Chasing the Customer … Sears – What Went Wrong? – Organizational Culture ?

Sears Roebuck & Company

What Went Wrong? The 3 C’s of Failure

How we got here. Read the series:

 What Went Wrong? The 3 C’s of Failure

  1. Culture
  2. Customer
  3. Change

In the next installments, I will visit each of these individually. I am sure there are those of you will disagree and offer comments. That’s fine with me.

For the better part of a century, Sears was the central warehouse for the American consumer. Sears buyers became the buying ‘agent’ for Americans. Time after time surveys confirmed that Sears was the most trusted economic institution in the county. It grew to be one of the seven or eight largest corporations in the world. Two out of three Americans shopped at Sears every three months and over half of American households carried a Sears credit card. Sears at that time employed over a half-million employees.

In the early 70’s, however, Sears began to fall apart. Within five years, the icon of American commerce would appear to be so badly injured and so lacking in direction that it verged on paralysis. Everything seemed out of control.

What went wrong? Here is my opinion. It may be right or it may be wrong. It is my opinion! Walmart, Apple, RIM, Microsoft, Kroger, Macy’s, Nordstrom and yes Sears are at apparent cultural inflection points. What about legacy media companies like the New York Times, The Sun Times, The Chicago Tribune or broadcast TV, or even cable TV? Customer culture and technology are changing fast. Are those changes occurring faster than management and organizational culture can adapt? Who is figuring it out and who is not? Will the lessons of the past produce guidance for the future? Perhaps this series will start you thinking about some contemporary situations too. That, after all, is the whole point.

What Went Wrong? The 3 C’s of Failure

  1.  Culture
  2. Customer
  3. Change

The first level of examination is Culture. For the purpose of this paper, I am defining Culture more specifically as organizational culture. However, organizational culture closely relates to and is influenced by the broader social and historical forces that create the context of an individual’s behavior. Each iteration of the definition of ‘culture’ translates into the ways in which each person behaves within an organization.

My friend and teacher, Dr. Harry Levinson said of organizational culture, “The human landscape is made up of geography and atmosphere, personal psychology and social cross-currents, changing patterns and lasting perspectives. The art of executive management … is just able to keep pace with the changes presented by the larger world. Its greatest source of strength lies not in computer modeling or the use of econometric forecasts, helpful through these tools clearly are, but in the best use of human resources. The leader is the one who can use the resources, but in order to use them well he or she must understand them.”

My short definition is that the role and responsibility of leadership and management in developing an organizational culture, after considering everything, is ─ the organization of talent.

In the late 60’s America was changing, the customer, overall culture and market was in flux and so was the culture of Sears. The once fluid, interlocking forces of the Field (stores) and Tower (headquarters) were now stuck between two fundamental principles of human organizational culture. Sears culture split into two powerful and competing liberal political traditions similar to the split that still exists and defines the broader cultural perspectives present in our American society today:

British political philosophers Hume, Adam Smith and Burke held that the basic function of government was simply to provide a framework within which the creative dynamism of all of the people would be free to operate. Good results would emerge spontaneously only if a limited government simply maintained the rules of the game.

Voltaire, Rousseau, and Descartes represented the European continental vision that believed that man could by reason and design lay out a blueprint of action. It followed that top-down control could and should be used to achieve and implement what pure reason, logic and applied intellect declared to be good.

Centrifugal forces were now aligned against centripetal at Sears. Both sides were preparing and ─ willing to fight.

It would be up to Edward R Telling and Ed Brennan, as Sears senior leadership, to try to fix what many thought was un-fixable ─ the culture of Sears Roebuck and Company.


3 Responses to “Chasing the Customer … Sears – What Went Wrong? – Organizational Culture ?”
  1. katadhin says:

    This is a great article Ron, thanks for sharing! I think part of the problem is the boiling frog syndrome. Often it is hard to sense the signals that imminent and massive change is needed to avert disaster.

    In retail, the water is starting to heat up rapidly because consumer shopper behavior is changing rapidly in both the physical act of shopping and also in the way consumers gather information. Retailers (and brands) will either adapt to this behavior or go away, it’s that simple. No amount of marketing is going to keep consumers coming to a retail location if they just son’t want to shop that way.


    • Thank you for your comment and insight. You are correct in your analysis.

      I hope to point out as the series unfolds, how Ed Brennan got the culture fixed but did not understand the shift in both the consumer and what I call change. Change is a topic which the series will explore in more depth.

      Our standard of living has advanced more in the last century than the previous 5000 years. There was a lot of change and adaptation required in that time frame.

      The Sears consumer wanted different products and shopping experiences and there were new technologies that changed the consumer experience and expectations. Sears did not adjust.

      General Wood understood that consumer goods product delivery was moving from mail order to physical stores. He built a lot of them. The culture Brennan built worked. The store format and merchandise he decreed didn’t. Although the teams did things right they did not do the right things.

      Switching things a bit. People haven’t lost their interest in news. Yet the legacy media industry has yet to figure out what the new definition of news is nor the form factor it should be delivered in. More in depth on that later.

      Many companies today are at an inflection point. Global demographics are shifting as well as technology.

      Hope these notes help frame the discussion. You will have to live through it as I will, hopefully, be sitting on a cloud someplace watching how you and the next generations cope.



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