Maybe a dozen years ago I was sitting in on a session with a successful
private equity
guy and his small posse while they discussed a company he had owned for a few years. This company provided high-end services to prestigious client companies, and employed a couple thousand smarter-than-average folks.
Specifically, this fellow had a keen interest in identifying exactly who the ‘strategic thinkers’ were in this company of his. He and his lieutenants concluded that there were definitely two, perhaps three, individuals they’d call strategic thinkers.
This was kind of an eye-opener to me. Like probably everyone reading this, I’d always flattered myself into thinking – or at presenting myself so I’d fool people into thinking – that I too was a strategic thinker. My guess is that just about everyone reading this has similarly favorable opinions of their own abilities. By this fellow’s standards – and he’s a person universally regarded as a first-rate thinker – very few of us are.
One of my take-aways from this was that perhaps strategic thinkers like this guy are even more attuned to identifying the quality in others than the rest of us are, and that they put a very high value indeed on the trait.
We often figure we know strategic thinkers when we see them. It could be that Buffett, Gates, and Munger find each other interesting and enjoy their mutual company at least in part because they share this characteristic. We all have our examples of strategic thinkers in business. A layman’s list (mine) might include names like Musk, Mullally, Bezos, to name a few. Some companies, we’re pretty certain, have none on board-- or at least none in the right positions. We all have our examples of those, too.
So to me, the most interesting aspect of the JCP ruckus this week was the minor footnote that Ron Tysoe was taking Ackman’s spot on the JCP board. It’s probably just to me, but I find this is more interesting than Ron Johnson’s initial appointment, the hiring that sent the stock up to triple where it is now.
As we commented on this board at the time when Johnson was hired, Penney’s needed merchandising leadership and not a stores guru. They still haven’t filled that all-important void, and in that regard, Tysoe doesn’t help much. But with Tysoe on the board JCP’s gets someone who, for better or worse, has a history as a rather bold strategic player. Maybe not so much for the subsequent execution – apparently never his strong suit - but he has a track record of being behind big happenings.
We remember that in the ‘80’s, when the young Canadian with a recent law degree and MBA, Tysoe made a splash as developer Robert Campeau’s right hand man. Campeau, an 8th grade drop-out then in his mid-60's, made an unsuccessful run at Royal Bank before he and Tysoe set their sights on the US, with a successful hostile takeover Allied Stores (Brooks Bros, Ann Taylor, Bonwit Teller, Jordan Marsh, The Bon Marche, and a couple dozen others) in ’86. Tysoe was age 33 at the time.
Through Allied they then levered up further with the 1988 acquisition of the larger Federated (Bloomingdales, Burdines, Bullocks, Filene’s, and an additional score of names). In 1990 the Campeau Federated (Allied/Federated) companies went bankrupt, and Campeau was tossed out, rather ignominiously.
Federated brought in new management – but despite jettisoning Campeau, they retained Tysoe (with very senior titles of 'CFO' and 'Vice Chairman' but with apparently Charlie’s level of actual headquarters presence).
As Federated emerged from bankruptcy, Macy’s was filing for it. The barely-on-its-feet Federated then purchased Macy’s, in a hugely leveraged and extremely ambitious transaction.
Originally everyone assumed that the Macy’s acquisition was new-CEO Questrom’s brainchild, but when senior management was asked directly as to how it came about, Tysoe (not present, as usual) was credited for conceiving the plan and convincing the initially skeptical CEO and board of its merits.
This was big news to me – we’d all almost forgotten about this guy Tysoe, and when we did think of him at all it was to wonder why he was still around. With this Macy’s deal that he conceived, it started to dawn that he was always in the background, and that he obviously had a serious influence.
Perhaps it isn’t too much to think he even had an important historical effect on the industry. That Macy’s acquisition of course had far-reaching and permanent consequences, not just among retailers. As merchandising functions of these stores increasingly consolidated, moderate and even upscale brands lost substantial pricing leverage with the now-combined company. The dramatically consolidated stores, not those consumer brands they carried, had the upper hand. Further, cross-town price competition disappeared. Vast amounts of aggressive daily newspaper advertising dried up.
This is an over-simplification of the changing dynamics, certainly, but the point is that in many of these large industry-shaking consolidations, Tysoe was the behind-the-scenes financial strategist on the acquisition side.
A couple of years after the Macy’s purchase, Tysoe was again credited as being instrumental in Federated’s (since renamed Macy’s) acquisition of May Co (Marshall Field, Famous-Barr, etc.) furthering again the industry consolidation.
Now I don’t want to overstate Tysoe's influence, either. He seems to have no affinity to merchandising or operational issues. Execution apparently isn’t his forte. But it is certainly interesting to see him now show up on JCP’s board.
We’ve heard recent talk of Questrom (now in his mid-70’s) coming back. Tysoe was Questrom’s strategy muse through the big deals for which the elder ‘merchant prince’ received the headline credit. My first thought was that maybe Tysoe’s JCP appointment was a not too subtle scouting to assess the situation for Questrom, who last week said he might come back under the right (for him) conditions. Perhaps. I’m not sure Questrom is the answer at this point, but at least he’s probably better than what they’ve had.
Maybe it’s too late and JCP is too far gone. But then again who knows, maybe history will once again repeat itself and we’ll see some big idea coming from a JCP board member that we’ll look back on as obvious and inevitable. Even if unlikely, it’s more a possibility now than it was last week. With Tysoe there it might not necessarily be the right idea, but we shouldn’t be surprised if it’s a big one.
However it turns out, JCP is a lot more interesting going forward than it was with Ackman and Johnson around. But JCP after all this time still needs a capable merchant.
guy and his small posse while they discussed a company he had owned for a few years. This company provided high-end services to prestigious client companies, and employed a couple thousand smarter-than-average folks.
Specifically, this fellow had a keen interest in identifying exactly who the ‘strategic thinkers’ were in this company of his. He and his lieutenants concluded that there were definitely two, perhaps three, individuals they’d call strategic thinkers.
This was kind of an eye-opener to me. Like probably everyone reading this, I’d always flattered myself into thinking – or at presenting myself so I’d fool people into thinking – that I too was a strategic thinker. My guess is that just about everyone reading this has similarly favorable opinions of their own abilities. By this fellow’s standards – and he’s a person universally regarded as a first-rate thinker – very few of us are.
One of my take-aways from this was that perhaps strategic thinkers like this guy are even more attuned to identifying the quality in others than the rest of us are, and that they put a very high value indeed on the trait.
We often figure we know strategic thinkers when we see them. It could be that Buffett, Gates, and Munger find each other interesting and enjoy their mutual company at least in part because they share this characteristic. We all have our examples of strategic thinkers in business. A layman’s list (mine) might include names like Musk, Mullally, Bezos, to name a few. Some companies, we’re pretty certain, have none on board-- or at least none in the right positions. We all have our examples of those, too.
So to me, the most interesting aspect of the JCP ruckus this week was the minor footnote that Ron Tysoe was taking Ackman’s spot on the JCP board. It’s probably just to me, but I find this is more interesting than Ron Johnson’s initial appointment, the hiring that sent the stock up to triple where it is now.
As we commented on this board at the time when Johnson was hired, Penney’s needed merchandising leadership and not a stores guru. They still haven’t filled that all-important void, and in that regard, Tysoe doesn’t help much. But with Tysoe on the board JCP’s gets someone who, for better or worse, has a history as a rather bold strategic player. Maybe not so much for the subsequent execution – apparently never his strong suit - but he has a track record of being behind big happenings.
We remember that in the ‘80’s, when the young Canadian with a recent law degree and MBA, Tysoe made a splash as developer Robert Campeau’s right hand man. Campeau, an 8th grade drop-out then in his mid-60's, made an unsuccessful run at Royal Bank before he and Tysoe set their sights on the US, with a successful hostile takeover Allied Stores (Brooks Bros, Ann Taylor, Bonwit Teller, Jordan Marsh, The Bon Marche, and a couple dozen others) in ’86. Tysoe was age 33 at the time.
Through Allied they then levered up further with the 1988 acquisition of the larger Federated (Bloomingdales, Burdines, Bullocks, Filene’s, and an additional score of names). In 1990 the Campeau Federated (Allied/Federated) companies went bankrupt, and Campeau was tossed out, rather ignominiously.
Federated brought in new management – but despite jettisoning Campeau, they retained Tysoe (with very senior titles of 'CFO' and 'Vice Chairman' but with apparently Charlie’s level of actual headquarters presence).
As Federated emerged from bankruptcy, Macy’s was filing for it. The barely-on-its-feet Federated then purchased Macy’s, in a hugely leveraged and extremely ambitious transaction.
Originally everyone assumed that the Macy’s acquisition was new-CEO Questrom’s brainchild, but when senior management was asked directly as to how it came about, Tysoe (not present, as usual) was credited for conceiving the plan and convincing the initially skeptical CEO and board of its merits.
This was big news to me – we’d all almost forgotten about this guy Tysoe, and when we did think of him at all it was to wonder why he was still around. With this Macy’s deal that he conceived, it started to dawn that he was always in the background, and that he obviously had a serious influence.
Perhaps it isn’t too much to think he even had an important historical effect on the industry. That Macy’s acquisition of course had far-reaching and permanent consequences, not just among retailers. As merchandising functions of these stores increasingly consolidated, moderate and even upscale brands lost substantial pricing leverage with the now-combined company. The dramatically consolidated stores, not those consumer brands they carried, had the upper hand. Further, cross-town price competition disappeared. Vast amounts of aggressive daily newspaper advertising dried up.
This is an over-simplification of the changing dynamics, certainly, but the point is that in many of these large industry-shaking consolidations, Tysoe was the behind-the-scenes financial strategist on the acquisition side.
A couple of years after the Macy’s purchase, Tysoe was again credited as being instrumental in Federated’s (since renamed Macy’s) acquisition of May Co (Marshall Field, Famous-Barr, etc.) furthering again the industry consolidation.
Now I don’t want to overstate Tysoe's influence, either. He seems to have no affinity to merchandising or operational issues. Execution apparently isn’t his forte. But it is certainly interesting to see him now show up on JCP’s board.
We’ve heard recent talk of Questrom (now in his mid-70’s) coming back. Tysoe was Questrom’s strategy muse through the big deals for which the elder ‘merchant prince’ received the headline credit. My first thought was that maybe Tysoe’s JCP appointment was a not too subtle scouting to assess the situation for Questrom, who last week said he might come back under the right (for him) conditions. Perhaps. I’m not sure Questrom is the answer at this point, but at least he’s probably better than what they’ve had.
Maybe it’s too late and JCP is too far gone. But then again who knows, maybe history will once again repeat itself and we’ll see some big idea coming from a JCP board member that we’ll look back on as obvious and inevitable. Even if unlikely, it’s more a possibility now than it was last week. With Tysoe there it might not necessarily be the right idea, but we shouldn’t be surprised if it’s a big one.
However it turns out, JCP is a lot more interesting going forward than it was with Ackman and Johnson around. But JCP after all this time still needs a capable merchant.