4 ms·

Yes. IIRC he's kind of an extreme libertarian who actively pitted different parts of the company against each other, to compete.

ceejayoz 7y ago
This is getting downvotes despite being 100% accurate. https://www.bloomberg.com/news/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles https://www.bloomberg.com/news/articles/2013-07-11/at-sears-... > Lampert runs Sears like a hedge fund portfolio, with dozens of autonomous businesses competing for his attention and money. An outspoken advocate of free-market economics and fan of the novelist Ayn Rand, he created the model because he expected the invisible hand of the market to drive better results. If the company’s leaders were told to act selfishly, he argued, they would run their divisions in a rational manner, boosting overall performance. > Instead, the divisions turned against each other—and Sears and Kmart, the overarching brands, suffered. Interviews with more than 40 former executives, many of whom sat at the highest levels of the company, paint a picture of a business that’s ravaged by infighting as its divisions battle over fewer resources. > Under the new model, Lampert evaluated the different divisions—and calculated executives’ bonuses—using a metric called business operating profit, or BOP. As some employees had feared, individual business units started to focus solely on their own profitability and stopped caring about the welfare of the company as a whole. According to several former executives, the apparel division cut back on labor to save money, knowing that floor salesmen in other departments would inevitably pick up the slack. Turf wars sprang up over store displays. No one was willing to make sacrifices in pricing to boost store traffic.
- geogra4 7y ago
  Sounds like a pretty damning indictment of quarter-by-quarter short termism
  - TulliusCicero 7y ago
    No, this sounds like an orthogonal issue. Plenty of public companies -- perhaps most -- are afflicted with quarter-by-quarter thinking, but deliberately pitting divisions against each other? That's much rarer behavior.
  - bluGill 7y ago
    Short termism doesn't have to work that way. In this case it did, but short term thinkers who have the company in mind are willing to say X loses money so Y can make more. Grocery stores sell milk as a loss because people look at the price of milk and buy from the cheapest - then buy the high margin cereal, candy (or whatever is high margin) that more than makes up for the loss in milk. This can still be short term thinking, and yet result in the whole doing well over the long term.
    - astrodust 7y ago
      That's not short-term thinking, that's marketing: Spending money to get customers. Short-term thinking is letting your stores fall apart to boost profits, ignoring the exponentially long-term costs of a lack of maintenance.
  - tehjoker 7y ago
    Sounds like an indictment of competition vs cooperative planning.
- braythwayt 7y ago
  I once did consulting for a bank, I shall call them La Trappe Financial. They were a European powerhouse who came to North America, launching in Canada first, and then in the US when they had used the Canadian launch to sort out doing business in North America. The Canadian unit paid a big consulting firm to build an online banking app. Fine. When they launched in the US, the Canadians didn't want the US unit to have the banking app. Why? Because management at Trappist Financial stack-ranked its business units against each other, so if you help another unit, your bonuses will suffer. There was a protracted fight, and eventually the US unit got the source code in one big lump. However, the consultants that had built the app were forbidden to do any work for the US unit, thus the firm I worked for were parachuted in to take over. Development diverged, with both Canada and the US adding new features, but the code forked and neither unit would share its additions with the other unit. So there was much duplication of features, and zero knowledge-sharing. It's not for me to say whether this made La Trappe Financial more successful overall, but I can say that I witnessed a great deal of wasted engineering and lost opportunities that everyone attributed to the perverse incentives created when units compete with each other rather than collaborate. I imagine that they only way they would have cooperated on a project like internet banking would be if someone was savvy enough to create the illusion that only by cooperating could they beat Germany, or A/NZ, or Japan, &c. What a colossal waste.
  - magduf 7y ago
    This is the kind of idiotic thinking you get with Libertarianism. They're thinking, simplistically, that "competition is good", but the problem is that they're already in competition: in your case, the bank is already competing against many other banks out there. In Sears' case, they were already competing against Kohl's, Home Depot, Best Buy, etc. Internal competition might reduce a little waste and get people more motivated, but it isn't made for when considering the outside competition. Another example I can think of is Microsoft under Ballmer; they operated that way to a certain extent. It didn't work out too great for them either, but they were a monopoly of sorts, so they had the luxury of being able to operate that way without it killing them.
    - smacktoward 7y ago
- pkaye 7y ago
  > According to several former executives, the apparel division cut back on labor to save money, knowing that floor salesmen in other departments would inevitably pick up the slack. Now this all makes sense. I used to shop there and sometimes the entire floor was devoid of staff to help you except the one person ringing up at the counter. It became too depressing to shop there at some point.

ceejayoz 7y ago

This is getting downvotes despite being 100% accurate. https://www.bloomberg.com/news/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles https://www.bloomberg.com/news/articles/2013-07-11/at-sears-... > Lampert runs Sears like a hedge fund portfolio, with dozens of autonomous businesses competing for his attention and money. An outspoken advocate of free-market economics and fan of the novelist Ayn Rand, he created the model because he expected the invisible hand of the market to drive better results. If the company’s leaders were told to act selfishly, he argued, they would run their divisions in a rational manner, boosting overall performance. > Instead, the divisions turned against each other—and Sears and Kmart, the overarching brands, suffered. Interviews with more than 40 former executives, many of whom sat at the highest levels of the company, paint a picture of a business that’s ravaged by infighting as its divisions battle over fewer resources. > Under the new model, Lampert evaluated the different divisions—and calculated executives’ bonuses—using a metric called business operating profit, or BOP. As some employees had feared, individual business units started to focus solely on their own profitability and stopped caring about the welfare of the company as a whole. According to several former executives, the apparel division cut back on labor to save money, knowing that floor salesmen in other departments would inevitably pick up the slack. Turf wars sprang up over store displays. No one was willing to make sacrifices in pricing to boost store traffic.

geogra4 7y ago
Sounds like a pretty damning indictment of quarter-by-quarter short termism
- TulliusCicero 7y ago
  No, this sounds like an orthogonal issue. Plenty of public companies -- perhaps most -- are afflicted with quarter-by-quarter thinking, but deliberately pitting divisions against each other? That's much rarer behavior.
- bluGill 7y ago
  Short termism doesn't have to work that way. In this case it did, but short term thinkers who have the company in mind are willing to say X loses money so Y can make more. Grocery stores sell milk as a loss because people look at the price of milk and buy from the cheapest - then buy the high margin cereal, candy (or whatever is high margin) that more than makes up for the loss in milk. This can still be short term thinking, and yet result in the whole doing well over the long term.
  - astrodust 7y ago
    That's not short-term thinking, that's marketing: Spending money to get customers. Short-term thinking is letting your stores fall apart to boost profits, ignoring the exponentially long-term costs of a lack of maintenance.
- tehjoker 7y ago
  Sounds like an indictment of competition vs cooperative planning.
braythwayt 7y ago
I once did consulting for a bank, I shall call them La Trappe Financial. They were a European powerhouse who came to North America, launching in Canada first, and then in the US when they had used the Canadian launch to sort out doing business in North America. The Canadian unit paid a big consulting firm to build an online banking app. Fine. When they launched in the US, the Canadians didn't want the US unit to have the banking app. Why? Because management at Trappist Financial stack-ranked its business units against each other, so if you help another unit, your bonuses will suffer. There was a protracted fight, and eventually the US unit got the source code in one big lump. However, the consultants that had built the app were forbidden to do any work for the US unit, thus the firm I worked for were parachuted in to take over. Development diverged, with both Canada and the US adding new features, but the code forked and neither unit would share its additions with the other unit. So there was much duplication of features, and zero knowledge-sharing. It's not for me to say whether this made La Trappe Financial more successful overall, but I can say that I witnessed a great deal of wasted engineering and lost opportunities that everyone attributed to the perverse incentives created when units compete with each other rather than collaborate. I imagine that they only way they would have cooperated on a project like internet banking would be if someone was savvy enough to create the illusion that only by cooperating could they beat Germany, or A/NZ, or Japan, &c. What a colossal waste.
- magduf 7y ago
  This is the kind of idiotic thinking you get with Libertarianism. They're thinking, simplistically, that "competition is good", but the problem is that they're already in competition: in your case, the bank is already competing against many other banks out there. In Sears' case, they were already competing against Kohl's, Home Depot, Best Buy, etc. Internal competition might reduce a little waste and get people more motivated, but it isn't made for when considering the outside competition. Another example I can think of is Microsoft under Ballmer; they operated that way to a certain extent. It didn't work out too great for them either, but they were a monopoly of sorts, so they had the luxury of being able to operate that way without it killing them.
  - smacktoward 7y ago
pkaye 7y ago
> According to several former executives, the apparel division cut back on labor to save money, knowing that floor salesmen in other departments would inevitably pick up the slack. Now this all makes sense. I used to shop there and sometimes the entire floor was devoid of staff to help you except the one person ringing up at the counter. It became too depressing to shop there at some point.