Saturday, July 8, 2017

Another Free Market Competitive Fail

Word came yesterday that my county will join the list of communities that no longer has a Sears. It has been an anchor store at our one mall since that mall opened a few decades ago. Now, come October, it will gone. And there are lessons here for education reformsters.

Coming to a mall near me

Folks have been tracking Sears' growing problems for years, and while there are a variety of diagnoses, most agree that CEO Eddie Lampert was a huge part of the problem-- if not all of it.

Lampert masterminded the K-Mart/Sears buyout in 2005 when he was just your typical hedge fundy master of the universe. Before long, the board had made him the fifth CEO since the merger, though reports are that he was running the show before he grabbed the crown. Lampert had no experience in retail, but equipped with a hedge fund manager's confidence, he retooled the company.

Here are some of the features of Lampert's version of Sears. See if any of it sounds familiar.

He did little collaboration, preferring to impose his own grand vision of how the retail chain should work. Despite his lack of retail experience, Lampert reportedly lectured veterans about how retail works. He put huge value on the opinions of outsiders.

He ignored the physical plant of stores, instead focusing his attention on a new program for guiding the whole business (the "Shop Your Way" rewards program).

He rarely met face to face with anyone, not even upper management, but prefers to manage by screen, believing that if he could collect lots of "deep data" that would tell him all he needed to know.

And most of all, he created an atmosphere of competition instead of collaboration, splitting the store into thirty divisions that had to compete with each other for resources and funding. This was disastrous, with divisions and departments undercutting each other, benefiting themselves, but damaging the store as a whole. If you want to see just how badly internal competition and divisional performance incentive system can screw up an organization, read about the death of Sears.

Oh-- and as outlined in a lawsuit by stockholders, Lampert used his hedge fundy skills to create a deal for himself by which his personal financial interests can be served by moves that are bad for the company.

So, a Bold Visionary with no actual knowledge of the institution or respect for people who work there (but confidence in his own financier background) decides to impose his own program which will be managed by boatloads of data. His own financially interests are not really aligned with those of the institution, and he decides to drive quality by pitting his employees against each other to serve their own interests. That could describe the last decade at Sears, or it could describe any big charter entrepreneur with no education background who decides to craft his own program, pit his teachers against each other for merit pay, run the whole thing by crunching numbers in a computer, and make certain that he makes bank on the business, whether it works for the students or not.

Lampert's Sears is an Ayn Randian free marketeer technocratic competition-unlocks-greatness wet dream, and it is a disaster that is slowly but surely dying. There are many lessons to learn here, but one of the biggest is that unfettered free market competition doesn't end well for the community in which it exists. Do you want to claim that schools are different? I totally agree with you-- but the business-minded reformster point all along has been that schools are just another kind of business, and they can be run in a businesslike way.Businesslike like Sears? Because that would seem to be a bad idea.

Look, you may say, Sears was a goner anyway, destined to be crushed between Amazon and Wal-mart. But that's a free market lesson, too, a reminder that in the free market there are winners and losers, and the losers have to be crushed into pieces, the people who depended on them scattered to the wind. Is that really what we want for schools? Do we want to sort schools into winners and losers and crush the losers, or is it perhaps a better aspiration to make all schools winners? I'd like to throw a party for the second choice-- let's just hope our K-Mart is still open when I go there to buy supplies.

No comments:

Post a Comment