BrainTrust Query: Can Paul DePodesta Knock It Out of the Park for Sears Holdings?
Sears Holdings’ Chairman Eddie Lampert has gone outside the box in an effort to add to his bench strength by placing Paul DePodesta on the company’s Board. Mr. DePodesta is the central character depicted in "Moneyball" who used his expert statistical and predictive analytical skills to influence decisions by Oakland A’s GM Billy Beane, and later went on to be GM of the LA Dodgers and later San Diego Padres. He is currently a VP with the New York Mets.
Can one man sitting on Sears’ board influence decision-making of a challenged iconic brand? Is a commitment to data and the insight that information provides enough to stem Sears’ quarterly sales declines?
According to one retail analyst, placing brilliant statisticians in a position of influence is a trend that is likely to emerge in traditional retail operations.
"What Paul DePodesta … did to bring analytics into the world of baseball is absolutely parallel to what needs to happen — and is happening — in retail," Greg Girard, program director of merchandising strategies and retail analytics for IDC Retail Insights, told the Chicago Tribune. "And he’s got street cred to take it down to the line of business guys who need to change, who need to bring analytics and analysis into retail decisions."
According to sources, those classic 7 a.m. daily calls with Mr. Lampert are heavy on data. A massive team of analysts, both domestic and offshore, compile a daily report full of data derived from Sears’ ShopYourWayRewards program as well as the retailer’s credit card programs. Mr. DePodesta’s challenge will be to take this big data and make it meaningful in order to drive key business metrics — average sale, units per transaction, conversion, cross-shopping and traffic. It certainly is a tall order for a board member.
At Sears Holdings, a loss of more than $3 billion in 2011 all but erased memories of small profits in previous years. Apparel and Home Appliances saw positive sales trends in the third quarter of 2012, but Home Electronics suffered declines given the heavy pressure on price through showrooming and price match strategies from competitors such as Best Buy, H.H. Gregg and others.
Mr. Lampert said the company was excited about adding Mr. DePodesta’s "strong analytical skills and talent assessment acumen" to its board. But he fits even better than that.
Once on the board, Mr. DePodesta will consider a complicated scouting report and set of objectives: a commitment to 1:1 marketing; leveraging the long-standing preference and affinity of credit cardholders; delivering relevant and compelling offers to ShopYourWayReward members; and innovating through mobile, social and online. The question is, can his expertise be applied to turning around the fortunes of a player that hasn’t finished in the first division in a very long time?
Discussion Questions
Will adding statistical superstars to a retailer’s bench become a new trend? How likely is it that Mr. DePodesta can make a real difference in Sears Holdings’ performance?
Well it will certainly be fun to watch.
But speaking of putting the right player in the right position…trying to do this from a Board level is pretty well impossible. The statistical model worked in baseball (sometimes) because there was an immediate connection to the playing field. Unfortunately the distance between the Board Room and the customer is a thousand uphill miles.
My mind wanders to two thoughts. First we need to remember that statistics are a record of what happened yesterday. In baseball there is a secure framework of rules and the same positions are played at every game no matter what. In business there is no security and the idea that the future is a statistical linear extension of the past is rather shortsighted.
Second, and this is probably one of those thoughts best kept to oneself, is that in my experience as an OD consultant, something happens when brilliant individuals sit around the long rosewood table in the puffy leather seats and call themselves a “Board.” Something awful happens to the collective intelligence and ability to access to wisdom. Instead of brilliance you get endless hours of posturing and convoluted non-decision-making to say nothing of zero collective courage. I’d like to figure that out some day.
If you question this observation just Google “Congress” or “Senate” and look under “Results.”
There has been a steady stream of otherwise successful retail merchants that have passed through the Sears’ organization under Mr. Lampert’s tenure. No doubt Mr. Podesta will add tremendous insights and ideas, much like his predecessors. Also likely is that Mr. Lampert will do what he has done for all the others, which is ignore their advice.
There are no silver bullets in retail. It is a game of persistence and endurance. Color me deeply skeptical.
Mr. DePodesta’s appointment certainly can’t hurt. But it’s not a substitute for a clear strategy, which seems to have been lacking for many years. There are many smart people at Sears who would like to be unleashed to address the opportunities facing this iconic retailer.
With the amount of shopper, product, and activity influence data (economy, hurricanes, etc) growing in retail, a good numbers person can help, but will not win. Retail is not baseball. You do not get 3 outs. There are few fixed variables and you have more channels for success—not just crossing home plate.
The battle of retail change will be won with technology and retail art, no matter if you are at the board level or at the store level. You can beat shopper technology (iPads, best price apps, androids, social tools, etc) with data and decision technology that is coupled with retail art. This art? Retail art in the future is about having and using the right technology at the right place and at exactly the right time. This leading of technology, data, retailing, and human gut feel will be the new standard defining element that separates the retailer winners and losers. The retail industry executives that “play” this game will not be on the bench.
Baseball, numbers, and retail mix well—but are not “for sure” winners. Wanna really cross the retail home plate and score? Turn to leveraging shopper or family science knowledge/data with scalable and adaptable technology platforms (not just tools) and let real retail players that still know the art of retail is it (from the board to the store). Baam! You can knock it out of the park when you meld the retail mind with real technology.
Happy Shopping and Meld Some Mind! OK, I am from the world of retail technology, but have lived in the world of retail since Sears shifted to its first software-driven POS solution.
Looks like a PR move to me. Yes, we hear a lot of hype about big data. But, given the amount of statistical work already going on inside Sears, I’d be surprised if there were a major insight that could dramatically change their future. Improvements? Of course. But enough to warrant a board position? I’m skeptical.
Right idea, wrong implementation.
Driving analytic insight and data driven decision making is critical to organizational success and is becoming less of a strategic advantage and more of a critical need for companies to keep an even playing field. However, thinking you can place a marquee name on a company’s board and make that have any real impact to a company is unrealistic.
As we move into the world of data scientists and big data, quantitative folks are going to occupy linchpin roles in the c-suite with a team that will drive analytics, economics and data based decision making through the organization. Doing that quicker, better and bigger will drive company success and in the case of faltering organizations, turn them around.
On the surface this may make a lot of sense. On further examination, however…
There’s certainly no lack of data at Sears (or any other major national retailer, for that matter). That’s really never been the issue. The challenge has been culling through all of that data for the essential information that can lead to transformative decision-making.
And yet, Sears is only one of a number of retailers that seemingly continue to make mis-step after mis-step. What’s missing? It’s certainly not data.
If anything, I believe that most retailers have been taken captive by all the data. Data is, by definition, backward looking. It can tell you what’s happened, and while that’s not unimportant, it’s not determinative. It can’t tell you what’s ahead. That requires a true merchant.
I was taught, and still believe, that retailing is part art, part craft and part science. I have no doubt that Mr. DePodesta can crunch numbers with the best of them. But unless he can bring some understanding of the art and craft of retailing to the table (as he and Mr. Beane did with the A’s), then all we’ve got is more data, more analytics, without the insight that would truly be a game-changer for Sears.
It’s a great move, but an incomplete one. Sears should bring this guy on in a top exec position, and pay him based on performance. Shouldn’t be too hard to lure him away from the Mets—they are a hopeless case, and their owner is even more incompetent and inflexible than the worst retail exec.
Another publicity stunt to raise stock price? If this was such a great move, it would have already been done by the successful retailers, not the low sales per square foot chains.
No. Sears has not lost its business to BBY or HH Gregg, but instead to poor customer service, the wrong product pricing, terrible product positioning and inventory control. Go into a Sears store and you will see tremendous numbers of out of stocks, bored store clerks that offer no assistance, poor product prices, and a misaligned retail model.
Everywhere you look it appears that the Sears retail model is broken. No amount of statistical focus, from a board member (not a VP or President) nonetheless, will fix this.
Certainly this is one way to get the Sears name on the front page again. Mr. DePodestra will not be up against a bunch of aging jocks in this battle. It still boils down to the right stuff at the right price.
Sears announces that they have traded the Craftsman brand for Allen Questrom and a merchant to be named later. Said Questrom, RFM, RBIs? Let’s walk the mall!
Actually, the amount of data we have around customer behavior, albeit not so deep historically, like: Like! or, big data sentiment analysis, indoor and outdoor traffic flows, and web analytics makes this interesting—is this when we find out the value of GMMs, DMM, Store Managers, Sales People, Facebook, Twitter, SKU count, Oprah? Maybe, but Steinbrenner stays—oh sorry, this is Moneyball and Sears is Oakland. I Like! Oakland.
They find a way to win, but the attendance sucks due to the location of the store (I mean stadium.)
I give up (sigh). Just when Sears was laying low and staying out of the news (so we can’t update the office pool on whether they will have single- or double-digit same-store sales declines this season), or more particularly as BestBuy, Supervalu and their ilk were hogging the headlines as fumblebums, Eddie-the-Great has another brainstorm…or maybe we can blame the Ouija board they seem to use for strategy.
But anyway, is he going to make a “real” difference? Of course not (any more than he transformed the Dodgers, Pads or Mets, for that matter). Sears doesn’t have a “statistics” problem, it has a number problem: that number is one, and it’s the one person who has to leave for there to be any hope for a future.
I have been consistently commenting on the underlying concern or even fallacy of “marketing as algorithm” because we humans are far more complex than mere numbers can discern. Does making basis points shifts in response rate matter? Sure, at scale, minor advances in better email open rates and conversion does add efficiency, however, that is not all that is required.
It is very easy, even understandable, to be at the top of a huge enterprise and have a desire to review “the numbers” which roll up to be reviewed at “a high level.” Yes, significant statistical outcomes can be predicted, modeled, and executed against, even to positive effect. BUT—as several comments have noted, at the moment of human interaction there remain some potential flaws in this particular model at Sears.
To my simple mind, revitalization of this retail franchise needs to operate on both ends of the classic “top down’ AND “bottom up” approach. If, by adding such a talented visionary, a recognition can be reached that perhaps each store could be thought of as it’s own team, serving their unique audience and that equipping these local coaches and players with improved ways to interact, react to, comprehend, measure and even anticipate INDIVIDUAL needs – then we might really have something here.
My fear would be that an actual ‘moneyball’ approach (which had a lot to do with identifying undervalued resources who “should” preform in a fairly confined number of degrees of freedom) could lead to “good” choices (at higher levels of geography or other summary levels) that could directly result in further human flight from stores themselves because “their store” no longer reflect their specific local desires and needs. We have seen this happen before.
With truly amazing SYRW data, clear store information, and clever marketing I still believe there is a solid chance for Sears Holding (as iconic as the brands in this stable are) to become highly LOCAL, with the full power of the “long tail on-line assortment” supporting each retail location. But, it is about discipline, store by store action, commitment to a central long range vision and then the all-powerful ‘execution’ that will tell this story. Lots of progress has been made in multiple areas of the enterprise yet apparently some basics still go wanting.
When I think about SYWR data and potential use I see great opportunity, but so far I neither see nor feel emotional connections with humans really being broadly attended to. That is precisely the major flaw I continue to fret about as “big data” washes over all of us with the ‘promise’ of personalized clarity when in fact we as human animals make 80+% of our choices on a less than conscious level—so oceans of data offering behavior outcomes still forces us to ASSUME why folks behaved that way. Don’t misunderstand, I am a major advocate of data use and value … it’s just that I believe statistics are simply that and nothing more. Tools that are to be used to better understand what is happening, but they are not a cure all for insuring future success.
So, to actually answer the questions … 1) Yes, adding “statistical superstars” to retailers (via hire or equally likely outsourced via IBM, et al) will continue to be a huge trend and so it should be to marshal the data and harness its power. 2) Will this particular hire make a big difference – it certainly should however, to me the larger, lasting value that could be achieved will likely be expressed in more than simply mathematical concepts.
If you are not totally tired of my ramblings more on this topic can be found here.