Ms. Roxanne S. Austin
1000 Nicollet Mall
Dear Chairwoman Austin:
You find yourself leading the Target board as it searches for a new CEO to replace the one your board just fired, Gregg Steinhafel. For many, if not most Minnesotans, this is a big deal. We all buy stuff at Target. Minnesotans take huge pride in the success of Target. Most members of our local business community have many and close contacts within the Target community. Our state flag could have a red target in the center.
Target’s roots go back to 1902, when George Draper Dayton founded Dayton’s, and Target is headquartered here on Nicollet Mall. The company exemplifies solid Midwestern virtue: great value at reasonable prices—not too showy, but solid. We have all watched Target grow from its birth in the old Dayton’s to a marketing behemoth of 1,924 stores (127 stores in Canada).
But CEO Gregg Steinhafel will not be coming to headquarters anymore. For many in the business community, the decision of your board and Steinhafel to part ways did not come as a complete surprise. Don’t get me wrong—Gregg is widely admired, and his 35 years at Target have seen major growth and success for many of those years. But nobody these days runs a team successfully forever; he should be glad he’s not a football coach in the NFL. Although, at approximately $20 million per year, he’s been paid better than your typical NFL coach.
Boards change CEOs for a number of reasons, and it takes board leadership to make that change. Steinhafel’s unnecessary involvement of Target in controversy in 2010 because of political contributions was a rare misstep by a company that has had success selling goods to all members of the public, regardless of political inclination. The botched entry into the Canadian market, marred by an avoidable trademark dispute and slowed by uncharacteristic poor retail execution was another warning sign. Clearly, the data breach issue that has been much in the news and will continue to be much in the news should have been the final straw. Several other high-ranking executives have already left over that breach, and at some point, the buck stops at the CEO’s desk. But that is probably not what prompted your board to pull the trigger.
Companies that have had the recent and public difficulties of a Target generally experience disquiet in the corporate ranks. These discordant voices get heard in the boardroom eventually. Some of them, as in the public LinkedIn post in May by Jeff Jones, chief marketing officer, get heard or at least confirmed in social media. And so, here is some unsought and free advice as you lead the Target board in its quest for new corporate leadership.
The entire state is rooting for you. Good that you have hired a national search firm to assist in the search process. Be very careful about elevating internal candidates. The board will know the quality of these candidates better than anyone else, but Target’s many missteps in the recent past have not been the fault of just the CEO. New and outside leadership very likely is needed.
And then you have the question of what qualities you wish to underscore in your new CEO. There have been a number of local articles about possible new CEOs, some of them suggesting that the Target board think “outside the box.” As a big-box retailer, this is not a very good idea. Retail experience, or, more broadly put, business-to-consumer experience, would seem to many of us essential in the new Target CEO. Retailing also encompasses all aspects of technology, as you have discovered with the recent cyber-security issue.
The new Target CEO should have a strong technology background. While that individual does not have to be conversant in code writing, they should be conversant in applications. Your board has already recognized that some of these individuals will not be found within Target and has started hiring senior executives from outside the organization, like Bob DeRodes as the new chief information officer. But this is the board’s opportunity to highlight the importance of technology in 21st-century retailing and to make that a key part of the new CEO’s rÃ©sumÃ©.
We are quite confident that the board will be able to pull this off. Target has a rich history of innovation and solid values. We would also like to thank Gregg Steinhafel for helping build one of the truly great Minnesota companies. And finally, we look forward to welcoming a new CEO to the local business community.
A Target Shopper
Vance K. Opperman (firstname.lastname@example.org) is owner and CEO of MSP Communications, which publishes Twin Cities Business.