Gooch Out, RadioShack Begins Search for New CEO
Just when you think things have sunk just about as low as they can go at RadioShack, a piece of news comes along that shows you just how wrong you can be.
The latest announcement from the consumer electronics chain is that Jim Gooch, RadioShack’s CEO since May of last year, is stepping down immediately.
Mr. Gooch, who first joined RadioShack as CFO in 2006, has been looking to establish the company as a leader in the mobile technology space. Mr. Gooch has maintained the initiative was showing results, but clearly not quickly enough for investors. RadioShack reported a loss of $21 million in the second quarter. At the time, Mr. Gooch said, "We saw incremental improvement throughout the quarter as we successfully connected with our customer base and drove sales growth in this key category through effective promotions and the expansion of our Target Mobile centers."
RadioShack announced it would retain an executive search firm to look for a new CEO. The company’s CFO Dorvin Lively will assume the role of acting CEO on an interim basis. According to a company release, "The board does not intend to place any limitations on the search, which may include internal candidates."
Discussion Questions
How much responsibility does the board have for RadioShack’s performance? Describe the leadership style you would be looking for in the new CEO of RadioShack if filling the job was your responsibility?
The Board’s responsibility is to guide and manage the organization (Executive Team) on behalf of shareholders. So I would tend to believe that what decisions a CEO makes falls partially on the Board’s shoulders.
New CEO qualifications:
1) CEO that understands the strengths of RadioShack and exploits them;
2) Select a CEO that does not plan to follow what other retailers are doing;
3) Mobile is not the golden key for RadioShack so pick a CEO that agrees.
I love RadioShack and believe they still have a huge opportunity to be a force in the marketplace. Both online and Brick & Mortar.
Strengths the new CEO needs to exploit:
1) Small store format with lots of convenient locations;
2) History of being the place to solve technical issues. RadioShack was the original Geek Squad.
3) SKUs that few retailers carry. Be the place for great items others don’t have.
4) Private Label! People still trust RadioShack’s brand. Use it!
These are interesting times in electronics retailing: obsolescence of some models with growth and expansion in others. It seems that the shifts in retail models are almost as dynamic as the technology changes themselves!
RadioShack needs to be the business that makes its current/old self obsolete. It feels to me like this requires significant change, not just tweaking around the edges! But such bold bets are hard to make in the framework of an existing business with hard-wired P&L expectations and organization structures.
The Board is ultimately accountable for finding and maintaining the right path for the business, its customers and shareholders. They have a tough job! I hope all the Board members truly feel accountable for this and empowered and energized to make it happen.
The Board of Directors has the responsibility to drive the Strategic Direction of the company. They have to have the strength to guide and challenge executives within the company in the execution phase. Companies breath and thrive by having the correct vision, adequate cash flow, and having the right people in place. The board has to assure that fact.
The buck starts and stops there.
RadioShack needs a leader who has great strength in non-cognitive, as well as cognitive skills.
Non-cognitive:
1) Drives teamwork
2) Insists upon and practices integrity
3) Effective communicator — he / she is going to share some good news, some bad news, and some new direction news
4) Willing to look around the corner at the consumer — this is a demand-side business, as the goods within the store can be purchased in a variety of channels
5) Be decisive, and empower decision-making — this company needs leadership — NOW
Cognitive:
1) Understands and embraces technology
2) Nimble financial mind that is willing to take profitability discussions to every level of the company
3) Well-tested marketing executive
4) Understands geographic areas of the country — RadioShack has numerous store formats, and competes in markets large and small.
The board’s responsibility is in selecting a leader, not in day to day operation. I would hope a short list of replacements is ALREADY on the table and the process is not really just beginning. That IS their responsibility.
As in most of retail, the right merchandise at the right price is the ultimate driver of sustainability. That would suggest a MERCHANT leader.
The story of RadioShack is remarkable to say the very least. This fatal outlook story for the future of the company has been told several times in the past. Somehow they have survived and expanded. The story of leadership change is also interesting and lengthy. What stands as a constant is their role as an IT supplier has always been far more successful on the hardware side of the sale. This is important because hardware has a very short life in IT and even shorter profit margins.
Getting in soon and selling a bunch of product for “the other guys” worked for a while, but too many times the company has hit a brick wall as we see here. If it was my decision to make, I would add in store data recovery and security to their bag of goods along with whatever new hardware device that is hot and being flooded with third party product. The data support for households and small business could develop into a good business of regular customers. Another consideration would be to offer beginner web sites using open source software. As I have previously stated, this is nothing new to RadioShack and I hope they will, once again, find a way to continue.
And they seemed so happy together! Anyway, I ran this article thru Babelfish, “We saw incremental improvement …” translated to “we’re reading that twitch as a heartbeat” and “announced it would retain an executive search firm to look for a new CEO” came out as “the Board just outsourced THEIR job.” Clearly RS is a mess, but who specifically should be blamed for this, I don’t know. Sometimes a company is like Pullman and nothing can save it because it is inextricably linked to a doomed industry, and sometimes a bright mind can realize their “core business” was really something else entirely and save it. That, of course, takes genius…something you’re unlikely to find by rounding up the usual suspects.
I met with RadioShack at their headquarters in the late ’90s and they bragged about how they had no competition. Times have changed. The board has significant responsibility for performance. As for the CEO, I want a humble leader, with a servants heart who has vision and a commitment to excellence.