It’s well known that libertarians want government shrunk, and that many of them profess to have been influenced by the Objectivism, the “philosophy” of the awful novelist Ayn Rand, who preached that properly channeled selfishness created the greatest good for the greatest number. And such techniques are supposed to make businesses prosper, right? So after this insane Rand-spouting hedge-fund guy, Eddie Lampert, became CEO of Sears Holdings, broke the company into more than 30 units and told them to be selfish (i.e., turn on each other), guess what has happened?
In January, eight years after (Eddie) Lampert masterminded Kmart’s $12 billion buyout of Sears in 2005, the board appointed him chief executive officer of the 120-year-old retailer. The company had gone through four CEOs since the merger, yet former executives say Lampert has long been running the show. Since the takeover, Sears Holdings’ sales have dropped from $49.1 billion to $39.9 billion, and its stock has sunk 64 percent. Its cash recently fell to a 10-year low. Although it has plenty of assets to unload before bankruptcy looms, the odds of a turnaround grow longer every quarter. “The way it’s being managed, it doesn’t work,” says Mary Ross Gilbert, a managing director at investment bank Imperial Capital. “They’re going to continue to deteriorate.”
Plagued by the realities threatening many retail stores, Sears also faces a unique problem: Lampert. Many of its troubles can be traced to an organizational model the chairman implemented five years ago, an idea he has said will save the company. Lampert runs Sears like a hedge fund portfolio, with dozens of autonomous businesses competing for his attention and money. An outspoken advocate of free-market economics and fan of the novelist Ayn Rand, he created the model because he expected the invisible hand of the market to drive better results. If the company’s leaders were told to act selfishly, he argued, they would run their divisions in a rational manner, boosting overall performance.
Instead, the divisions turned against each other—and Sears and Kmart, the overarching brands, suffered. Interviews with more than 40 former executives, many of whom sat at the highest levels of the company, paint a picture of a business that’s ravaged by infighting as its divisions battle over fewer resources. (Many declined to go on the record for a variety of reasons, including fear of angering Lampert.) Shaunak Dave, a former executive who left in 2012 and is now at sports marketing agency Revolution, says the model created a “warring tribes” culture. “If you were in a different business unit, we were in two competing companies,” he says. “Cooperation and collaboration aren’t there.”
That’s just moronic. Either you’re a company, with all units competing toward a single goal, or you spin off the units you don’t need. You don’t make your people fight internal wars; you have them fighting for customers and you, the CEO, need to have their back with a sensible strategy and adequate supplies/training. Sure, it’s fun to play sand tiger shark and have your babies eating one another in your womb, but it’s also a good way to become a “species of concern,” “vulnerable” or even endangered.