By now, the failed experiment of Ron Johnson as CEO of major retailer JC Penney has been well chronicled. Until the April 7 issue of Fortune magazine, however, much of the detail about what happened had not been made quite so public. What was revealed in the article, titled, “How to Fail in Business While Really, Really Trying,” was not simply corporate hubris or even CEO ego run amuck. Rather, it demonstrated quite simply how difficult business transformation can really be (even for really smart people).
So here we have Ron Johnson, former head of Apple’s retail division, widely hailed as a genius for making his vision for Apple retail stores a reality. If you have ever visited an Apple store (and you probably have), you know that they continue to be busy, buzzing, bustling (and very profitable) places. Innovative in design, layout, lighting, and staffing, there is nothing traditional, stodgy, or boring about an Apple retail store. The same could not be said for JC Penney. In fact, the big retailer had plateaued and was going nowhere fast. Who better to transform this traditional, boring, also-ran into a lively, exciting, youthful destination?
Clearly, Johnson had his own ideas and his own ways of doing things. And he did what many in his position do when beginning a new challenge: he surrounded himself with his own people. The holdover JC Penney team members were made to feel as though they were outsiders, especially when they challenged some of Johnson’s ideas. No more coupons or sales? JC Penney customers had come to rely on them and scheduled their visits to the store to align with the timing of these special offers. The offers stopped coming―and so did the customers.
There are certainly enough Penney holdovers who lamented the fact that rather than selling “cool technology to ‘20 somethings’,” Penney was selling “dresses and flannel sheets to women in their 50s!” Clearly the same retailing prowess that fueled Apple’s growth could not work at JC Penney. Looking back, that argument seems to make sense now. But here’s the insight.
The fact is that no one knows whether Ron Johnson had it right or not, and that is the real tragedy of the JC Penney story. What was clearly wrong was not the idea of radical transformation and change (Penney needed both), but the rate and pace of that change. That’s what makes transformation so challenging and so daunting. We need to hold on to what we have now, while simultaneously creating something new and better.
For executives and owners in the printing, mailing, graphic communications business who themselves are seeking to transform their businesses, the JC Penney story (as far away as that seems from our industry) can and should provide a stark and valuable lesson. Business transformation requires parallel paths; keeping what (and who) we have in the near term while creating something new and different for the long term. It isn’t that we are wrong to transform and change our business; it is the rate and pace of that change that will go a long way in determining our success.