Searsmen Marching to
a Different Drummer
A history of Sears as big as a catalog
Across the Board
Sears was for decades the quintessential American store, which made it a quintessential Illinois store. It was founded in Springfield and brought to greatness by a Springfield man in Chicago. I think I did a half-dozen pieces about it over the years, including this review of an important company history done for Al Vogl, the sterling editor of Across the Board in New York City.
Reviewed: The Big Store: Inside the Crisis and Revolution at Sears by Donald R. Katz. Viking, 1987
The Big Store has the bulk and form of a historical novel. But comparisons with James Michener do the author of this book an injustice, if only because Katz is a better writer. The book does have something in common with Michener's sagas, however: prodigious research. Katz, a contributing editor and columnist at Esquire magazine, spent five years on the project. His interview notes and transcripts alone amounted to more than 10,000 pages.
But mere diligence does not explain the almost seductive intimacy of The Big Store. Katz enjoyed access to the highest levels of decision-making at one of the world's major corporations at a crucial point in its history. He sat in on board meetings, flew on the corporate jets, wandered the golf courses, witnessed the deals being made. He even worked as a clerk in a Sears store in Hicksville, New York, for two weeks.
The Big Store recounts the history of a hugely successful enterprise that, through a conspiracy of circumstance, was threatened with disaster in the 1970s. Panic and upheaval ensued, as is usual in such cases. So, however, did revival, which is not. If Katz does not describe Sears as waking from the dead, he does show the crippled giant walking again.
It is the story of a company whose success has always been deeply rooted in American aspirations. "Sears always dwelled in the gap that separates what people wanted and dreamed about from what they already had," Katz writes. Sears has been pushing an unceasing flow of goods into that gap for a century, first through its mailorder catalogues, later through its nearly 900 stores. Sears didn't just sell goods, though, it sold a way of life. For most Americans of modest means, the experience of growing more secure and more comfortable was measured by things labeled "Sears."
As recently as 1972, making dreams real was a nearly $11 billion a year business that directly employed half a million people. The company had succeeded, "Searsmen" believed, because it was run by people who had grown up wanting the same things that most Americans wanted. The Sears executive staff then numbered roughly 17,000, loyal servants to a company that, as Katz puts it, mixed "sons of miners with the sons of machinists and sons of farmers and made them all sons of the sale."
The ideal Sears employee, the company's personnel chief insisted, came from a town of fewer than 10,000 somewhere in the Midwest. (The man named chairman in 1977 went beyond the rural to the bucolic, looking, in Katz's description, like he'd been squashing cow patties on the back forty within the previous hour.")
When Sears managers gathered in one place they looked like a marching band, attired, as they often were, in the garish miracle fabrics worn by those who travel the roads connecting the small towns to the suburbs. The Searsman was distrustful of the East, especially New York City. He was disdainful of the well-schooled elites who, to borrow a contemptuous crack from one Sears director, read Camus when they came home at night.
But America had changed by the 1970s, and Sears hadn't. Specialty shops and discount retailers nibbled at the traditional Sears market from both ends. Moreover, the people who ran Sears were no longer like the people who increasingly shopped there. The white, male. World War II vets who filled Sears' ranks had trouble adjusting to the fact that by the 1970s most people of modest means in the United States weren't white. People still shopped at Sears—an astounding two of three Americans did so in any three months of 1972, and more than half the households in the nation had a Sears credit card—but they were buying less and less. Profits and stock value slipped as a result of competition, inflation, the high cost of interest from its huge credit operations, and the sheer weight of the company's own bureaucracy.
America had changed before, of course, and Sears had changed with it. Katz finds in Sears a singular story in the history of enterprise, because the company had, in the span of less than a century, been "founded and refounded three times by three charismatic business geniuses." The company's co-founder, Richard Sears, who boasted that he could sell a breath of air, was the first. He was followed by Julius Rosenwald, who made Sears & Roebuck into a catalogue-merchandising empire, and Robert Wood, who transformed Rosenwald's catalogue-supply network into a massive chain of retail stores designed to cater to newly "automobilized" America.
By the late 1970s, then, Sears was confronted by the need to reinvent itself again. The complex system of buyers, suppliers, and retailers had become what Katz calls a "gigantic patronage system" run on kickbacks, sweetheart deals, and padded payrolls, much of it outside the knowledge or control of the parent company. In accord with the ancient rules of commerce, Sears had "risen to utter dominance of its economic sphere, only to find that its necessarily bureaucratic order had curtailed innovation and change."
The man who led Sears' way back from the path littered with corpses of smaller competitors, such as Grant's and Korvette's, was Edward R. Telling. Katz casts Telling in the mold of Sears, Rosenwald, and Wood, and his account makes clear that the word "revolution" in the book's subtitle is no exaggeration.
Under Telling, Sears drastically cut its staff. In one early-retirement incentive program alone, nearly 1,500 senior executives left in what amounted to a purge of an entire generation of managers. The parent company also asserted control over pricing, personnel, store design, and promotions; Sears' retail system, renowned for its lack of control, was eventually so meticulously linked to the Sears Tower in Chicago that the president of the merchant operation could, with the touch of a finger, tell what had sold on any aisle in any Sears store the previous day.
Just as important was Telling's expansion into the financial-services sector through the purchase of the real-estate brokers Coldwell Banker and the investment house Dean Witter. Adding such firms to its own huge credit and insurance operations accelerated Sears' transformation from a store that sold goods to one that sold services. The effects of the turnaround could be measured in the changes in Telling's reputation; Gallaghers Presidents' Report, which had named Telling one of the nation's 12 worst executives in 1978, named him one of the 12 best in 1981.
The shift from lawn mowers and swing sets to stocks was not a departure from Sears' traditional role, but an extension of it. Sears had become the seventh largest corporation in the world by perfecting the mass merchandiser's "humbling of the goods," enabling the ordinary family to live like the rich (even if they had to do it on credit). The new Sears was built out of the company's network of stores, computer links, and credit operations, and was headed toward what Katz calls "the consummate synergy—a house bought from Coldwell Banker, insured by All-state, stocked by Sears goods, financed by Sears mortgage brokers, who raised the money from mortgage securities sold to the public by Dean Witter." The dream recalled the earlier Sears, which had pioneered in extending credit to plain folks when the banks shunned it as too risky.
The sight of Sears running to catch up with the rest of the 20th century fascinated analysts and sometimes scared the hell out of its own people. The company's sheer size was a burden. So was its culture. Sears employees had long enjoyed the rollicking free enterprise that had been allowed to flourish, which made old-timers particularly resentful of change.
Managing a company that has thrived because it has been essentially unmanaged will always be a tricky task. When such a company is in the business of selling, well, as Katz puts it: Retail organizations are "peculiarly ruled by their statesof mind . . . dependent upon a mass 61an to make the system work." The problem for Sears' top executives was not just how to make the company obey, but how to make it believe.
The Big Store is a management tract of sorts, albeit an unconventional one. Phil Purcell, the "bright-button" management consultant who helped Telling devise the crushing of the old order, explained to Katz that structure is seldom the problem at struggling firms, that personality has a profound impact on policy, and that the real aim of management in many large organizations is to avoid responsibility for error.
Indeed, most of the new guard at Sears departed from the standard texts on management. The brilliant Edward Brennan, who rescued the ailing retail operation and went on to replace Telling as chairman and CEO upon his retirement in 1986, is moved to profanity only once in the book, when asked his opinion of a then-popular management self-help book. "Jumpin' Joe" Mo-ran, a senior vice president, once dared commit to paper the truths that any experienced manager knows, such as, "Saying something won't necessarily make it so." (Moran, Katz concluded, was "so enamored of the metaphors of power that the practice of management appeared to [him] in Biblical panoramas.")
The Big Store is not about management, however, and, in fact, is only incidentally about a company. Companies ultimately reflect the desires of the people who run them, desires that are made corporate in every sense of the word when acted out in the context of executive power. Katz's true subjects are what he describes as "the powerful passions that everywhere inhabit economic life." The characters of Katz's near-novel make up what one company outsider saw as a veritable museum of American types. Central to the story is Telling, not least because in its way his passion burned hottest.
Telling is an American eccentric. He craved company but seldom conversation, so colleagues often accompanied him on strange, silent walks. People were loyal to him, but no one pretended to understand him. (He once promoted a waitress from Sears' old headquarters on Chicago's West Side to a Tower job because he was impressed by her ability to peel a grapefruit without leaving any rind.) In his attempt to describe Telling's "sophisticated accrual of power" in his climb, Katz ends up comparing the chairman to de Gaulle; yet Telling himself confessed to not really knowing what power was.
Although Telling struck some Wall Street types as a hopeless rube, he was surprisingly well read. He once wrote a speech for a college commencement that knowledgeably compared the rival intellectual tradition of Hume, Smith, and Burke with that of Voltaire, Descartes, and Rousseau. But if at some other firms managers were pressed to pretend to know more than they did, at Sears they pretended to know less.
In the end, Katz concludes that Telling was a "hopeless romantic," if only because he believed that people could actually change things. But Katz also found that beneath Telling's rube exterior lurked "fury, methodical dedication, and grand designs." Katz sensibly shrinks from making the connection, but there is something almost Ahab-like in Telling's career. Far from the unquestioning company man. Telling loathed the vaunted Sears system, which rewarded age over youth and staying power over talent. He despised the decentralized management system, which left so much power in the hands of managers renowned for their arrogance and incompetence. (That system, by the way, helped leave Sears vulnerable in the 1970s to legal actions alleging patent violations, hiring discrimination, and bait-and-switch sales practices.)
Telling's fury is dissected in the chapter that recounts his early years with Sears. Like so many Searsmen, he came from a small town, and, like them, he worked for Sears because he had to. Sears tested the loyalty of its people with low pay and frequent moves, and though Telling forbore, he never forgot. He had suffered humiliation at the hands of local managers under the system he eventually destroyed. His insistence upon Sears company transportation to get him home to his wife and dinner each night seems merely indulgent, until one learns how, as a beginner, he was expected to ride the store circuit, in his one and only car, leaving his pregnant wife to haul home groceries in a toy wagon.
Telling was a revolutionary in the making in those years. Once in power he surrounded himself with "several supersensitive and insecure men, some deeply religious men, some obsessively ambitious, several quite short men" into a "private band of irregulars" who had in common only that they, like Telling, "never fit into the status quo" at Sears.
Telling's genius was to recognize in other people the fires that burned in him. Katz concludes, "The crisis caused only the most politically attuned, most mysterious, and least stable of Searsmen to rise to the top, for only they had the slightest notion of what to do." In many ways Telling was the most attuned, the most mysterious, and the least stable of them all.
In an afterword, the author wonders aloud why Telling gave him such a privileged look at the company. Neither Telling nor Sears is enamored of journalists; like all big businesses, Sears protects its decision-makers with a Swiss Guard of professional public-relations types. Katz concludes that Telling hoped for an account of those momentous months that would ring true. Truth in this case demanded an outsider, because the existing vocabulary of business life was hopelessly inadequate to describe what business is really about. That is why so many accounts of business ring false— and why this one rings so resoundingly true. ■