Why Bernie Brookes Had To Go
For a business to be successful over a sustained period you need two strong leadership “types” through the journey. Rarely are they the same person. The key is understanding which lever to pull in order to drive sustainable company value at the right time.
One is the “cost cutter” or the person who highly values the dollar. The second is the entrepreneurial spirit a “business builder”. Steve Jobs was the quintessential “business builder”. Jobs rarely concerned himself with costs but his entrepreneurial success is unsurpassed. Whereas Al Dunlap was the quintessential “cost cutter”.
Both leadership “types” are equally important at various stages in a business’ lifespan however given the conservative nature of stock markets and often to a company’s detriment markets generally prefer “cost cutters” to lead companies. The balance is hard to find, and if you double up on them your business is in trouble.
In Australia a great example of a business builder is Ian McLeod former CEO at Coles. McLeod’s replacement John Durkin is of the classic cost cutter mould, expect job cuts and increased profits from reduced a reduced cost base not from stellar growth.
Rarely a company has a cost cutter & a business builder simultaneously in the same leadership team. Where both have great respect for each other and an outstanding working relationship. Facebook have that team at present in Mark Zuckerberg the “business builder” and Sheryl Sandberg providing the financial balance.
The CEO’s understanding of digital is particularly important when it comes to making decisions about how to invest capital resources in this digital era. For leaders with a preference for Cost Cutting, digitization often appears too expensive and nebulous to pursue with vigour. For leaders who adopt a Business Building approach they consider the investment in digitization as an opportunity to build new commercial channels and a long term rich connection with the customer.
Back to Bernie. Myers employed Bernie ex Woolworths to undertake much-needed changes, including supply chain efficiencies and stripping bloated costs and excess from the Myer business. After Bernie sold some $150 million of dead stock and sold the flagship Melbourne store for $425 million the company was listed on the hype of model Jennifer Hawkins at $4.10 a share.
The nadir of Bernie reign was the float.
Since then the shares, now $1.51 together with sales appear in terminal decline.
Did Bernie ever understand the Myer brand?
It is reflected in Myers present online strategy expending vast sums on paid traffic, the highest cost of customer acquisition as against the choice available to Bernie to build Myers as an online brand. Instore his lack of understanding was reflected by his lack of concern or any effort to stop such vital brands as Hugo Boss & Industrie leaving. Instead Bernie hastened them out the door. Myer’s predominant customer is female. In the end Bernie left Myers bereft of no online or no instore strategy and no way to rebuild as Bernie left the executive with no woman qualified on brand knowledge in a woman customer centric store. It is unfathomable that today there is no female in the executive with a strong branding knowledge. Myer employs vast numbers of woman in senior positions but the glass ceiling into the executive still holds firm, excluding HR roles.
More sadly towards the end Bernie tried to become the Myers brand. Bernie everywhere did not work and given the sales decline and lack of strategy both instore and online there was no choice.
WHY YOU SHOULD SELL YOUR SHARES IN MYER
Bernie was of quintessential “cost cutter” mould. A brave Myers board would have replaced Bernie with a dynamic business builder. Though the jury is still out it appears Myer have replaced one cost cutter with another cost cutter.
Expect reduced footprints, rhetoric on reining in logistics, supply chain costs and the loss of more brands. A true tell would be if they seek to reduce the stores footprints, the nadir of retail terminal decline. So with no online or instore strategy identifiable except “tidying” up logistics and reducing costs and no executive whom can relate to the primary customer.
I would be selling my Myer shares.
*Predikkta has sourced several external independent global tools to analyze websites.These tools do not reflect on occasion the internal website analytics, but are recognised global tools and provide accurate comparative results for measurement against competitors.
**The views in this article are those of the author