At the start of 2013’s holiday shopping season, Target was hit with a major blow. The company sustained one of the largest data breaches in retail history as approximately 70 million customers had their payment information stolen. As a result, Target has suffered a significant loss of sales, customers, and the public’s trust. The question now is how – and if – Target will recover, and what all CFOs can learn from the ordeal.Target’s Transparency
Recently, Target CEO Gregg Steinhafel met with Monica Langley of The Wall Street Journal to conduct an interview about the company’s approach to recovery. Unlike other CEOs when faced with the tasks of disclosure and action, Steinhafel insists on being transparent. “Target won’t be defined by the breach, but how we handle the breach,” said Steinhafel, a statement that clearly portrays one of the CEO’s core values – honesty at any cost.
Lessons for CFOs
Target CFO John Mulligan was recently questioned by Congress about the company’s massive security breach. Based on Mulligan’s responses and the company’s ongoing recovery efforts, there are three important lessons to be learned.
- Customers First – Target is one of the few companies to be transparent about a breach of this size, which sends a clear message that the brand is doing everything possible to put customers first. This focus on customer relationships should play a role in the CFO decision-making process.
- Security – It was recently revealed that Target executives were given a warning about potential security issues, but did not take action. CFOs will need to closely partner with IT to ensure consistently tight security.
- Collaboration – A stronger sense of industry collaboration needs to be implemented to help identify security risks, as identified in the recent Congressional hearing. For CFOs, this means reaching out to other CFOs to increase communication and awareness of security risks.
Will Target Bounce Back?
Since its security was compromised by cybercriminals, Target’s stocks have dropped by nearly $10 a share, indicating an urgent need for effective recovery efforts. Most experts agree that Target has a shot at bouncing back. After all, Target isn’t the first to experience a breach of this magnitude. At 130 million accounts compromised, Heartland still reigns as having the largest data breach in the past decade.
Do you think Target’s recovery strategy will work?