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opened two outlets away from the plants. The stores failed. This was not at all what Wood had in mind: He envisioned a vast network of stores, like the one he ran in the army. But Merseles s mind was made up. He paid little attention to Wood s proposals. Wood moved to Sears in 1924. There he ran the retail office, even though Sears had no retail stores. But Wood had plans for plenty of them. Chandler reports that again he ran into strong opposition from the older mail-order executives, who were more interested in expanding their established business. Still, Wood managed to open a few stores in the 1925 1927 period. And when he became president in 1928, he took Sears squarely into the retail business. We can see that Wood had a big coup d oeil at Montgomery Ward. His resolution took him to Sears, where he finally was able to follow through on it. Now came the push for a decentralized structure. Despite good profits, the old centralized structure was holding Sears back. Retail stores plus mail order, across the whole country, made for a complex puzzle indeed. The problems mounted until Wood decided, in May 1929, to defer further expansion. Wood called in a consultant, George Frazer, and appointed five executives to a committee, including Alvin Dodd as the retail expert. What did that committee do Like the DuPont subsubcommittee, the Sears group looked for what worked in other firms. They stood on the shoulders of giants. Their principal object of study was the structure of J. C. Penney and other chains. This marked the final triumph of retail over mail order: Sears was imitating retail chains. The result was a district organization of regional offices and a general office at headquarters. Sometimes old structures die hard. The new structure took 20 years to implement. Yet in the end, district offices became the heart of the decentralized structure that the general office oversaw. So, like GM, Sears found its structure through two coups d oeil. At Montgomery Ward, Wood saw how to reorganize a mail order company into a retail chain. Then, Frazer, Dodd, and the others saw how to imitate the success of J. C. Penney and other retail chains through a district organization.
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68 T H E A R T O F E X P E R T I N T U I T I O N
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This ends our review of Chandler s four cases. He surely succeeded in his worthy cause: to show U.S. executives how in a variety of situations a central office can solve the problem of diversification and scale. Chandler found this a question of national urgency:
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The coming of this new strategy and with it the new structure is of paramount importance to the present health and future growth of the American economy.
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Chandler s book is a classic demonstration of the art of what works. Thanks to his study, the builders of the new organizational structures could look to the model created by du Pont, General Motors, Jersey Standard, and Sears. These are the giants stand on their shoulders. That s what Chandler s book is about. So expert intuition finds support not only in Chandler s cases, but also in his overall aim. As you look to the model of the central office, do what Chandler s examples themselves did. They studied the experience of their industries, both their own and of other companies, to see what worked. Then they built on that past achievement in their own course of action.
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The Art of Japanese Business
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Two decades later, the structure that Chandler studied fell on hard times. By the early 1980s, companies from Europe and Japan had overtaken U.S. companies in many major products and markets. The leading example was the automobile industry. The United States built big, expensive cars that guzzled gas and fell apart, while Japan built small, cheap, durable cars with good gas mileage. Many critics blamed the centralized general office, which took its eye off the market and fell in love with its own plans. As a result, many businesses looked to Japan for guidance. One of the key studies that executives turned to was The Mind of
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