Asking Steinhafel to leave was actually a sign of just how healthy Target is.
It shows that it's way too soon for longtime shareholders, suppliers and employees concerned about the future of Target to panic. The board is paying attention and is willing to act, as should be expected from this company. Holding executives accountable for results is one of the reasons it rose from a regional department store to become an industry giant.
This is not to suggest that the decision to seek Steinhafel's resignation was a no-brainer or even easily reached. By many measures Target continues to be a solidly successful company miles from any sort of financial crisis.
Target last year made money, about
But when Target early Monday announced that "after extensive discussions," the board and its CEO had agreed that the company needed new leadership, it was not difficult to imagine what those extensive discussions were about.
The conversation could have been about a Canadian expansion in which sales have fallen wildly short of plan. Had it been a business school project, the forecasters would have flunked.
The conversation may have rolled around to the core business of U.S. retailing, another topic that would have been uncomfortable for the CEO.
Comparable store sales in
Target's two biggest initiatives of recent years, a loyalty credit card with a 5 percent discount and a full section of groceries, have both been implemented, so why is it the customer count only seems to go down?
Then came Target's fourth quarter, when Target confirmed that up to 40 million customers' credit and debit card information had been lost to hackers. That stunning news was more than enough to spoil the results from the traditionally strong fourth quarter.
These problems may sound more like short-term setbacks that shouldn't end the career of a CEO, but these setbacks were not just isolated events that made 2013 a "bad year." And there were enough of them to get any director's attention.
Some of the directors perhaps remember technology issues that cropped up well before the fourth-quarter data breach, such as when Target brought its target.com e-commerce business in-house.
In its first three months after the late summer 2011 launch, target.com accounted for more than half of the major outages at the top 100 e-commerce sites, including a famous collapse following a surge of traffic from shoppers looking for fashionable
When the site crashed again a month later, Target that day announced that target.com's president,
So it's no surprise that the executive in charge of technology at the time of the data breach,
While Steinhafel wasn't the one to pick the hardware and software that allowed the data breach and target.com debacles, each would still belong in the discussion when directors looked at the body of the CEO's work.
Could it be that Target didn't spend enough money on information systems and the people to run them? It sure looks like it. That's not a technology decision, that's a strategic priority decision.
It's a CEO decision.
Deciding to hold the CEO accountable for the results of these kinds of decisions remains rare. The search firm Spencer Stuart tracks turnover in S & P 500 companies, and in its most recent data, only a small percentage of the CEOs who left their jobs did so under pressure.
It's important to remember, however, that it's actually happened before at this company.
The CEO at the time was
The company operated as three divisions then, with Target being both the largest and the engine of revenue and profitability growth. The company had pledged to improve the results of its other units, and in 1993 the profitability at one of them had once again slipped.
Macke was a merchant, with an intuitive sense of what the customer would want and how she would feel walking in to one of his stores. Old hands described him as having a bit of skepticism for the kind of data that's now called "metrics."
But Dayton Hudson was not run by the seat of anyone's pants, least of all its CEO's. Its corporate governance practices were so well-regarded that its intensive CEO evaluation process became a 1991
That is the system Macke grew up in. Director independence, rigorous oversight, accountability for performance -- Macke was described as a true believer in all of these things. He believed in the system that ended his career.
How many of the securities analysts looking at news of Steinhafel's departure this week know that history isn't clear, but many sure didn't see the end of Steinhafel's Target career coming. They used terms in their research notes early Monday like "abrupt" and "surprising" to describe the news.
Several mentioned an April invitation to a meeting Steinhafel would be hosting on
But there's at least one Target employee who couldn't have been completely surprised. That's
He was a young M.B.A. grad from
He knows how the system works at Target.
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