Sears, which was once a thriving department store, is dying a slow death and the company is grasping for cash in order to stay afloat. Last year, Sears borrowed $200 million from CEO Eddie Lampert’s hedge fund and most recently Sears agreed to sell Craftsman to Stanley Black & Decker. Under the terms of the acquisition Sears will get a cash payment of $525 million followed by a payment of $250 million after three years. It will also receive royalties from the sales for Craftsman for the next 15 years. Stanley Black & Decker is focused on strengthening its position in the tool market. In October 2016 the company announced it would acquire the tool business of Newell Brands, which includes Irwin, Lenox and Hilmor, for $1.95 billion.

From Success to Struggle

So how did Sears go from successful department store to its current situation? Of course many retailers have been hit hard – not just Sears. Faced with competition from online stores, traditional retailers are struggling to keep up. Macy’s is in the process of closing 100 stores in order to cut costs and Walmart is now offering free two-day shipping when shoppers spend at least $35 in order to compete with Amazon.

But, we can’t blame everything on competition. Competition is the very nature of business and there will always be changes to in the industry, which are beyond your control. It’s up to leaders to anticipate these changes and proactively develop a strategy in order to survive and even thrive when times are tough. Instead, Sears did nothing. Sears is not the only company to fall into this “strategy.” When things are going well, or at least satisfactorily, it’s easy to get comfortable and keep doing the same thing.

However, the result of doing nothing can be disastrous for your business. Think about Montgomery Ward, which was the Amazon of the 1800s, accepting and delivering orders by mail. But now the company doesn’t even exist. If Sears wants to avoid the same fate, it will need to be more innovative to fix its long term growth problems. Getting cash now is a temporary solution and it will be interesting to see what steps the company takes once they get the cash.

Are You Doing Nothing?

For business leaders today, I urge you to take a serious look at your business and marketplace. Don’t let yourself get too comfortable or get too caught up in the day-to-day tasks that you neglect the bigger picture. Any company that doesn’t remain on its toes can succumb to doing nothing.

No matter your current situation, you should always think about what could happen next and question your assumptions. Just because your plan works now, doesn’t mean it will work in the future. Where might the market be headed to tomorrow? In five years? Set aside time to look at your business strategy to make sure you answer these questions.

Photo credit: Mike Mozart via Flickr cc

Have you considered all your options for growth?

I have found that some leaders are limiting their potential for company growth because they fail to examine all the possible ways to achieve it.

Some are stuck in copycat mode, constantly mimicking the strategies of their competitors and playing catch-up. Others struggle to come up with new ideas. Even leaders of companies that are growing may be missing out on key opportunities.

Five key options to consider when it comes to company growth are organic growth, minimizing costs, external growth, exiting the market and doing nothing.

Even if you think you know which option is best, I recommend you consider them all to create a complete picture of the possibilities that lie before you. This equips you to make an informed decision about the best way to grow your company.

Capstone will be exploring the five options for growth in our upcoming webinar on December 11.

You will learn to:

  • Define the five growth options as they apply to your company
  • Understand why external growth (acquisitions, joint ventures, etc.) can be the best option for your company
  • Gauge the current state of the M&A market using relevant statistics and indicators
  • Begin to develop a step-by-step M&A process for your company

Don’t let opportunities pass you by. Learn how to best position your company for success by joining us for this foundational webinar.

Date:  Thursday, December 11, 2014
Time:  1:00 PM ET
CPE Credit available.

Register: http://attendee.gotowebinar.com/register/3419240731938664450

Of course, doing nothing is rarely if ever a pathway to growth. However, it is a choice that companies actually make every day. ‘‘Choice’’ may be an overstatement. Few executives or board members sit down, open their flipcharts, and plan a careful do-nothing strategy. They drift into it by default. When things seem to be going more or less satisfactorily, we all get tempted to keep doing what we are most accustomed to. However, the long-term costs can be disastrous.

Take a couple of well-known historic examples: Montgomery Ward and Kmart. These two retail giants both assumed that past success was a guarantee of future performance. But the world changed around them: Consumers became more demanding both for price and quality, while the supply chain was transformed by globalization. Now the companies are two great symbols of corporate failure.

What does this mean for you? The main lesson is that the do nothing strategy can creep up on you. Take a look at your current business strategy and ask if you are assuming a future that is simply a repetition of the present. Continue to actively ask “What if?” questions and always remember to focus on future demand.

This post is part of a series on considering your options for growth. Read the introduction here. The five pathways to growth are:

  1. Grow Organically
  2. Exit the Market
  3. Be the Low-Cost Provider
  4. Do Nothing
  5. Pursue External Growth

 

Photo Credit: Fey Ilyas via Compfight cc