to take notice of this example.


Boards need to ask themselves — why have our companies been successful in their histories?

More often than not, what they are going to find is that their companies have been successful because their brands or their Products (big “P” here — for reference see Retail’s Product Problem — Why We Need to Stop Thinking with Our Small P’s) have occupied a distinct niche in the marketplace, and the underlying business models attached to their brands (namely bricks-and-mortar stores) remained relatively unchallenged since the 1960s.

But then along comes Amazon, and other e-commerce players, amassing capabilities with a tenacity akin to the Viet Minh, and all of a sudden these same business model niches are now threatened. Survival is now 100% in question.

What’s scary is that the sales and marketing people at Pepsi from the video are analogous to the bricks-and-mortar merchants, store leaders, and professional managers that occupy most of the leadership positions across retail companies today.

Many of the leaders occupying the C-Suite of our most important retailers today are people that have become successful because they were the best in their companies at “optimizing” the business model of bricks-and-mortar retail. They know how to squeeze the orange to get the most juice out of the model as possible — the majority of the time focusing their efforts on incrementally boosting revenue and incrementally lowering costs, rather than implementing transformative step changes.

These leaders have never had any need to think like Product Managers because what retail companies really had to think about disrupting themselves within the time span between 1980 and 2010? Literally nobody.

Retailer leaders were able to coast along and sit pretty sipping Mai Tai’s on the beach at their second homes, while they basked in the glory of their heavily deferred compensation packages.

It is easy to find these people on a resume too. I call them “operators.” Operators don’t “do.” They operate.

They jump from job to job. Often times their experiences are short in nature — one year to two years in a given position or a company. They squeeze the orange quickly while they have a role, and then shrewdly and politically move into something new as quickly as possible. Short-term results may look great, but no one has any idea of the long-term impact of their work, because unlike Product Managers, they have never really been asked to “create” anything nor have they stuck around to take ownership of their product over the long-term.

We have to break the cycle.

If we can’t all agree that the business model is fucked and that we need new ideas, then we may as well go home.

We have to start creating a culture of “do” within our retail companies. We have start rewarding the dreamers, the creators, the builders. If instead we continue to reward the job hoppers, the “professional managers,” it won’t be Amazon pulling the trigger — we will be the ones putting the 12-gauge shotgun right between our own pearly whites.

Doers and dreamers are different. They understand Product Management and want to build entirely new retail concepts fresh from the ground up. Some companies are great at this — just look at what Nordstrom announced this week — but we need more companies like them. We need companies with leaders who understand that the game is infinite rather than finite.

The roadmap does not entail a new organizational structure or a new incentive. It requires simply a new mindset, a mindset that values ideas and experimentation. One, that says, “What the hell? This may not work, but the risk is low, and data can tell us if the idea is right or wrong.”

It is far more valuable for a company that wants to survive in the long-term to spend $5M propagating this attitude than it is for a company to spend $5M on a cost-reduction program on a business model that won’t matter in the future regardless.

Did you hear that Wall Street? Yes, you are complicit in this too. There is more finanical value in long-term strategies than short-term strategies that prepare a company for harvest. Sure, the stock price in the short-term might appreciate at a healthy rate for all your large investors (the 1%) but the opportunity costs for the truly employed, hard-working America are far greater.

The opportunity costs are foregoing the value of something bigger — you miss on the upside opportunity that the success of Amazon, Apple, and other companies that think like this bears out and you risk the downside of failure, which impacts the employees at the sales registers, in the backrooms, and in our communities who will suffer tremendously and have to find other jobs, while you, Wall Street, will continue to enjoy cashing out your short-term positions.

It is time we stop celebrating the short-term, waxing and waning on year-over-year comps that are meaningless indicators of a company’s actual long-term potential. We have to start evaluating and looking for clear evidence of the “do.”

Wall Street and Boards of Directors, consider yourselves on blast.

Be careful out there,


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Chris Walton is an accomplished Senior Executive with nearly 20 years of success within the retail and retail technology industries. He is well-versed in merchandising, store operations, inventory management, product design, forecasting, e-commerce, pricing and promotions, and tech product development.

Chris was most recently a Vice President with Target, where he led the retailer’s Store of the Future project and also ran the Target’s home furnishing division for e-commerce. He previously worked for GAP, Inc., as a Distribution Analyst and Manager.

Chris holds a BA in Economics and History from Stanford University, and a MBA from Harvard Business School.

He likes to dress as Darth Vader for Halloween, and his wife also frequently asks him to ask Alexa, "to turn off the music."

  • Page
    September 13, 2017 at 1:17 am

    So right on, Chris. The retail industry is too risk averse, even when the cost to test a new idea is minimal. The future requires a cultural shift to a place of “yes”. Testing new innovative ideas should be seen as critical as quarterly sales and profit results. No wonder Nordstrom wants to go private.

    • Chris Walton
      September 13, 2017 at 1:30 am

      Right on Page!

  • Clayton Weiby
    September 20, 2017 at 7:06 pm

    Chris – this is a great return to form on your part, really like the distinction between operators and doers and how they create value. Reminds me somewhat of the Ben Horowitz book, “The Hard Thing about Hard Things.”
    Don’t the investment analysts deserve some credit for appropriately placing higher value on those companies with bright futures, e.g. Amazon at a P/E of 240+ vs. others at 12-25?

    • Chris Walton
      September 20, 2017 at 8:16 pm

      Thanks man. And yes they do. Good point. Though I also kind of think they arent hitting the legacy guys enough.

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