Where do you see your company in 5 years?
Five years from now the top companies on the Fortune 100 list could easily be a very different group of names. Looking backward, we can point to many industries and when their downfall began. It wasn’t quick but a slow progression as consumer behavior changed and technology ramped up. From new brands to more nimble organizations who are on the cutting edge of technology.
For instance, when I think about retail, I remember when the height of the big department stores went from reigning to now. It was when Robert Campeau, a Canadian real estate developer, used the Junk Bond Market, to leverage debt to come into the US markets and buy Allied stores just because of Ed Finkelstein, the Chair of Macy’s wasn’t interested in using Campeau’s capital to take on some debt. It was 1985. That moment of pure ego driven power was the beginnings of a slow slide down a huge hill to where we are today.
I was at Macy’s in 1983 and it was an incredible year. There was a culture of success and excitement that was empowering and I was running the second largest cosmetic department in the chain. I was 22. Once the debt situation began, you could feel the shift quickly, at least I did, and I made the move to leave. I saw the writing on the wall. Macy’s leaders were no longer riding high but were running around with massive debt on their hands to combat the change and it wasn’t pretty.
I had a really interesting conversation with Rachel Shechtman, the founder of Story, this week when we did a podcast (coming soon) about how do you change retail but our conversation can be applied to any industry. I would start with the question of what do you want to look like in 5 years. People ask themselves that when they are thinking about their careers. The only way to plan a roadmap is to know where the road is going. Her thesis and I agree wholeheartedly, is that these industries need to take their companies down to the studs (usually the analogy of doing a complete gut renovation) and rethink the entire work organization chart from the top down and bottom up. New titles, new revenue models, new product and start again. The stocks may plummet but they will eventually rise from the ashes.
The years to come will be quite interesting because when and if any of these companies do that, the number of people they need to be working there will be significantly less. Cultures and priorities must change with new nimble blood. If they can’t do it, they will not be able to hang their hats on years of business because the hat hook will have disappeared.
Comments (Archived):
The saying that I have is ‘business is taking advantage of (executing on) the low hanging fruit of opportunity’. As such a company that got to where it was by doing that (and almost every successful company out there has done that) will have an extremely difficult time because there is no low hanging fruit to take advantage of the 2nd time around.Look at it this way. Say back in the gold rush days you headed out west and you saw that people needed pick axes. So you decided to execute on that low hanging fruit and you made a ton of money. The amount of sales and opportunity that existed meant that even if you made mistakes you still did pretty well. You had a great deal of leeway. That doesn’t mean that anyone could do that. Sure you were still special because you pulled it off. But now let’s say people don’t need pick axes anymore. What are you going to do? What will you sell? And what if that opportunity isn’t anywhere near like it was by selling pick axes?I first observed this ironically in the late 80’s or early 90’s with a guy who owned fashion jewelry stores in malls. I think he had 25 of those stores. He was very successful and made money (and constantly complained about mall landlords). Well he decided one day to sell skin care products after meeting a man who was a pharmacist and he went into business with him. Ended up losing his shirt on that. A few years later fashion jewelry was no longer selling in malls (I think it did come back later though) so he was only saved when some big chain wanted his 25 locations and bought out his leases. Not for the business either they didn’t want that. They wanted the leases. [1]Skip forward a few years and his son wanted to go into the restaurant business. He said to me ‘if he thinks I am going to give him any fucking money he’s nuts’. Well he didn’t so his son did it on his own (traveled to Italy to apprentice with someone, worked for Wolfgang Puck in LA when that meant someone) and now is a famous chef that you have probably heard (James Beard award winner and top lists of restaurants) of who just sold his empire to a large public company (while retaining his original restaurant). Dad missed that one his special skill was the original idea that he rode and nothing more than that. [2][1] Separate side story his wife was an attorney who helped him with all of that and never got any credit for her role in the original business success.[2] I helped him with the resume that landed him his first jobs after Italy.