Posted by Nobody said it was easy.
As the years wane on and you gather perspectives and insights from your business, your industry and your peers, what you quickly realize is this: nothing is easy… nothing is simple. Even quick scores (like Instagram grabbing close to one billion dollars from Facebook) was not a cake walk. All companies (and the people that work for them) understand the difficulty that is business. There is a small part of me that wishes we could simply close our eyes, click our heels three times fast and make a wish that business should be as much fun and as easy to do as taking the kids to the park… but alas, money complicates things.
Shedding skin.
The news of JC Penney dismissing their CEO, Ron Johnson, after just 17 months broke my heart in many different ways. Primarily, I’m a big fan of retail and an enthusiast of the industry. As digital as my existence may be, I’m a complete urbanist and revel at the opportunity to walk through a big shopping mall. I love the smell of commerce in the morning (to quote the movie, Mallrats). I am fascinated with the changing landscape of retail and even more enthralled with the place of shopping malls in our culture (more on that here: Do Shopping Centers Have A Future?). When Johnson (who was previously heading up the retail division of Apple and was responsible for some of Target‘s success prior to that) was picked to help reinvent the beleaguered department store chain, I held high hopes that his actions might reinvigorate the entire department store model.
This is where things get selfish.
On a selfish level, I spend a few paragraphs of energy talking about Ron Johnson and JC Penney in my upcoming business book, CTRL ALT Delete (out on May 21st). As soon as the news broke, I got an email from Joseph Jaffe asking me if there was time for me to edit, update or change the part of my book that speaks to Johnson’s work. My gut reaction was to call my literary agent and editor to seek their guidance. I reviewed that, specific, part of the book and it reminded me of something very important. The story that is being told isn’t really about JC Penney or Ron Johnson or how successful they could be. The true story was about that fact that Johnson was trying to bring a lot of simplicity to a business that had become increasingly complex, bloated and somewhat uninteresting to today’s shopper. The story of JC Penney is just as applicable today as it was when I first wrote about it. Maybe even moreso now that Johnson has been shown the door. Trying to untangle a business and make the offering as simple and delightful as possible is very, very hard work. It gets much harder as you get bigger, and it gets much harder the longer the company has been in business. We’ve all heard the Einstein line about simplicity being the ultimate in complexity, and the news of Johnson’s departure simply reinforces that.
How simple are things?
If you polled employees at Apple (and if they were willing to tell you the truth in candid fashion), you would probably uncover that Apple is not a simple company at all. That with all of the secrecy, layers and more, every individual is not working in an open and collaborative environment, but rather a complex place where pieces and bits are being mastered and optimized without a full understanding of how the pieces and components shore up to a bigger product or service. Often, the excuse given is that this decreases the likelihood of something being leaked, but if you peel the layers of that onion away, what you find – at the core – is a very complex model that results is products that are simple for people to use. Still, the business is not simple.
Business is not simple.
The over-simplification of business may be a misnomer. Ultimately, all of us (whether we’re B2C or B2B businesses) are trying to create products and services that are simple and intuitive to use. That journey is one that requires many complex things to happen. When the news broke of Johnson’s departure, something fascinating happened. According to article in Time, JC Penney Ousts CEO Ron Johnson, Ullman Returns: "Penney’s stock price Monday evening showed investors’ frustration with Johnson and it’s uncertainty about Penney’s future. When news began to leak after the market closed that Penney was ousting Johnson, the stock, which had closed at $15.87 in the regular session, climbed nearly 13 percent to $17.88 in after-hours trading. But as pleased as investors were about getting rid of Johnson, they didn’t appear impressed with his replacement. After Penney announced Ullman would take over, the stock reversed course falling as far as 11 percent from its regular closing price, to $14.10. That’s 21 percent from its after-hours high."
Here’s the other thing…
Perhaps Johnson wasn’t the right fit. Perhaps his strategy was met with friction from the existing customer base, maybe his marketing strategy was off, but here’s the thing: JC Penney was in need of Johnson (or, at least, a reinvention). Ditching him doesn’t change that. It merely reinforces it. Where this will ultimately net out is anyone’s guess, but rest assured that whomever takes the reigns at JC Penney will be focused on creating an in-store experience that is in-line with the consumer of today. And, rest assured, the consumers that become the heavy users and brand evangelists are the ones who are getting products and services that are brilliantly simple. No, I’m not going to go back and change the contents of CTRL ALT Delete. In fact, I think the story glorifies this moment of purgatory that business finds itself in (and that’s the core message of the book). Could you turn around an organization of that magnitude in 17 months or less? It’s not an easy task, and it’s the new reality of the speed and transitions that we see in business today. I start the book out by saying that people need to look to their left and then to their right at the people around them, because the odds are that one of you won’t be around in the same vocation in the next five years. Maybe the real editing of the book should be around the timeframe. I hope 17 months doesn’t become the norm.
JC Penney still needs a reboot. My guess is that there are parts of your business or your own career that need one too.
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Good post Mitch – it speaks to the larger question for all companies and people – can one thing (like Johnson) fix all things (JCP culture, mindset, audience, shareholder expectation, etc.). Too often people and companies look for the silver bullet.
Hi Mitch
As always great post what I like the most is that you saying that you are not going to change the content of the book.
Long time listener of SPOS and follower. Keep doing what you are doing. Love your show especially Joseph Jaffe 🙂 and Media Hacks podcasts
Interesting piece which brings to mind two key failings in the world of change at the retail level. 1) If the consumer doesn’t understand your strategy, it’s going to fail, despite the best intentions of the retailer. The J.C. Penney consumer needed to understand how all of this was going to translate into a) savings for them and b) a superior shopping experience and clearly that didn’t happen (losing the coupon without fully articulating the strategy to the consumer was a mistake) 2)it’s not change that frightens boards, investors and consumers it’s the pace of the change…too fast and no one understand what is going on and too slow and no one knows you’re changing. He tried to move an old ship too quickly and paid the price (even though i suspect thats why he was hired in the first place, sometimes you can’t win.
I think that the logic for the comparison for the retail success of Apple versus the turnaround for JC Penny’s is greatly flawed. Although the Apple retail strategy is different, extremely customer centric, and new to many computer retail alternatives – it is still selling some of the greatest products of it’s time. Any retailer that has Apple i-Pads and i-Phones is have great success with that product – not because they are great retailers but because they are selling great products. JC Penny’s is not a destination for great products, maybe not even average products. Additionally the concept of a retail department store is a failing concept, let alone an old and tired brand. No one is going to make JC Penny’s a successful department store, because younger consumers do not want to shop at department stores. In addition to an old customer base (in terms of age), the retail foot print is too big. Just like so many other brick and mortar stores, they built the store to reflect their former sales trends and now as sales shrink, their stores can not. Their $12B in sales is legacy and will continue to shrink as the age of their customers continue to increase.
In summary, Mr. Johnson was a very experienced and knowledgable retail store executive who had the good fortune and honor in working for one of the most successful brands of our current time in Apple. That does not mean that placed in totally different circumstances that he would be able to leverage the success of Apple at a far lesser and different business model brand of JC Penny.
Nice post, Mitch.
Although the move to oust Ron Johnson seems rash, the bigger question will be what Ullman does next. Will he drastically change what Johnson was doing, or will he just slow things down but continue moving in the same direction?