Sears, Roebuck and Company

In the early 1990s, handicapped by a policy of diversification initiated in the early 1980s and suffering a loss of focus, Sears, Roebuck and Company was facing continually rising losses. Competitors such as Wal-Mart, meanwhile, were strongly targeting the retail consumer and forging ahead in terms of market share.

In 1992, with its very survival in the balance, Sears embarked on a remarkable recovery exercise which was to change the way it did business, reverse a ten-year business downturn and transform substantial losses into impressive profits.

Writing in Harvard Business Review, Anthony J. Rucci, executive vice-president for administration of Sears, Steven P. Kirn, vicepresident of human resources planning and development of Sears, and Richard T. Quinn, president of the Quinn Consulting Group, describe the recovery program initiated by chief executive officer Arthur Martinez which led to a sea change in Sears' company culture as the business refocussed firmly on the consumer.

Altering the logic to transform the prevailing company culture was key to Sears' goal of changing the way it did business. Sears effectively tapped into the chain of cause and effect that runs from employee behavior to customer behavior to profits, developing an employee-- customer-profit business model that tracked success from management behavior through employee attitudes to customer satisfaction and financial performance.

To gauge customer and employee attitudes and customer satisfaction, Sears developed total performance indicators, or TPI - a set of measures indicating how the company is performing in the eyes of employees, customers, and investors. The TPI are based on the fruits of ongoing data collection, analysis, modeling and experimentation, and enable assessment of the potential impact of various factors on employee...