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The Target store near Target headquarters on Nicollet Mall in Minneapolis.

Glen Stubbe, Star Tribune

Lou Gerstner wasn’t an IBM lifer when he became CEO; he wasn’t even a technology executive.

Stuart Ramson • AP file,

Hubert Joly, who is leading Best Buy’s resurgence, was labeled “unimpressive” by one stock analyst.

GLEN STUBBE • Star Tribune file,

Schafer: What Target needs most is ...

  • Article by: LEE SCHAFER
  • Star Tribune
  • May 11, 2014 - 6:32 AM

A list of likely candidates seems to appear within hours of a big CEO job opening, always produced with all the care of Capt. Louis Renault’s list of usual suspects in Casablanca.

When Target’s CEO position opened last week with the resig­nation of Gregg Steinhafel, the first flash of potential replacements included a former vice chairman of Target, the CEO of the Gap and the CEO of an enterprise called Tractor Supply Co.

A couple were retailing executives who made the list just by having grown up in Canada. Perhaps some analysts thought they would know how to get other Canadians to flock to Target’s new north-of-the-border stores.

Target’s board should ignore this list. If the search goes well, the next CEO of the Minneapolis-based company likely won’t be anyone on it.

That’s because the list is dominated by accomplished merchants, and Target doesn’t need another one of those. It needs a gifted leader.

Retail experience isn’t disqualifying, certainly, so long as the qualities of leadership are there.

As for those qualities of leadership, it isn’t a short list. What’s important to remember is that the very best leaders have many of them, none overshadowing the others. That’s the framework of leadership that came from the 19th ­century Prussian general Carl von Clausewitz.

It may seem odd to consult the nearly 200-year-old thoughts of a German soldier on CEO selection. One reason Clausewitz’s classic “On War” remains well-read today is his insistence that to be a top leader, a single outstanding talent or trait isn’t nearly enough. It could even be dangerous. Leadership requires having a full complement of skills and traits, all working together.

Think about what’s needed at Target. The new boss probably needs to have genuine empathy for the staff, who have been through layoffs and the disappointment of recent setbacks like the underwhelming Canadian launch and a major data security breach.

The next CEO at Target should also be an engaging speaker, in a five-minute impromptu talk in the lunch room or addressing a ballroom full of New York fund managers. And next time there’s a data breach or some other crisis, he or she needs to go in front of the TV cameras and be convincing on what’s being done to fix it.

Admittedly these are not qualities that the soldier-philosopher Clausewitz listed, but even his insistence on courage should mean something to Target’s board of directors. By courage he didn’t just mean charging a row of cannons, he also meant the quality it takes to accept responsibility for mistakes.

What’s most interesting is the way Clausewitz thought about intelligence, another must-have trait. For him it was the brainpower to quickly grasp the best option and choose a course of action, even when three-fourths of what a commander really needed to know was wrapped in a fog of uncertainty.

And it seems fair to say the fog is particularly thick in retailing right now.

The ability to really understand what Target’s customer wants is a critical CEO skill, said Mary Saxon, the leader of the consumer markets practice for the international executive search firm Heidrick & ­Struggles, speaking in the spirit of Clausewitz.

If that sounds easy or obvious, she added, it’s not. Not when the customer can now shop on an iPhone at midnight.

“Retailing will always be about having the most compelling product,” she said. “But all the rest of it has changed.”

And in a fast-changing environment, conventional thinking risks selecting an outstanding merchant who starts work with a plan for fixing Target — and then gets proven wrong within a year.

The best leader is going to report for work not sure of the right thing to do but will plan to figure it out in a hurry — when so much that would be helpful to know remains lost in the fog.

One of the best examples of that came at IBM more than 20 years ago, as the once-dominant Big Blue was losing billions of dollars and looking for new leadership.

The board’s pick, Lou Gerstner, didn’t just come from outside IBM but from outside the industry. Three weeks into his job, Gerstner presided over his first strategy planning meeting. As he later told a Harvard ­Business School class, “after eight hours I didn’t understand a thing.”

But Gerstner’s challenge at IBM wasn’t forming a new strategy for selling computers to businesses, although it took months for him to fully realize that. He learned he had to change IBM’s culture.

He needed to get the competitive, goal-oriented individuals who collectively had once kept IBM at the top of its industry to buy into the idea of being collaborators who would achieve their goals as members of a team.

What’s happening at Best Buy Co. looks a little like the IBM story. It’s certainly true that going outside to Hubert Joly, the CEO of the travel and ­hospitality company Carlson, got the same sort of baffled reaction in 2012 as Gerstner’s appointment as CEO in 1993.

Best Buy’s stock dropped 10 percent that day. No securities analyst called Joly an inspired choice for the Richfield-based company. One just called him “unimpressive.” None of them knew if he had ever worked in a store.

It’s now clear that Joly’s lack of retailing experience hasn’t hurt a bit. His leadership gifts, for communication and strategy development, have been very much on display.

Joly has said he wasn’t looking for a job when he decided to go to Best Buy. He was attracted to the challenge of turning around a $45 billion company many investors had given up for dead.

That’s another trait the old soldier, Clausewitz, noticed in the best generals. Nothing beats hunger for honor and renown as a motivator.

Clausewitz appeared frustrated that this concept so easily got confused with simple glory-seeking — something not admired in the Prussian officer corps or in a corporate boardroom.

But, he wrote, show me a great leader who did not first aspire to do great things.

The Target board should know that its best candidates will have many positive traits — including the fiery ambition to lead Target back into the ranks of America’s most-admired companies.

 

lee.schafer@startribune.com • 612-673-4302

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