The New Virtual Organization World
It's a New Principled World, It's Virtual, and It's Organized
However, that being said, I want to take that saying one step further and state: "The constant drip of Salty Water or Acid Rain on Iron and Steel will greatly accelerate their destruction over time."
Thus when it comes to the (Iron and Steel) retail industry, it is not simply Water (Fear of Taking Immediate Action) that it has to contend it, that time has long come and gone; it is now, in fact, dealing with the constant drip of Salty Water and Acid Rain (Old Thinking, Warped Ideas, Automaton Vision) on Iron and Steel. As we all know, Salty Water and Acid Rain greatly accelerate the destruction of Iron and Steel.
Therefore, absent a miracle in New Thinking, the total destruction and decimation of the retail industry, as we now know it, will happen much faster than anticipated by so-called retail industry pundits, innovators and intelligentsia.
So, let me go over the aforementioned constant drip of Salt Water and Acid Rain:
Old Thinking
And when such pressure fails to meet financial projections, then the Executive Leadership Team huddles one more time in order to come up with another set of reasons for failure to perform and to announce a new set of measures designed to address the current situation. Such measures inevitably include one or more of the following: 1) replacement of one or more key members of Senior Management or the Executive Leadership Team; 2) across-the-board company layoffs and hiring freeze; 3) closing down of a number of facilities and locations; 4) reduction of company benefits to current and future employees; 5) downward revision of key performance indicators and projected financial results; 6) entice current and potential customers to get deeper and deeper into debt they really can't afford to pay back (e.g., get customers to sign up for private label company credit cards, bank cards, etc.); 7) hiring of change management consultants from leading consulting firms to advise them on how to adapt to the new competitive landscape.
And this same cycle repeats itself over and over and, before you know it, many years have gone by and the Executive Leadership Team begins to see the handwriting on the wall:: Your Time Is Up! :: and panic sets in. At which point, the shareholders get into an uproar, begin to flex their muscles and clamor for a new CEO to come to the rescue of what is now a "nearly failed" company. The former CEO is usually retained as or promoted to Chairman for a while and the new CEO is given carte blanche to execute under the now watchful eye of a reinvigorated and panicked board of directors.
Warped Ideas
Of course, once panic sets in and a new CEO is brought on board, the reign of "Warped Ideas" begins in the following sequence:
WARPED IDEA #1. Knight in shining armor coming to the rescue of a damsel in distress.
Why is that, you might say? That's because the success or failure of a company depends on more than just one man or woman. It requires the collective effort of the entire Executive Leadership Team and Senior Management Team.
The bottom line is this: Besides the calming, soothing and cosmetic effect such move has on stockholders, investors and other stakeholders, in fact, there is very little a new CEO can do other than to try to stem the bleeding, and attempt to prolong the company's life by a few weeks, months and, by some miracle, perhaps, even a few years or decade.
Therefore, the purpose of a new CEO during such time of crisis is to come in, help you put your affairs in order, and to administer the last rites at your deathbed - and wish you a peaceful journey in the corporate afterlife.
Time to play the devil's advocate: I am clearly aware that many of you, current and former retail CEOs and others, will disagree with the above "bottom line" position and point to some recent spectacular, celebrated retailer rescue achievements made either by you yourself or some of your colleagues in the retail industry.
However, that being said, I hate to be the bearer of "bad news:" Contrary to public opinion, it is exactly these so-called extraordinary retailer rescue achievements, when examined under a microscope away from the all the hype and smoke-and-mirrors, which serve to prove my "bottom line" position.
Retailer Rescue Achievement Example
Let's take Sears Roebuck and Co. as a good example:
Arthur C. Martinez is widely recognized and credited as the executive who rescued Sears from oblivion during the 90's and put it on a solid footing as a going concern. He joined Sears Merchandising Group in 1992 as its Chairman & CEO; then became Chairman & CEO of Sears Roebuck & Co. in 1995; and retired from Sears in 2000.
As I scrutinize Martinez's achievement, please note it is NOT at all my intent to belittle his remarkable accomplishments during his 8-year tenure at Sears since the company was in dire straits, a real mess and had its tentacles spread out all over the place. Rather, it is my contention that despite his accomplishments, Sears was a patient in terminal mode who could NOT be rescued by anyone and that the most that any superhuman CEO could have done then, as I earlier pointed out in the above "bottom line" statement, was "to stem the bleeding, and attempt to prolong the company's life by a few weeks, months and, by some miracle, perhaps, even a few years or decade." In which case, Martinez did, in fact, accomplish that miracle.
He did what any successful CEO would be expected to do during such time of crisis: "to come in, help you put your affairs in order, and to administer the last rites at your deathbed - and wish you a peaceful journey in the corporate afterlife."
As the facts soon bore out, that is exactly what happened within less than five (5) years after Martinez's departure and retirement from Sears. Kmart, a company which had just emerged from bankruptcy on May 6, 2003 bought the venerable Sears on March 24, 2005 - not the other way around. Something that no one in the retail world could have predicted (before it actually happened). This can only prove my contention that Sears was indeed in terminal mode when Martinez retired from Sears in 2000 - a fact that Martinez himself would have had to be painfully aware of at the time of his retirement; the same can be said for the new CEO Alan J. Lacy, since he himself was also a long-time Sears executive insider and Martinez's right-hand man.
In the very last paragraph of David Floyd's article::June 8, 2017::in Investopedia: "Who Killed Sears? 50 Years on the Road to Ruin," the legendary Warren Buffett himself buttresses my "bottom line" statement. (No need to get distracted. You can read it later.)
WARPED IDEA #2. Time to rebrand the company.
In fact, pause and try to answer this question: Throughout your entire life as a decision-maker in the retail industry, have you ever encountered one consultant from one of these big consulting firms who did not include "rebranding" on their list of available solutions?
Invariably, these quick-fix solutions primarily consist of: a new logo, new signage and billboards, new company slogan, new color combinations to reflect a new image, a nicer or flashier website, major store remodeling, introduction of new product lines and labels, renewed focus on product quality and customer experience, expensive Superbowl ad, celebrity endorsements, etc., extensive public relations campaign and a year-round advertising effort to reflect the NEW ME image.
After all, who wants to hear about "long-term" solutions to today's ailments? Certainly NOT the investors, stockholders and other key stakeholders. And as far as the consultants and corporate management are concerned, they might be out of a job by the time these long-term solutions get a chance to begin to bear fruit.
Time to play the devil's advocate: I am also clearly aware that many of you would scoff at my viewpoint that "Time to rebrand the company" is a "Warped Idea" :: especially given the fact that it has worked flawlessly and accomplished so many wonders for you and others on so many occasions in the past.
Again, I hate to burst your bubble: These are NOT ordinary times. Trying to rebrand the company for an existence in the "Brick and Mortar World" will NOT work, as evidenced by the hundreds and thousands of retailers who, despite their having made similar "rebrand the company" efforts, are either still in a terminal state on their deathbed, are languishing in a comatose state with absolutely no hope for full recovery, or have already bitten the dust and made the trek to the corporate afterlife - and are now nothing but distant memories.
Why is that, you might say? That's because we are now living in "The New Virtual Organization World":: a world that Jeff Bezos clearly FORESAW and UNDERSTOOD in terms of what that meant for the future of the retail industry back in July 1994 when he started Amazon from his garage. A new world that we are all headed toward whether we want to or not.
About "The New Virtual Organization World"
What is "The New Virtual Organization World"?
(Without the Virtual Organization Management discipline, all you would wind up with is: Virtual Chaos.)
The conflagration of all the preceding and recurring events and forces has set in motion invisible, powerful, invincible and unstoppable forces and entities which can be marshaled and organized on the Web (i.e., in a virtual environment). Hence the reason for the name: The New Virtual Organization World. It's just another way of saying, "It's a New Principled World, It's Virtual, and It's Organized."
A Brand New Platform for the Retail Industry
Whereas practically ALL major retailers of that era saw the Web as just a fad, another distraction, some new toy, another marketing touch point, a new digital brochure, a new communication platform, some sort of web-based Content Management System or, at best, merely an extension of their brick and mortar entities and just an additional commerce platform, Jeff Bezos was instead looking at a brand new world for the entire retail industry unfolding right before his very own eyes: The New Retail World.
He saw the World Wide Web itself as the new platform for the entire retail industry and set about to realize his vision of this new retail world - a central pillar of The New Virtual Organization World. A vision of a new retail world that he has not only realized in flying colors over the past 23 years but is also continuing to transform at breakneck speed on a daily basis, leaving nothing but carnage in its wake for today's "brick and mortar" retail world.
The Greatest Visionary and Founder of "The New Retail World"
Which makes Bezos "the greatest visionary and founder of the new retail world" in The New Virtual Organization World. His place is cemented in the Pantheon of the Gods of The New Virtual Organization World (when it is eventually built). Although if you were to ask Bezos a question about his vision of The New Virtual Organization World, I am positive he would reply, "What is The New Virtual Organization World?"
WARPED IDEA #3. Time to look for an exit strategy.
What this means is that, the time to consider exit strategies should be when ALL IS WELL ON THE WESTERN FRONT and you want to include them in a comprehensive contingency COOP plan (continuity of business operations plan) or a strategic plan to maximize the return on investment to investors and shareholders :::: NOT when the survival of your company is on the line.
Time to play the devil's advocate: I can imagine what's going through your mind right now this very second: "There is nothing wrong, in fact it's a smart thing to do from a strategic standpoint, to consider all available options while you are engaged in a fierce battle - and that "figuring out an exit strategy" can be one of these things and it does not have to be mutually exclusive - and a "warped idea."
Again, I beg to differ: When faced with a serious or life-threatening crisis, before you can figure out an exit strategy, you must first understand what you are really fighting for, who you are really fighting against as well as their strengths and weaknesses, the nature of the real battlefield landscape, all your possible exit routes, and the tools that you have at your disposal to fight the good fight. And the plain simple truth is this: today's brick and mortar retailers woefully lack those prerequisites for coming up with an exit strategy.
Reasons for Today's Carnage in the Retail World
To further compound the situation, these retailers are all reeling from the following: 1) They don't really know what they are fighting for :: Is it just to survive? Is it to maintain market share? Is it to increase market share in a particular market segment? Is it to expand into virgin territory? :: Can any single one of them answer that question with a great deal of clarity and a degree of certainty? 2) They don't really know who or what they are fighting against :: They don't understand that their opponents or adversaries or competitors are NOT in the "brick and mortar world." In other words, they don't have a clue about the mighty forces in The New Virtual Organization World that are arrayed against them and the real retail battlefield landscape.
As strange and confusing as it may seem, this means that: Macy's real competitor is NOT Sears, J.C. Penney, Dillard's, Burlington Stores, Kohl's, Target, Costco, etc., and vice-versa:: Abercrombie & Fitch's real competitor is NOT TJX, Luxottica, Ross Stores, L Brands, Gap, Urban Outfitters, American Eagle Outfitters, Children's Place, Chico's, Aritzia, Guess?, Esprit, Giordano, etc., and vice-versa.
Hence the reason why they are so befuddled when asked about their prospects for the future, and all they can say is: "We are now living in uncertain times - dealing with a very challenging landscape and, therefore, unable to predict any major changes in the foreseeable future."
Your Real Competitor
I already know your next question: If none of them are my real competitors, then WHO IS?
Here is the simplistic answer: Any major retailer AND every other small bit retailer (there are millions of them out there) in The New Virtual Organization World :: which, by definition, means "any NON-brick and mortar player" who occupies the same space that you do and vying for the same target market. It doesn't matter how small they are today because when you really think about it: one ant in your house is not a problem, but one million ants while you are sound asleep will make a meal out of you. After all, AMAZON started out in 1994 as a small bit retailer working out of a garage.
That is why Amazon, the Supreme Overlord of The New Retail World in The New Virtual Organization World is -- safely and at a healthy distance, left and right, coming and going -- beating the hell out of all these retailers in the "Brick and Mortar World" who are themselves busy trying to compete with each other.
As a matter of fact, most, if not ALL, brick and mortar retailers who have filed for bankruptcy during the first half of 2017 have stated the Amazon effect in their filings :: however, that being said, Amazon is just a convenient excuse for their lack of understanding as to WHY this incessant "brick and mortar retail" carnage shows no end in sight. Even antitrust regulators are getting in on the "Time to Stop Amazon" chorus line. However, as I stated earlier, the reason is simple: Today's brick and mortar retailers are clueless about the "real retail battlefield landscape." So, let me proceed with an explanation.
As a matter of fact, most, if not ALL, brick and mortar retailers who have filed for bankruptcy during the first half of 2017 have stated the Amazon effect in their filings :: however, that being said, Amazon is just a convenient excuse for their lack of understanding as to WHY this incessant "brick and mortar retail" carnage shows no end in sight. Even antitrust regulators are getting in on the "Time to Stop Amazon" chorus line. However, as I stated earlier, the reason is simple: Today's brick and mortar retailers are clueless about the "real retail battlefield landscape." So, let me proceed with an explanation.
The Real Retail Battlefield Landscape
Use your vivid imagination and think of the following:
Being a tsunami, this means that the energy of that force stays deep below the surface of the ocean and travels through deep water at such an incredible speed that it's barely noticeable on the surface of the ocean. (Therefore, due to the location of The New Virtual Organization World, this means that ALL its inhabitants are safe and sound - they can't feel a thing. For them, life goes on as usual.)
HOWEVER, as this energy gets closer to the shoreline, that's when things change completely and the tsunami reaches astronomical heights and destroys just about everything in its path.
What this means is that, for any ship or boat traveling within the shallow part of the ocean or docked along the shoreline, as well as for everyone living or currently situated within close vicinity of-or along--the shoreline (i.e., the brick and mortar retailers), by the time they realize it's a tsunami, it is too late for them to do anything about it.
As well, according to normal ocean weather patterns, Huge Waves or Rogue Waves will appear from time to time on the surface of the ocean. In which case, the heavier and more modern the ship, the better protection they will have against the elements and the greater the likelihood they will be able to ride out the surface waves.
Let us now move on to the brick and mortar world.
The Brick and Mortar World is located right there within the vicinity of--and along--the shoreline and on the shallow part of the ocean. There are millions of brick and mortar retailers doing business on land as well as on the ocean.
When the weather changes and the inhabitants of the brick and mortar world anticipate or notice the appearance of Huge Waves or Rogue Waves on the surface of the ocean, the ship and boat owners normally anchor their ships and boats and batten down the hatches, and the inhabitants along the shoreline normally board up their doors and windows, and wait until things get back to normal.
If you happen to be one of those modern behemoths (literally, figuratively or metaphorically speaking) weighing over 100,000 tons, the length of several football fields, hundreds of feet deep and wide, and able to cruise at amazing speeds, you can just continue to cruise right along without a care in the world.
They don't get sufficient advance notice that would allow them to take their ships and boats farther out toward the middle of the ocean and stay put until the tsunami has taken its course and done its damage within the vicinity of the shoreline.
And that, friends and colleagues, is the new retail battlefield landscape that you are dealing with. And it is this lack of understanding which is impeding your numerous attempts and heroic efforts at trying to reverse the tides of retail doom and destruction which keep coming your way.
For Example:
Executive Chairman of Abercrombie & Fitch Arthur C. Martinez (yes, the same executive who rescued Sears in the 90's) came out of retirement in January 2014 to lead this venerable retailer. At the time of his appointment, the stock was trading at $38.47 and on the close of July 28, 2017 it traded at $9.83.
On the surface, the average analyst or investor would tend to attribute the stock's decline to Martinez's performance. However, that is NOT at all the case. They are--and have been for a very long time--making a tremendous amount of effort and are pulling out all the stops in order to reverse the decline.
Here is some more interesting data to prove my point which came directly from their slide presentation at Jefferies 2017 Global Consumer Conference:
"Since 2010, closed ~ 400 stores, remodeled 150, ~$400 M of CAPEX Investments"
It's just that the stock decline in the retail industry is a phenomenon that is happening across the board and it will finally come to a screeching halt once the brick and mortar retail industry finally figures out who their real competitors are and the real retail battlefield landscape where the fighting needs to take place. Until then, the carnage will continue as usual.
So now that I have identified the root causes of your brick and mortar retail bloodbath misery, let us move on to the final ingredient of that Salty Water and Acid Rain solution (Old Thinking, Warped Ideas, Automaton Vision) I mentioned at the very beginning of this paper.
Automaton Vision
After all, who would object to the fact that advanced technology can indeed result in greater productivity?
The problem with that approach is this: 1) When you are in a desperate situation, the more money you have access to, the easier it is for others to convince you to try a new approach or solution. As well, the more reasons you will come up with in order to spend it hoping that, if all goes as well as planned, this will be the answer to your prayers. As the saying goes, "desperate people do desperate things." 2) There is a HUGE difference between having access to new technologies and knowing how to make effective and optimum use of these technologies.
Here is a perfect example of what I mean by that:
Macy's, Montgomery Ward, J.C. Penney, Barnes & Noble, Sears, and Amazon ALL had access to the very same web technology that Jeff Bezos used to launch Amazon from his garage in July 1994. And 23 years later, look at the picture below:
AMAZON vs. MACY'S :: July 1994 - July 2017
In July 1994, Amazon had a ZERO market cap and yet, just three (3) years later, in May of 1997, Amazon had a market cap of $461 million.
In July of 1994, Macy's market cap was over $1 billion. In May 1997, Macy's had an estimated market cap of over $2 billion.
On July 26, 2017, Macy's has a market cap of over $7 billion vs. $504+ billion for Amazon.
AMAZON vs. MONTGOMERY WARD :: July 1994 - July 2017
In July 1994, although there was no public trading market for Montgomery Ward common stock, its total annual revenues (as of 12/31/1994) were over $7 billion and it had a book value of over $687 million. In May 1997, Montgomery Ward was in the middle of preparation to file for Chapter 11 bankruptcy. And by June 2001, it was fully liquidated. ZERO Value.
On July 26, 2017, Montgomery Ward is defunct ($0 market cap) vs. $504+ billion for Amazon.
AMAZON vs. J.C. PENNEY :: July 1994 - July 2017
In July 1994, JC Penney had an estimated market cap of nearly $10 billion. In May 1997 it had a market cap of nearly $12 billion.
On July 26, 2017, JC Penney has a market cap of over $1.6 billion vs. $504+ billion for Amazon.
AMAZON vs. BARNES & NOBLE :: July 1994 - July 2017
In July 1994, Barnes & Noble had an estimated market cap of over $990 million. In May 1997 it had a market cap of nearly $1.5 billion.
On July 26, 2017, Barnes & Noble has a market cap of over $678 million vs. $504+ billion for Amazon.
AMAZON vs. Sears :: July 1994 - July 2017
In 1994, Sears had annual revenues of over $50 billion.
On July 26, 2017, Sears has a market cap of over $945 million vs. $504+ billion for Amazon.
You will notice that all these floundering retailers were once retail giants and luminaries, had a million times more financial and human capital resources than Amazon - a newcomer working out of his home garage, and had the same access to the same web technologies which allowed Amazon to eclipse them all. The difference being, Amazon was empowered with NEW THINKING and knew how to make effective and optimum use of these technologies.
NEW THINKING Is Required
What is this NEW THINKING?
Now that I have identified for you your real competitors and the real retail battlefield landscape, the ball is now in your court. You need to either embrace The New Retail World within The New Virtual Organization World or continue to do business as usual and look for exit strategies.
As a member of The New Virtual Organization World, your organization will be required to assign at least one executive (preferably you) to represent your organization on a permanent full-time basis and an alternate representative. ALL new members are introduced to a collaborative environment which requires that they discard everything that they have ever learned about "brick and mortar retail" so they can begin this NEW THINKING process.
The New Retail World within The New Virtual Organization World will NOT be providing your organization with retail consulting services nor will it be providing you with ready-made solutions to your current woes. Nor would we ever consider such request in any way, shape or form. Therefore, do NOT bother to ask since that is absolutely out of the question and NON-NEGOTIABLE.
The New Retail World within The New Virtual Organization World will NOT be providing your organization with retail consulting services nor will it be providing you with ready-made solutions to your current woes. Nor would we ever consider such request in any way, shape or form. Therefore, do NOT bother to ask since that is absolutely out of the question and NON-NEGOTIABLE.
Instead you will be part of a Collective Brainpower of Retail and Non-Retail Executives, which may even include your direct competitors, which will come up with solutions that will benefit ALL members of the team. In fact, you are even encouraged to invite as many other retail and non-retail executives to join you. You will learn to think and see things from The New Retail World standpoint within The New Virtual Organization World. IT IS NOT the sort of environment where someone can come by strictly in order to steal ideas and exploit others - and then dash out the virtual doors.
What you will learn to do on your own, for your own organization and The New Retail World industry in general, will dwarf anything that today's most prestigious and priciest retail consulting firms could ever dream to know or provide. In other words, you and your colleagues in The New Virtual Organization World will all be in a league of your own.
As well, although The New Retail World within The New Virtual Organization World has a great deal of admiration for Jeff Bezos and Amazon, we will NOT be trying to show you how to beat or become another Amazon. Our knowledge goes way beyond that.
As well, although The New Retail World within The New Virtual Organization World has a great deal of admiration for Jeff Bezos and Amazon, we will NOT be trying to show you how to beat or become another Amazon. Our knowledge goes way beyond that.
As the current CEO of Abercrombie & Fitch Arthur C. Martinez presciently stated in his 2001 autobiography:: The Hard Road to the Softer Side: Lessons from the Transformation of SEARS, "myopia is fatal. Think boldly about what business you are in, .... and how you will meet the needs of the customers of the next generation...success will not be driven by your board scores....They'll be driven by your character and your intensity, and by your willingness and ability to continue to learn."
The bottom line is this: WE ARE NOT THERE TO SHOW YOU HOW TO IMITATE. WE WANT TO SHOW YOU HOW TO INNOVATE in The New Retail World within The New Virtual Organization World.
How to Embrace The New Virtual Organization World
Upon approval of your membership, I will be there to provide you with the spiritual guidance and philosophical direction you need (nothing to do with religion) in order to make sure that all parties are observing the proper decorum and proceeding in the right direction. We do however expect you (or your representative) to do 99% of the heavy lifting in order to get things off the ground.
As well, if you are the CEO of a leading retail organization, I also invite you to request an invitation to join League of Extraordinary Virtual Organization Executives. That way, you will get an opportunity to meet with me in person, face-to-face, shake hands and chat during our scheduled (voluntary) monthly excursions.
Let Us Manifest!
on The New Virtual Organization World Consortium
on The New Virtual Organization World Consortium
About Author: Pierre Coupet, CEO & Q of Virtual Organization Management is the founder of Virtual Organization Management Institute (VOMI), VOMI Virtual Organization Academy, VOMI Global Think Tank, and Virtual Organization Recruiter:: founder of the modern virtual organization management and virtual organization recruitment disciplines pioneered since 1997:: founder of League of Extraordinary Virtual Organization Executives:: and Architect of THE NEW VIRTUAL ORGANIZATION WORLD Collection.
Copyright 2007-2023. Pierre Coupet. VOMI. Virtual Organization Management Institute. VOMI Virtual Organization Academy. Virtual Organization Recruiter. VOMI Global Think Tank. All rights reserved. Cannot be reproduced without permission.
