While the Target Corporation has achieved a great deal over the last few decades, it is also clear that over the last few years the company is seen a significant reduction in its growth and profitability. This has become a major problem for many traditional brick-and-mortar stores. Even Walmart recently announced that it will be closing hundreds of stores across the United States. One of the primary culprits in this change in consumer spending habits is the rise of online retailers like Amazon.com. These online companies have drawn customers away by offering buyers certain advantages, including lower prices, better selections and in some cases free delivery. Like any other business, Target Corporation has the goal of earning maximum profits for the corporation and its stockholders. Achieving this kind of success requires that Target achieve its objectives (laid out in its mission statement) of providing competitive prices, excellent products and an enjoyable shopping experience for the customers. These objectives are best achieved by maintaining a constant process of change, improvement and innovation. However, as the new CEO of Target (Brian Cornell) has pointed out, over the last decade Target has largely failed to meet its goals due to its lack of innovation and growth. Even when Target has attempted to make changes recently, they have usually failed. For instance, Target efforts to compete with online retailers like Amazon.com have yielded lackluster results. Target has become stagnant and bureaucratic in its ways, and one of the reasons it brought in an outsider as its new CEO was to change this. The following will examine how Brian Cornell has attempted to bring changes to Target and how Target can use change to turn challenges and threats into opportunities.
SWOT Analysis of Target
As pointed out above, the corporate culture at Target has in recent years become stagnant and set in its ways, at least to the extent that it has been unable to carry out its own mandate of constant change and innovation. Such rigidity makes it difficult for Target to deal with problems on the one hand or take advantage of opportunities on the other. A brief SWOT analysis of the situation at reveals the following strengths, weaknesses, opportunities and threats:
Strengths
Solid Brand Image and Brand Awareness
Effective Operational Strategies
Celebrity Endorsed Lines
Excellent Employee Retention
Reliable Customer Service and Quality Products
Weaknesses
Less of a Global Presence Than Some Other Companies
Organizational Rigidity That Inhibits Innovation
Legal Problems Resulting from Litigation
Opportunities
Can Focus on Expanding Globally
Can Access Resources It Has Not yet Tapped
Can Place More Emphasis on Private Label Products
Threats
Greater Competition from Dollar Stores
Continuing Erosion of Its Market Share Because of Online Retailers like Amazon
Introducing Change
The changes that Target's new CEO Brian Cornell has introduced to the company have already had a very noticeable impact on the organization's culture. For example, Target has been shifting resources and focusing on new approaches, such as bringing additional traffic to their current stores by expanding signature categories. In addition to this, Target has also begun introducing new store formats known as CityTarget and TargetExpress stores. These more urban centric stores help to improve Target's brand image in large metropolitan areas. Target's center of excellence was created to allow them to better understand customer interactions with Target and how they can enhance the customer experience. This last effort is being led by Jeff Jones, Target's chief of marketing.
How Brian Cornell Is Changing Target
As Target's recently appointed CEO, Brian Cornell has brought a number of strengths to his new position, particularly in regards to leadership ability. This includes a great deal of experience at other major corporations, such as Sam's Club and PepsiCo. This experience allows him to bring best practices to his leadership of Target. There are many different theoretical approaches to leading a company, but because he is introducing change Brian Cornell could best be termed a "transformational leader." Transformational leaders are ones that (Bass, 1985, p. 102):
Serve as a model of integrity and fairness.
Attempts to understand the company and its employees.
Lays out a clear set of goals.
Sets expectations high.
Encourages both lower level employees and upper staff.
Offer's support and recognition of achievements.
Uses a motion to motivate employees.
Convinces employees they can do difficult things.
Although it is clear that Brian Cornell has been fairly effective in his transformational role at Target, also clear that he has been more effective in some areas than in others. However, introducing change in any situation requires a clearly laid out plan. Below are three ways that Brian Cornell used his position at Target to effectively introduce change.
Understanding the Business and Its Abilities
It's essential for any company leader (particularly one that's new to the job) to fully familiarize him or herself with the company they are running, which means understanding its histories, capabilities and (more broadly) the strengths and/or weaknesses of the employees (Northouse, 2004, p. 175). By doing this, the leader will be able to focus his or her change initiatives so that they will work with the existing capabilities and history of the company, taking advantage of the company strengths and minimizing any weaknesses. Cornell has made significant strides in this regard. For example, as he is done at a number of public companies before, Cornell carried out a comprehensive study of Target and held face-to-face sessions with company employees in order to better understand what their problems are and what can be done about them.
Expecting Efficiency
A transformational leader attempting to introduce change to a company that has been having problems needs to establish high expectations, particularly in regards to efficiency. Inefficient operations and processes have to be weeded out of any company, particularly one that is struggling. In the last decade or so, it is clear that Target's structure has become inefficient and top-heavy. In order to deal with this, one of the first steps that Cornell took as the new CEO at Target was to significantly reduce the number of staff at the Target headquarters. In eliminating some 1700 employees in this way, Cornell was hoping to create a smaller, more efficient management structure that could more quickly respond to corporate needs. This also had the advantage of significantly reducing managerial costs.
Establishing Bold Goals
While there are times when a company wants to emphasize a steady approach, there are other times when a CEO needs to change a company by proposing bold steps and making difficult decisions. One example of this in Cornell's new leadership at Target is seen in the decision he made to end Target's ongoing efforts to enter the Canadian market. For many years, Target had attempted to expand the number of its stores by opening a number of new ones in Canada. However, this effort was largely unsuccessful, and created a significant drain on company resources. While this was a controversial decision, Target was now able to refocus its personnel and financial resources on its existing stores in the US. In addition, Cornell chose to redirect expansion efforts in the United States toward opening new types of stores, rather than simply building more traditional Target stores.
Three Areas Where Cornell Was Less Effective
Obviously, no leader can be right 100% of the time. While Brian Cornell has been fairly effective in introducing positive change into the Target corporate structure and mindset, there are certain areas where he is not fully demonstrated the characteristics necessary in a transformational leader.
Encouraging the Staff
It's safe to say that one area of weakness for Cornell's leadership at Target has been that some of the actions he has carried out failed to encourage the staff. In fact, many of them actually discouraged the staff. This can be seen in the decision to fire some 1700 staff at the Target company headquarters. While this is described as a strength above, it certainly represents an attempt to make the company more efficient, the unexpected and sudden way in which this was executed certainly had a very negative impact on employee morale within the company. The average employee at Target now has the sense that he or she has far less job security than before.
A Lack of Fairness
Again, it could be argued that Cornell has been as fair as he could given the circumstances at Target. Nevertheless, the aforementioned firing of the headquarters staff and the subsequent closing of all of the stores that had previously been opened in Canada, not to mention the replacement of many high-level executives within the company immediately following Cornell's arrival could be viewed as somewhat unfair. Most of those fired from their positions were only guilty of obeying the strategy that had been put in place by the board at Target and its previous CEO. Given this, it seems unfair that they should have to suffer the consequences for the poor results that these policies produced.
Employee Motivation
A key aspect of introducing change in a business is finding ways to motivate the employees (Avolio, 2011, p. 21). However, it has to be acknowledged that Brian Cornell's principal goal at Target has been to motivate current or potential customers, not to motivate the employees themselves. Every new initiative he has introduced since coming to Target, such as his Center for Excellence, is intended to allow Target to better meet its customer needs and expectations. While Cornell has occasionally sat down with his employees to discuss their work and to talk in general terms about the company, he has not been providing the inspirational leadership that a "transformational" leader would normally want to offer. In fact, many of the structural changes he is introduced to Target (while certainly effective) have done little to motivate its employees.
Bringing in Fresh Leadership
As mentioned before, Target has recently seen a small but noticeable decline in its profitability and growth rate many experts believe this is a consequence of stagnation within the company, meaning that Target has failed to maintain its commitment to its mission statement. It has failed to innovate and has clearly not ensure that it was offering customers an enjoyable shopping experience. This stagnation was one of the reasons Brian Cornell was brought in from the outside. It was believed that installing a new CEO who had no history with the company would allow for new solutions and ideas for change (Malcolm, 2014, online).
When considering Target's problems, it's quite obvious that it needs to find a way to (under its new leadership) re-energize its brand image and how it goes about operating at stores. In addition, it needs to develop new strategies that will allow it to more effectively compete with both brick-and-mortar stores like Walmart and with online retailers like Amazon.com. The delicate balancing act of ensuring quality while also achieving profitability is a difficult one, but Brian Cornell has a great deal of experience at other companies in similar situations. In fact, the most recent data about Target seems to indicate that the new changes Cornell has introduced are having a positive affect on Target's prospects.
And, Target is a huge corporation with a massive footprint throughout the United States. While it has in the past had a reputation for offering quality items at a reasonable price, over the last decade the significant challenges it has faced from both brick-and-mortar stores and online retailers have chipped away at its profits. As it has attempted to deal with these problems, Target has slowly drifted away from its mission statement and core objectives. However, it seems clear now that the changes introduced by its new CEO, designed to reverse this trend and put Target back on track, are going a long way to restore its previously excellent brand image in the public mind. Nevertheless, the company has still yet to find a way to compete effectively online.
References
Avolio, B. J., & Avolio, B. J. (2011). Full range leadership development. Thousand Oaks, Calif: SAGE Publications.
Bass, B. M. (1985). Leadership and performance beyond expectations. New York: Free Press.
Malcolm, Hadley. (2014).With new CEO, Target ready to move forward. USA Today Online. http://www.usatoday.com/story/money/business/2014/09/10/Target-new- strategy/15385745/
Northouse, P. G. (2004). Leadership: Theory and practice. Thousand Oaks, Calif: Sage.
