Target’s executives on Wednesday morning will have no choice but to update shareholders and analysts on the company’s “transformation.” If they don’t do it upfront, the analysts will pester them with questions about it.
But if questions about a transformation eventually get a little tiresome for Target executives, they’ll have only themselves to blame. They’re the ones who didn’t want to use a more down-to-earth business term like “turnaround” to describe what has to happen at the Minneapolis-based company.
New CEO Brian Cornell was appointed to “Lead Company’s Transformation,” the news release of last July said, and the concept has since become so central to what the company says it’s doing that it even established a transformation office.
On one hand, it’s easy to see why a company would talk about efforts to improve financial results as a “transformation.” There’s hard work ahead, and sizing up the job as a transformation can motivate and focus the people who need to figure out and implement new ways of doing things.
It also makes it sound like a big job, which should buy some time before the shareholders get impatient for financial results to improve.
On the other hand, this kind of term really gets in the way of understanding what’s happening at Target.
For one thing, it needlessly mystifies the task of managing the company. The simplest way to describe the recent history of Target is that the people running the company needed to do a better job, from allocating capital to organizing the work at headquarters. The board of directors eventually decided that a new person was necessary at the top to really do that.
What to sell, how to entice consumers to shop more and how to organize and staff the headquarters to make those decisions — all of that is what managers are paid very well to decide.
A more fundamental problem with talking about a transformation is that it sounds like some sort of corporate self-improvement project that one day will end. Much like the baseball fans at Target Field, shareholders will expect to be able to glance up at the scoreboard to see what inning they’re in.
That isn’t the way it works in business. The game won’t end after nine innings. It won’t ever end.
Target is far from alone as a major company that’s undertaken a self-described “transformation” in recent years. It’s been such a big part of the recent history of Best Buy Co. that CEO Hubert Joly has it listed on the website’s executive biography section more or less as his job.
The words transforming and transformation peppered his latest annual report letter, and he’ll be talking more about Best Buy’s ongoing transformation after the release of its quarterly results on Thursday.
It’s very early in Cornell’s tenure at Target, but the transformation has been underway at Richfield-based Best Buy since late 2012. Even after that much time, it’s difficult for regular shoppers to immediately see what’s all that different.
Five years ago, Best Buy sold computers, TVs, electronics and appliances in a brightly lit superstore with a big yellow and black sign on the front and a staff of people who wore blue shirts.
On a recent visit to a Best Buy store, it appeared to still be selling the same stuff, in the same store. The staffers still wore the same style blue shirts like they did in 2010, including what appeared to be the same blue shirt on one staffer.
Now, by stopping and thinking you can begin to notice what’s made shopping there a far better experience. For one thing, the blue shirt associate who provided a smile and directions to the Fitbit display wore Samsung blue, not Best Buy blue. That wouldn’t have happened five years ago, and new store-within-a-store sections like Samsung’s have clearly proved their value to Best Buy customers.
Now that Cornell is presiding over a transformation at Target, most of the things he’s talked about also fall well short of revolutionary. That doesn’t make them easy to implement, of course, any more than getting Samsung into Best Buy was. But if everything goes well, the Target store will still be essentially the same store we recognize.
If Cornell really wanted to fundamentally change the business, that might mean something like letting its store base shrink to free up the capital to invest what it takes to match what Amazon.com offers its online customers. That could be transformative.
It would almost certainly also be a bad idea, because among other things it would mean giving up Target’s traditional strength as a merchandiser. Amazon.com provided 92,993 hits in a search for “coffee makers,” and on Target.com that search turned up just 282. I may be getting fooled, but at Target.com, some human, a merchant, seems to be in charge of assembling the collection of coffee makers.
Joly is coming up on three years at Best Buy and Cornell has yet to reach his anniversary, but sooner or later they’ll have to stop talking about transformations and start talking instead about what’s being done every day to simply improve operations.
They could maybe quietly declare the transformations over, perhaps celebrate for a few minutes. Then get back to the office.
There will still be as much hard work to do as there was on their first days on the job.