Tuesday, April 9, 2013

Ron Johnson – Questions about Innovation & Change

Did the Apple fall too far from the tree?

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: 

  1. Change is a journey – even in an exponentially changing world.  The impatience of the Board for shareholder returns trumped this needed transformation
  2. 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?

Monday, April 8, 2013

Change Management: Does Compromise = Failure?

Compromising Dreams
I hate it when I hear people say that 70% of change efforts fail.  First I think the number is urban legend espoused by people who don’t realize the damage this statement does to our profession.  How many financial advisors would you hire with a 70% failure rate.

Sure, I understand the marketing gravitas.  We’re trying to create pain within potential clients.  We’re trying to say: “you're entering dangerous seas.  Most change efforts fail so you need an experienced guide – like me.”  Well, since we’ve been saying this for about 20 years don’t you think clients will inevitably conclude that our “profession” is really a shell game?

Do we really fail 70% of the time?  I know that I’ve worked on dozens of change initiatives and I would say my success rate is close to 100%.  Similarly I have polled many consultants & corporate change practitioners about how often they fail – their experience is close to mine.

So what’s going on here?  Do I only have access to successful change agents?  I think not.  In fact, I have access to experienced practitioners who claim that: “given the circumstances we were as successful as we could be.”  Is this a rationalization or a confession?

Fundamentally I think that practitioners are saying: “… we advise our clients on what to do; then we compromise within their real world realities.”  Is it compromise that is causing failure that we choose not to see?  I think so and here are three common compromises.

Often the change aspiration is inspiring but when it’s broken down into near term tasks we’re asked not to disturb sacred organizational silos or protected customer classes – the very hot spots where the change should have the biggest impact.

Everyone knows that change is a journey within an exponentially changing world.  We want near term results, quick wins.  When the low hanging fruit is harvested the exasperated sigh is: “is that all there is?  We knew that!”

How often does the organization devote the best and brightest to the change effort?  Rarely; these people are needed in the business to get real results.  Similarly, how often does change get it’s own, needed funding?  Again, rarely; usually change is expected to be self-funding through re-purposing of resources.

I believe that every time we make a small compromise decision we foreshadow our failure.  Each of these decisions makes us less accountable for the result.  In the end we can claim that we colored within the lines.  That seems to be our definition of success.