The company has certainly suffered in the way that many other brick-and-mortar outlets have in the face of the challenge from discounters such as Walmart and from online retailers like Amazon. But the consensus among the business press and dozens of very bitter former executives is that the overriding cause of Sears’s malaise is the disastrous decision by Eddie Lampert, to disaggregate the company’s different divisions into competing units: to create an internal market.
Lampert radically restructured operations, splitting the company into thirty, and later forty, different units that were to compete against each other. Instead of cooperating, as in a normal firm, divisions such as apparel, tools, appliances, human resources, IT and branding were now in essence to operate as autonomous businesses, each with their own president, board of directors, chief marketing officer and statement of profit or loss.
And so if the apparel division wanted to use the services of IT or human resources, they had to sign contracts with them, or alternately to use outside contractors if it would improve the financial performance of the unit—regardless of whether it would improve the performance of the company as a whole.
Executives would attach screen protectors to their laptops at meetings to prevent their colleagues from finding out what they were up to. Units would sc-ap over floor and shelf space for their products. Screaming matches between the chief marketing officers of the different divisions were common at meetings intended to agree on the content of the crucial weekly circular advertising specials. They would fight over key positioning, aiming to optimize their own unit’s profits, even at another unit’s expense.
As profits collapsed, the divisions grew increasingly vicious toward each other, sc-apping over what cash reserves remained. Squeezing profits still further was the duplication in labor, particularly with an increasingly top-heavy repetition of executive function by the now-competing units, which no longer had an interest in sharing costs for shared operations.
Ultimately, the different units decided to simply take care of their own profits, the company as a whole be damned. One former executive, described a culture of “warring tribes,” and an elimination of cooperation and collaboration. One business press described Lampert’s regime as “running Sears like the Coliseum.”
Thus, many who have abandoned ship describe the hare-brained free market shenanigans of the man they call “Crazy Eddie” as a failed experiment for one reason above all else: the model k–ls cooperation.