11 Ways Ron Johnson Presaged His Own Disaster At JCPenney (But Nobody Noticed)

Hopefully JCPenney is getting back on the fast track, although I can't resist the prescience of this Fast Company interview with Ron Johnson when he BECAME Penney's new CEO. Many wrote that they believed Ron Johnson failed ostensibly because: 1. Penneys wasn't Apple. 2. He misread what shoppers wanted. 3. He didn't test ideas In advance. 4. He alienated core customers. 5. He totally misread the JCPenney brand… 6. Messed up on competitive pricing strategy. This is all probably true, BUT, looking back on what Johnson said in that Fast Company interview, I wonder if any good HR expert or Board Member would have spotted the coming problems with hiring "dreamer" Ron Johnson to "remake" JCPenney's?

Fast Company wrote on April, 2013: "On Monday, after less than a year and a half on the job, a $4 billion revenue loss, a plummeting stock price, and a soap opera court case, Ron Johnson, the whiz behind Apple's $50 million-per-store retail business, was finally ousted by JCPenney.

 

Let's take a look at what we can learn from Fast Company's original interview with Johnson -- when he STARTED at JCPenney -- about what led him to make the move -- and what his plans were for turning around the atrophying department store.

1. Wanted more than a hobby...Apple retail was just too easy. "Johnson’s hunger to become a CEO came to a head in 2011, after 12 years at Apple and a global 300-plus store retail business that had become a well-oiled machine." In the interview, Johnson told Fast Company: "Leading the Apple retail stores had become a hobby. It was fun, but I felt like I wasn’t being stretched. Apple retail was just too easy."

2. Wanted the chance "to transform something." “I’ve always believed that the department store was the single biggest opportunity in retail," Johnson said... “So when I thought about what I could do I wanted to do something that had scale. I don’t just want to run a business, I want to do what I did at Apple -- I want the chance to transform something… I didn’t come here to improve Penneys, I’m here to transform Penneys.

3. Looked upon Penneys as an $18 billion startup. "We’re going to act like a startup in how we make decisions. “We can move as fast as we’re willing to and we’re going to win shop-by-shop, month-by-month. So every month there will be something new at Penney’s and there will be new shops coming in every month. And eventually we’ll have 100 shops and we’ll just keep moving.”

4. A lot of action went on in his own mind. “All my ideas just sort of come. I don’t know how to explain it. It’s all intuitive I think. [Fast Company asked Johnson: Did you spend time visiting all types of retailers?] No. I have been immersed in the retail industry for nearly 30 years, loving it, living it every day… It’s not like you go out and go study something and go…You just kind of have an instinct for this stuff…

5.  JCPenney isn't Apple. “Why am I here? It’s because I love the challenge of taking a great brand with a great opportunity and making it come alive. You look today and Apple's the store for everyone. So when I come to JCPenney it should be the same thing.

6.  Wanted JCPenney to become America's favorite store. “I thought Penney’s would be the best department store to go to: …it’s the best positioned because it’s got a heritage that’s grounded in what a department store needs, which is integrity… You want trust. Penneys was founded on the Golden Rule, which is treat people fair and square, treat people as you’d like to be treated yourself." And Be Everything To Everybody:

7. Felt his JCPenney leadership was "recreational". …I’ve been in retail for a long time. So this is sort of second nature... I love to do retail… A company needs a CEO, someone to talk to Wall Street and stuff like that…

8. Felt leadership was "situational thing". "…The other day I was thinking about what my role is.. I just believe everyone has skills and someone’s got to be the leader, but leadership… is a situational thing…

9. On first time as a CEO: "…I’ve always just kind of worked with people. I like hanging out with people and creating things.

10. Rome wasn't built in a day -- and behemoth businesses can't be reinvented overnight. “My intuition as a student of the industry was every time I’d walk into a [department] store I’d go, 'Why do they do this? Why do they lie to the customer about the regular price? Why do they make up a regular price to sell it on sale? I don’t understand being dishonest about pricing. Why are the fixtures the same that were used in 1985 when I folded my first pants at a Mervyns store and organized the racks? Why has nobody innovated presentation in 30 years? …Why do you have private labels that you think are really brands that customers see as clothing by the pound? I just don’t understand that. That made me think--that would be interesting to learn why it’s happened--but wow, if you could change that, that could be a pretty big deal.

11. On Competition. “The number one competitor is ourselves…The number two competitor is everyone else… the way you unlock potential is to unlock a new way to compete. And ideally in a way that’s never been done before, so it’s seen as new.”

Bottom Line For The Bottom Line: 

What do you think? Were the clues there from the beginning and no one saw them, least of all, most of the members of the board, or Ron Johnson himself, who seemingly came from an ideal world, but practically presaged his own demise with the competitive pricing strategy he advocated and everything else he stated before he started? And is pie-in-the-sky any way to run a business?  

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Gilon Miller, CMO

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Gilon is a seasoned marketing, sales and business development executive with over 15 years of experience in the software and Internet business. He is the Founder and CEO of GuruShots. Previously, Gilon was the CMO of Upstream Commerce, VP of Marketing at iMDsoft and Director of Global Marketing at SAP. He earned an MBA at the MIT Sloan School of Management and a BS in Electrical Engineering from Tufts University.
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