Lessons on Internal Team Building from Eddie Lampert and Sears

In a world where new business models are being re-imagined and industries are applying their approaches to different corporate structures, it’s worth examining the successes and failures of these methods. If you work in customer service management—and particularly if you have a team of sales people in charge of customer relationships—it’s a good practice to follow trends in customer service management.

As important as it is to follow what works in customer service management strategy, it’s equally important to follow what doesn’t work. An article in Bloomberg that profiled Eddie Lampert’s approach to managing Sears highlights this very point; namely, a successful management structure in one industry does not always apply to other industries. Though Sears is a retail behemoth, the lessons the company is (painfully) enduring under Lampert’s leadership are especially applicable to customer service management and sales-heavy organizations – or essentially any company that is housed under one brand, has a goal of serving customers through products, and shares the same pool of resources. Let’s examine Sears and Lampert’s approach.

Lampert’s strategy: Autonomous businesses within the business

Eddie Lampert made his name and fortune in the hedge fund world. A billionaire by the age of 41, Lampert became a majority owner in Kmart and used Kmart to buy Sears in 2005. His move from a Goldman Sachs superstar to managing established (though flailing) department store brands puzzled many, but what’s become even more puzzling is his insistence that Sears be managed like a hedge fund portfolio. He chose not to run the company according to the traditional retail model: department heads run product lines, but they all work under the same merchandising and marketing team, with the overall company goals as the overarching yardstick. Instead, Lampert broke the company up into 30 separate divisions, making them autonomous businesses within the company (sound familiar, you in sales?). All of the separate divisions must prove their value in order to gain their share of marketing spend and company resources, and they even have their own individual presidents, board of directors, chief marketing officers, and profit and loss statements.

Lampert insists that this structure gives him insight into the individual businesses that he’s created within the company, and, as he’s continued to argue, forces the department heads to fight and work harder in order to get their share of the pie. Instead, what has happened is that department heads are fighting against other divisions, forcefully protecting their own resources, and aggressively hoarding what they can—often at the expense of other brands within the company, and even the overall company brand. After eight years of managing the company this way, Sears has seen its stock fall 64 percent, and its holdings have gone from $49.1 billion to $39.9 billion. Many forecast that the company will continue on this path of decline under its current structure.

Customer service management strategy: The competitive versus the collaborative approach

It’s easy to read about stories such as Sears and think – “well, of course that’s not going to work.” Or, “that’s not how we manage our company, so we have nothing to worry about.” Before you get too confident in your corporate structure, and specifically, your customer service management strategy, think more about your individual departments, department heads, and teams. If you run sales, specifically, are you building a sales team that truly collaborates with other teams? Are they focused so much on their own metrics and successes that they forego the company’s main goals and image? Do teams help each other, and are they willing to sacrifice resources so that other divisions can prosper? In short, does your company operate more like a page out of “The Hunger Games,” or an episode of “Survivor,” or are you collaborating like a winning sports team?

Striking a balance in customer service management

While it’s true that competition spurs teams to outdo the others and can inspire added motivation, it can also breed unwanted behavior and lower morale – as is the case at Sears. Clearly there needs to be a balance. In the case of Sears, standard meetings to discuss marketing dollars for the various brands erupt into loud shouting matches, and company turnover has increased since the corporate re-structuring.

What’s notable about the Sears example is that the company is in the business of sales and ultimately serving customers, but nowhere in Lampert’s strategy do you find “serving the customer” or “upholding Sears’ image as a 120-year old venerated retailer.” Instead, he seeks to ignite selfish behavior among the divisions and looks for higher sales by essentially forcing the departments to thwart the efforts of other divisions within the company.

How about building a customer service team that’s more like an ecosystem?

If your company is in the business of serving customers and selling a product, are you operating in silos, or is your structure envisioned as a holistic ecosystem, where the parts depend on the other parts to grow and thrive?

The Sears story is a good reminder to take stock of your company’s values, goals, and customer service management strategy. If you’re there to sell and serve customers, make sure that every division, department head, and team member understands that the overall brand and goal of increased customer satisfaction must trump any individual department gains.

Unless, of course, you’re running a hedge fund.

Read more:

• Sears and the Fed: Separated at Birth?