I live in
Dallas. My personal case study for the
past two years has been Ron Johnson as the CEO of JC Penny. The business section of the local paper tells
me that my study is over. Johnson has
been fired. His style, innovations, and
vision of change managed to drive the stock from $35 to $15. Oooops!
Most people
know Ron Johnson as the genius behind the Apple Genius Bar. He’s the guy that changed the face of
retail. He gave us wide-open spaces, a
place for kids to play, and chest high tables to play with our tablets. I’ve been to his flagship stores in New York
City and London, not as a customer but as a tourist.
Ron Johnson
has gravitas. So when he took over JC
Penny in June 2011 I bought a front row seat.
I’m a change and innovation practitioner. I wanted to learn at the foot of the master. Closing out 2011 everything looked good. Johnson
announced:
- his vision to make JC Penny “America’s favorite store;”
- new people he wanted on the bus;
- “fair and square” pricing supported by a new logo dominated by a “square” – no more confusing coupons and complex pricing, just everyday low prices and value; and
- shift from a promotional department store to boutique stores within the store.
It didn't work. What was
left of JC Penny’s loyal customer base abandoned the store in droves.
I don’t
know Ron Johnson. I’m not his
apologist. But what did he do
wrong? Why did he fail? Didn’t Johnson do all the things that change
managers and innovators implore of their clients?
- Set a vision, commit to it, and get in front of it
- Change out the old executives with their defense of legacy
- Challenge orthodoxies like coupons, discount pricing, and spiff’s
- Know the unarticulated needs of customers – like Apple has done so well
All of this
advice resulted in failure, but I can only find two rationalizations for why it
didn’t work:
- Change is a journey – even in an exponentially changing world. The impatience of the Board for shareholder returns trumped this needed transformation
- Test and learn – the innovators mantra. Johnson seems to have pushed ahead with the arrogant leaders mantra of “got-a-hunch, bet-a-bunch”
But is this
the full explanation? Maybe there is a
part of the real world that says that organizations, like natural species, have
a shelf life. Maybe the world just moves
past the installed base of business.
Maybe death is natural, and should be accepted.
When we study
success we ascribe it to the actions we want to observe. When we study failure we do so to make the
point that the leader didn’t follow the certified game plan. That’s not the Ron Johnson case, from what I
understand.
Can we, as change
agents and innovators, learn from JC Penny, or are we afraid to?