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The real place

December 7, 2017   ·   0 Comments

By Brian Lockhart

At the end of December, just before Christmas, a lot of employees of Sears Canada will find themselves unemployed. If that isn’t bad enough, it may be a long time before they find out about the pension fund they have been paying into for years and they can forget about any severance pay which an employee would normally get after spending decades at a company.

They all knew this was coming, as the once largest department store chain in the country slowly strangled to death over the past few years.

Sears became a dinosaur – unwilling or unable to change with the times. Even in the best years of the company they seemed to have a poor grasp of business management. In a good year the company would only profit a few million dollars while achieving over $6 billion in sales. Where did it all go?

Well, some people did make a lot of money. When Sears announced layoffs over the years to ‘save money and reduce costs’, the fat cats at the top still managed to draw huge salaries and bonuses without ever setting foot in a store or meeting those valuable employees they so easily dismissed.

Even in its final death throes the company still paid huge retention bonuses to a small group of executive types who stuffed their pockets while figuring out the best way to avoid paying anyone else.

Emperor Nero fiddled while Rome burned. While the story of Nero fingering his musical instrument and lazily watching as much of the city was reduced to ashes may be somewhat embellished by his enemies – Nero still remains the epitome of a bewildered and inept leader who sat idly while watching the collapse of the world around him.

Too often this is the case in the corporate world in North America, where people are dropped into top positions in large companies with little or no knowledge of how the company actually works or what they produce. Making decisions on how to sell widgets based on reports tossed in a file folder on a desktop is far removed from understanding the actual process of how they are produced.

I had an interesting interview recently with Jamie Johnston, dealership owner at Orangeville Honda.

He along with several other dealers across the country were invited to Tokyo, Japan to visit Honda Headquarters and learn more about the company philosophy and how they operate.

Japan has always been a structured society, more so than many other places. That structure and attention to detail has served them well in the business world.

Mr. Johnston said he was impressed by how company professionals were heavily involved in the entire manufacturing process – not just from behind a desk.

He referenced a Japanese term – Gemba – that he was made aware of during the trip. Gemba means ‘the real place.’

The ‘real place’ is exactly what it means. It is referenced in Japanese society when a person is actually in the place where something occurs. In terms of manufacturing it refers to the floor where goods are produced.

In the Honda culture, executives don’t push pencils and dictate from a desk in a highrise. They take part in the entire process including visiting the company’s test race track and learning the manufacturing and engineering process that goes into the multitude of products they produce in their factories.

I spent over two decades at Sears Canada before being unceremoniously booted out along with most of my co-workers in the department I was in when they ‘restructured.’

I never held a grudge. The company provided me with a decent living for years and I had already felt it was time to move on.

But in all those years there, we never met the president or CEO. The only time an executive would even come to our building, which was a huge operation, was in a yearly, pre-planned and pre-announced visit. Even then it was a quick meet and greet for publicity purposes and that was it.

They then went back to the tower at headquarters for more meetings and pencil pushing.

Maybe if those executives had practised ‘Gemba’ and actually spent time in ‘the real place’ they could have made better decisions that reflected the need of a changing retail market.

It’s too late for Sears, but other large companies should take note of what can happen happen when business leaders reap the rewards while ignoring a burning city surrounding them.

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