"That skepticism apparently ran so deep, that merely two months ago, when Target announced that longtime, widely admired CEO Brian Cornell would be retiring and that 20-year company veteran Michael Fiddelke would take the reins, the stock immediately plummeted 8%, with sellside Wall Street analysts commenting that "investors were hopeful for an external hire," and "this internal appointment does not remedy the problems of entrenched groupthink and inward-looking mindset." (Target stock is down by more than one-third year-to-date.)"
"The old proverb "new brooms sweep clean" is often misleadingly mentioned to suggest that new hires are more thorough. That drops the cautionary second part of the proverb that should not be ignored: "but an old broom knows the corners." The wisdom of the full saying rings especially true when considering how the nascent turnaround effort at iconic retail chain Target appears to be coming into focus, despite widespread initial skepticism."
"It's understandable that investors often have a knee-jerk preference for outsiders to parachute into companies in turbulent times. We acknowledge there is never any one-size-fits-all solution - there are always certain situations where an outsider may be genuinely necessary to shake things up and clear the deck. For example, Cornell himself came to Target from PepsiCo when Target was mired in crisis amidst a cost"
The full proverb contrasts the immediate impact of new leaders with the contextual wisdom of long-tenured insiders. Target appointed Michael Fiddelke, a 20-year company veteran, as CEO after Brian Cornell's retirement, prompting an immediate 8% stock decline and analyst criticism favoring an external hire. Fiddelke's resume includes roles across retail, merchandising, operations, finance, and supply chain and a start as an intern. Investor instincts often favor outsiders in turmoil, though certain crises warrant external change. Historical precedent shows external CEOs can be necessary in specific situations, while insiders may better navigate institutional corners during turnarounds.
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