In a Q&A, Dennis explains not just how to understand, but how to pitch the boldest decisions at major retailers.

What have been the boldest leadership decisions in retail in recent years? Digital Commerce 360 posed this question to author Steve Dennis in an interview about his new book, “Leaders Leap.”

Throughout his career, Dennis has worked with some of retail’s biggest names, tackling strategy changes and placing bets in the face of disruption — both at physical stores and online. In this second part of the discussion, he shared his perspective on how he thinks about risk, as well as advice on pitching big leaps in front of board rooms and other stakeholders.

Dennis explained what he has seen and offered his pick for the boldest decision made by a modern retailer.

Editor’s note: This interview has been edited for length and clarity. Click here to read the first part of our interview with Steve Dennis.

How to pitch a bold decision in retail

Digital Commerce 360: You open up the book with a compelling story about walking out of a board meeting at Sears. Deciding to advocate for a leap along the lines of your definition is already a big decision. Taking on the associated risk is another one. In your experience, what have you learned is necessary to pitch this type of vision before stakeholders, whether it’s boards, executives, or shareholders? 

"Leaders Leap" by Steve Dennis

“Leaders Leap” by Steve Dennis | Image credit: Steve Dennis/Wonderwell, design by Adrian Morgan

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Steve Dennis: In some ways, there’s sort of the metaphorical leap, which is about taking risk, right? There’s both the strategic leap, and then there’s the leaps we take as leaders in our actions day to day, week to week, month to month, year to year. I don’t want to give the sense that, generally speaking, a leap should be automatically this incredibly risky thing. I do think there’s a boldness of action that’s important in general. But, I don’t wanna give the sense that it’s about taking moon shots or this sort of thing.

The best thing is to not let yourself get into a position where you have to leap in the first place, right? That’s the ideal thing. And I think that’s much more a series of smaller risks taken over time. It’s the cumulative impact of that as opposed to a real strategic leap. But I think if you get to the point where there is more overall boldness of action that’s required, the main thing — in terms of getting support for it — is to help people understand the risk of not doing it. And that’s, I think, the hardest thing of all.

It’s a little bit what I try to get at with the “Safe is Risky” chapter. It’s very clear with the benefit of hindsight that many companies’ failures to act more boldly and move faster earlier on is what’s caused them to have multiple years of struggle.

So just going back to the Macy’s example, there are any number of significant things Macy’s could have done over the last 20 years that would have given them at least the promise of being a much more valuable company, of having not lost so much market share to all the different players they did. Now, they’re in a position where they don’t have the capital structure to invest very aggressively. They don’t have the confidence of Wall Street to support being much more aggressive. And for them to be a really successful company now, they’ve got to win back so much market share that the reason why I’m so negative on their ability to be able to do that is because it’s such a herculean task.

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It would not have been all that hard for them to have gotten off the mall with other formats. And they’re doing so many things so late. Along the way, when it’s not a crisis moment, is the time to do it. And I think the best way is to try to quantify the risk. And then in terms of actions, it’s to place smaller bets. It’s to have tested a concept that would have fought with TJ Maxx and Ross. 

Even their Blue Mercury – they lost so much market share in cosmetics to Ulta and Sephora. Blue Mercury is like one-fiftieth the size of them in the U.S. That’s nice. But you know, it’s not a real battle. It’s so incremental that it’s almost kind of laughable, but at the place they are now, they don’t have a choice. They’re not gonna acquire TJ Maxx, right? So the options now are very limited.

What are examples of the boldest decisions in retail?

DC360: You bring up crisis moments. In your mind, what have been — whether proven, unproven, successful, unsuccessful — the boldest decisions you’ve seen the past four or five years in retail? 

SD: I’ll give you one that’s more of an overall business model one. And then a couple that are subsections of bold things. By far, the boldest retail one that I’ve been able to think of is what’s happened with RH — with Restoration Hardware. Actually, just as a quick aside, which shows that I do not always have the greatest capacity for discernment, I saw [Restoration Hardware CEO] Gary Friedman present at a conference where I was also a presenter about eight or nine years ago. 

He was presenting the gallery concept before one had been opened. And I remember thinking he was crazy, like it was just such a bold step — and also one where you really couldn’t test it very well. I mean the test was to go build one of these things, which was not a cheap date. 

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They took the concept. They took a store that was basically a weird mix of things — sort of tchotchke kind of items and a little bit of home fashion — and then they made this leap to this palace of high-end home furnishing. And I don’t know all the work that went into doing that other than it was pretty clear that their current format was not a winning format, and they had gone to bankruptcy already.

That was a business that was not in great shape, but that was a very big step. But I know it was rooted in understanding the market, that there was really nobody doing something on a scale. But they had certain equity and also Gary and a couple of people that were on his team knew that business well enough. So it wasn’t quite a moon shot, but it was a big, big step. And then to continue rolling it out — and they’re rolling it out, even in the face of the home market being quite soft, as you know. 

The other sort of set of things I would say — and I like picking a company that is a huge company — is what Walmart and Target have done in investing in their stores. Because both Walmart and Target saw 5-6 years ago now, I guess, at a time when this whole retail apocalypse narrative was pretty strong. But also in particular, this idea that Amazon was just unstoppable. And if you were a merchant like a Walmart or Target selling a lot of different stuff at comparatively low price points that you were going to get Amazon’d. And it isn’t as if Walmart and Target didn’t invest in their digital and ecommerce capabilities. They did. But to invest back into stores and see the role that stores can play, particularly when the narrative was pretty much 180 degrees in the opposite direction, it was pretty bold.

It’s also an example of where they didn’t just go nuts and do everything all at once. They did place some pretty big bets. Of course, they can because they’re big companies and they’ve got the cash positions and all that kind of stuff to invest. And full disclosure, Walmart’s been a client of mine, but they were doing the work. They understood what the economics were; they understood what consumers wanted; they push the edge a little bit because customers aren’t always the best at figuring out what they want till they see it.

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When to advocate for a bold decision

DC360: What’s your advice to a person trying to understand when a bold idea is worth advocating for and pursuing? Is it fundamentally the risk of total disruption and irrelevance? What’s an internal test you would put that up against when you see the opportunity for a bold strategy or leap? 

Steve Dennis, author of the book "Leaders Leap"

Steve Dennis, author of the book “Leaders Leap” | Image credit: Steve Dennis

SD: Number one, it kind of depends where the idea is. The right term is kind of maturity of the idea. For example, two years ago, let’s say if you were in certain technology spaces, you would have some awareness about generative AI, right? And you may not necessarily know how things are going to play out. We still don’t know how things are gonna play out.  

But even before ChatGPT came out. Whatever it is now — 21 months ago or something. There are people that were aware that some of this stuff is going on. So you might then want to say, let’s figure out a way to have kind of a listening post or some very early exploratory scouting. And the business case for that would be: This could be very, very significant. Could develop very, very quickly. We need to get more knowledgeable about what is going on and see some of the possibilities, so we can then place the next series of bets on it. But that would be a case for something that’s really almost like R&D-ish. 

Sears was very early on in click and collect or buy online, pick up in store. Neiman Marcus was quite early on that as well. And the business case was — for piloting it — that it was something customers wanted. It was something that could give us a competitive edge. And you could scope out a proof of concept and then ultimately a pilot that was manageable. But you had an idea that the size of the prize was big enough for it to be scaled to this level. 

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Amid all of these things, you’re thinking about the risk. You’re thinking about the resource. I always think about it as a series of options on this. If you spend this much money, you’re creating the option to do the next thing. So you have to be able to balance out, “What if I’m right? What if I’m wrong? What option value does it create for me?” It’s all in the context of — generally speaking — solving a customer problem or activating an opportunity. So you have to be able to scope it a little bit. 

One thing, when I was at Neiman Marcus, which is such an old example, but social media was fairly new when I was first there — this is when MySpace was the thing and Second Life was gonna be a big thing. But in terms of a retail position, MySpace was a little bit about advertising and whether or not we should stand up any kind of commerce capabilities on the site. Second Life was more about having a store in what was the primitive metaverse, right? But it was very, very early there. It was getting a lot of buzz. And I remember pitching a couple of different proof of concept sort of ideas to our CEO. 

We were asking for like $20,000 or something — we were a $4 billion company. It was trivial, but he wanted [to] know what’s the business case? And I remember saying, “There is no business case I like. This could be big. This is a probe. We will be smarter about this opportunity in four months’ time. And then we’ll see where we are.” But it’s like an insurance policy or something in a way, because you don’t want to fall behind. 

As it turned out with Second Life, we never did anything, and it was good we never did anything. MySpace, we fiddled around with it, but again, that never turned out to be anything. But as Facebook started to emerge, we had a greater sense of what was going on.  

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There’s a lot of parameters in terms of the decision that goes that goes into it. And if you’re pitching an idea, you have to be able to give — in the earlier stage — more color commentary. In the later stage, you’ve got to bring more analysis to it.

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