Summary
- Management has made many changes in an effort to professionalize operations at the company.
- Most of these changes have been perceived negatively by employees and have handicapped growth.
- A real turnaround will only occur if management returns to the simple, winning principles which made the company a success to begin with.
If It Ain't Broke, Break It...
To a man with a hammer, everything looks like a nail.
—Warren Buffett
The above adage perfectly describes the recent actions of senior management at Lumber Liquidators (LL). From the moment Dennis Knowles assumed the CEO position, with the goal of turning around the company, he started to "fix" things with his proverbial hammer. The problem is that many of those things were never broken to begin with and fixing them with a "hammer" only made matters worse.
Mr. Knowles has "professionalized" the company. Created checks and balances; systems and management teams to mitigate the factors which created the now famous scandals. It can be argued that these extra layers of bureaucracy were needed, to a degree, and had been lacking for too long.
If Mr. Knowles had been content to limit his tinkering to those main problems, the company could have returned relatively quickly to at least a semblance of growth that it once had. The problem is that management at Lumber Liquidators went much further. They changed the sales culture at the company. They tweaked selling techniques which had worked perfectly for two decades. High selling divisions were downsized. Focuses were shifted. The company lost many valuable employees who did not agree with the many changes. It seems like current management has systematically tried to change everything about the company, and in doing so, caused many more and greater problems. To exemplify the vast extent of the change, even the company headquarters is set to change city by the end of the year.
