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Sears Ignores The Invisible Band
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Business

Imagine that a major league basketball team is bought by a hedge fund manager who is a firm believer in the value of competition. Not just competition across teams, but competition within teams. He implements a radical new policy: each player’s salary is determined exclusively by the number of points he scores. Crazy, right? Anyone can see that such a policy would ruin teamwork and destroy the team’s ability to compete with more cohesive teams

Yet this is exactly what is now happening at Sears. Five years ago, Eddie Lampert, the chairman of Sears Holdings after Sears merged with Kmart, reorganized the company so that each business unit functions like an autonomous company, with its own president, board of directors, and profit-and-loss statement. According to a recent profile of Lampert by Mina Kimes in Bloomberg Businessweek:

Lampert runs Sears like a hedge fund portfolio, with dozens of autonomous businesses competing for his attention and money. An outspoken advocate of free-market economics and fan of the novelist Ayn Rand, he created the model because he expected the invisible hand of the market to drive better results. If the company’s leaders were told to act selfishly, he argued, they would run their divisions in a rational manner, boosting overall performance.

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The results have been disastrous, in part because Lampert was ideologically committed to the metaphor of the invisible hand and the associated idea that people are purely selfish. Ideology is a lens – it makes some things more visible, others less so. Lampert’s ideology prevented him from seeing that he was destroying the invisible band – the bond that forms around groups that can trust each other and work together toward shared goals.

Read more at Forbes

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