Bad Stewardship Killed Sears and Kmart

Corporate governance is as much about the what-fors as it is about the whys and hows.

Photo credit: Photo 187706364 / Closed © jwpnw | Dreamstime.com

The following first appeared on Medium as part of a series of stories on the downfall of Sears and Kmart. To read past stories and listen to podcasts, please go here and here. (This post has been lightly edited from the original.)

By Dennis Sanders

It’s June 21, 1964 in Columbus, Indiana. J. Irwin Miller, the CEO of Cummins Engine, gave a speech at the dedication ceremony for a public golf course in Columbus. Cummins had financed the project, and, in his speech, Miller explained why it was so important for a company like Cummins to get involved in funding a golf course in a small Indiana city. He said the following:

Why should an industrial company organized for profit think it a good and right thing to take $1 million and more of that profit and give it to this community in the form of this golf course and clubhouse? Why instead isn’t Cummins — the largest taxpayer in the country — spending the same energy to try to get its taxes reduced, the cost of education cut, the cost of city government cut, less money spent on streets and utilities and schools? The answer is that we should like to see this community come to be not the cheapest community in America, but the best community of its size in the country.

Miller backed the words in that 1964 speech with action. He connected with some of the world’s greatest architects to come to Columbus and build public buildings such as the local library: Eliel and Eero Saarinen, I. M. Pei, César Pelli were all recruited to build churches, banks, firehouses and other public buildings. Miller wanted to invest in Columbus partially to attract good talent to the community; he believed there was more to life than trying to make a profit or seek a lower tax burden. A business could work for the betterment of society just as much as making money.

Milton Friedman didn’t agree.