Why So Many of America's Greatest Brands Are Unhealthy

Learn to hit the pause button, start from the beginning and do what the most disruptive businesses have done -- focus on the individual.
Why So Many of America's Greatest Brands Are Unhealthy
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The latest news about Sears was dire. Empty shelves and stores led proclamations of the final nail in the brand’s proverbial coffin and one more in America’s brick-and-mortar retail casket. Sears’ failure to adapt is another sad story of legacy brands and industries in 21st-century America.

Like its building in Chicago, Sears was once the tallest tower in retail. It got there by constantly using an entrepreneurial spirit to reinvent itself, anticipate the unexpected to adjust to changes in the marketplace, and see opportunity in everything to evolve from its legendary mail-order catalogs to anchoring the rise in department stores and malls across the country. Its name was synonymous with quality and possibility.

Ironically, the very things that made Sears healthy for more than a century are making it unhealthy in the present: the inability to be entrepreneurial and reinvent, anticipate changes and see opportunity as it gets squeezed by big-box retailers on one side and online retailing on the other. As it tried to grow through acquisition (merging with Kmart), it further lost sight of what made it so strong and what it meant to serve individuals who defined its business. This became even more evident when Sears sold one of its most valuable assets -- the Craftsman brand -- to Stanley Black & Decker.

Related: The Good Thing About an Antiquated Industry? Lots of Room to Innovate.

This is not just a Sears problem, of course, but a problem for almost every mature industry business that has made its goal to selling more to individuals to appease Wall Street instead of serving those individuals to make their lives and their businesses healthier. But, that is what we need, because American enterprise is unhealthy in the workplace and marketplace.

But, here is the good news: We can recover. We can get healthy and inject an innovation mentality into even our most mature industries so that they and we can grow sustainably and evolve. To do that, we must do three things: Hit the pause button, start from the beginning and do what the most disruptive businesses have done -- focus on the individual.

All this starts with a bit of heresy: Ignore Wall Street. From consumer packaged goods to retail, Wall Street may be telling mature industries that they constantly have to reinvent themselves, but all it really wants to see is short-term growth and return on investment. CEOs thus create strategies not for long-term transformation but for immediate gains to the bottom line.

“Most companies appease Wall Street with near-term results that end up coming at the expense of long-run growth,” says Nik Modi, managing director at RBC Capital Markets. “Corporate executives must realize, however, that most investors consider the long-term duration of growth in valuing their investments.”

Related: Creating a Culture of Innovation Starts With the Leader

Hitting the pause button on Wall Street allows leaders and organizations to step back and ask one essential question: What are you solving for? Are you solving for selling, margin and Wall Street? Or is it about adding value to every person you are serving? Do you and your organization even know what your value proposition is anymore?

Most don’t. This is why mature businesses have lost their ability to innovate. If they hadn’t, they wouldn't be buying companies -- especially small companies -- to satisfy balance sheets and Wall Street. The large companies are turning to those small companies because they have stopped innovating and the marketplace has passed them by.

Now what these larger companies will proclaim is that these acquisitions help them diversify and broaden their reach to better connect to individuals. That’s clearly what Walmart hopes to do with its acquisition of trendy online retailers. They hope they will inject new energy and disrupt the status quo with how they lead, manage and create cultures of transformation. Sounds great, but that’s not necessarily going to satisfy Wall Street. So what happens next? The top of the organization looks down to middle management and says, "I saved you from losing your job by acquiring all these companies -- now go make it work. Fix this!"

Related: If Elon Musk Can Admit His Mistakes, Then So Can You

This is why the middle management of so many companies is so unhealthy. Without the mandate, the wherewithal to redesign the organization in the face of the acquisitions -- or any market changes really -- isn't there. It isn’t trained to lead, change or transform. It hasn’t historically been given the tools and resources and access to the intellectual capital to help the organization evolve. It can’t anticipate the unexpected and live with an entrepreneurial spirit thus ignore the opportunities the acquisitions present. The organization has acquired so much, so fast and created so much operational complexity that leadership from the middle to the top further loses touch with the individualized needs of their employees and customers and instead of trying to actually fix it, just focuses on selling selling selling.

Pretty soon, those organizations end up like Sears, and few (if any) companies can reinvent themselves when all you have to build on is nostalgia.

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