Published on: May 8, 2014
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Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.
I'd like to take a moment to weigh in on the CEO discussion that we've been having on MNB this week, and there seems to be no better place to do so than from Main Street.
It seems to me that one of the real challenges for people like the new CEO of Target, whoever he or she ends up being, is to make sure that they pay as much attention to Main Street as they do to Wall Street.
That won't be easy. CEOs - especially new CEOs at companies in trouble, and really especially new CEOs trying to dig their companies out of revenue and profit holes - are almost duty-bound to pay attention to the short-term numbers. To find ways to satisfy the investor class, who, it is a pretty good bet, already have drawn blood (because there is a new CEO dealing with the problems). And they generally know they don't have a lot of time - the average Fortune 500 CEO lasts just 4.6 years in the job, and the average CEO overall lasts just 8.1 years. Almost from the moment they take the job, the clock is ticking. And the sharks are circling.
I'm not here to suggest that investors aren't important. Clearly, they are. They help to fund companies' growth and evolution, so they cannot be ignored.
But CEOs, especially these days, have to pay attention to the long-term, and in the retail business, that means paying attention to Main Street. Retail companies need to hire CEOs that are merchants who understand how to balance effectiveness and efficiency. Sure, they have to find a way to generate profits, but they have to be equally focused on developing a sustainable, long-term business plan. Because if they pay attention to short-term revenue and profit issues, there almost certainly will be problems around the corner that they won't see and prepare for. And their companies won't be engineered to respond to the bigger trend and competitive challenges that can come from nowhere.
To return to an example I often cite, this is what Amazon's Jeff Bezos is doing. I believe he recognizes that if he slows down for even a quarter or two, he gives the competition a chance to catch up. He's lucky, of course - few investors are going to call for the head of Jeff Bezos. So he can do something a lot of CEOs cannot - keep reinvesting profits and pay attention to the long term.
The reality is that in a 21st century economy, maybe we have to adjust how we measure and benchmark corporate and executive success. Investors have to adjust. Boards of directors have to adjust. Pundits have to adjust. And this will allow CEOs to adjust.
It's like the difference between seeing a movie on a 27 inch TV and seeing it on an Imax, 3-D screen … in the current climate, you have to look at the biggest picture possible.
That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.
- KC's View: