When Mr. Johnson was recruited from Apple, based on his seemingly amazing work creating their highly successful retail stores, to join Penney's, everyone's favorite source of beige and Mom Jeans, one of his first orders of business was to go after Martha to secure her and her products as the centerpiece for a revamped Home department. Her contract with Macy's? Pffft - no problem! After all he didn't read it and her lawyers felt that they could wiggle around its restrictions if she opened her own stores. The stores in this case would actually be INSIDE the JCPenney, but who worries about little details like that. Surely it would be its own shop, just like the Starbucks in Target is identical to any other Starbucks, even though you can't smell the coffee because of the overwhelming fumes of popcorn and hot dogs from the snack bar next door, nor enjoy the restful coffee house ambiance when the red-shirted managers are screaming for REGISTER BACKUP!! a few feet away.
Not surprisingly, Macy's was not impressed by this argument and used its deep pockets to call up an army of lawyers, whose first order of successful business was getting the judge to ban Penney's from putting in stores or online any of the warehouses full of Martha Stewart sage green items they had already ordered and produced.
What struck me in following all this, is that it seemed like a rather reckless path for this green (though not sage green) CEO to embark on. JCPenney was well-known to be a dowdy, frumpy, bland, plain, Ann Veal sort of an establishment, but it was also profitable. As it turns out, much to the chagrin of self-appointed tastemakers, there is a pretty huge market for bland. Large swaths of the country actually prefer it, so while not setting the balance sheets on fire, Penney's business was firmly in the black.
But Mr. Johnson came from Silicon Valley, where they don't listen to what you want, the tell you what you want and if you disagree, well that's just because you didn't KNOW you want it. Now that attitude can usually work pretty well in the tech industry as no, you probably didn't know you wanted an iPod because you couldn't have dreamed that something more portable than your Discman could possibly exist. But most of what Penney's sells does exist. Underwear exists. Blouses exist. Shoppers, especially women shoppers, may just have developed a preference for the style of bloomers they prefer, or the cut of cabana-wear blouse they find most flattering. If they have been shopping at JCPenney for a while, chances are the chain has kept them well-satisfied in both areas. No doubt some fresh air was needed to attract a supplemental new wave of shoppers, but the stores were already kept humming with loyalists.
It would seem a sensible path would be to enhance what you have while looking to broaden and expand styles, right? NO! said Ron Johnson. Everything was thrown out - the pricing structure, the coupon system, the frequent sales, and FOUR HUNDRED product lines that the stores had carried for years, if not decades. There was the recklessness again, joined by arrogance and a lot of talking, but with one big thing missing:
Listening
In various leadership roles I have had over the years, the thing I learned right away is what you say is not as important as what you hear. Your first order of business is to listen to your people. You can have all sorts of sweeping ideas and strategies in mind, but until you listen to what people say, you will have no clue of what they find important or insights which would give you the tools to bring them along with you on your vision quest. If you dictate or turn a deaf ear to their concerns, you're going to get nowhere fast. You're the boss, you ultimately have the final say, but if those in your charge feel their concerns are not your concerns, you will be fighting upstream against their dissension the entire time, seriously dampening your potential success.
By many accounts, Ron Johnson, in addition to continuing to live in California, rather than move his home to the Dallas-area base of Penney's, might as well have been in a soundproof booth. He went full-steam ahead in throwing out customer favorites and replacing them with hipper styles which were perhaps not too forgiving to the full figure silhouettes of the core shoppers. When people found the new, no-sales pricing to be confusing and felt they were not really getting the value that was advertised, he told them they just needed to learn the system. He said he was going to "retrain women how to shop."
This reminded me of an experience his former company had a while back when it stopped listening to its customers as well. Remember Apple Maps? "You don't need accuracy, Streetview and transit information because we're giving you flyover 3D cities that look totally cool!" Do you know anyone who didn't replace that app with the Google one the moment it came out? Apple is still reeling from it.
Oh boy.
Well, all this definitely did lead to some records being set. JCPenney, a 111-year old company, saw quarterly sales drop nearly 30%. That level of loss had never even been approached before, and is quite an achievement when you think of how difficult it is for an established organization of that size to pull something like that off in the matter of a few months. Funny what happens when you tell your most loyal supporters that they are too fat and too dumpy to shop there.
Why have I found this whole thing so interesting and maddening the past week? It wasn't just customers who were told they weren't wanted while one man selfishly used a historic company as his playpen. The drop in sales caused 20,000 employees to be laid off since he started on the job 17 months ago. TWENTY THOUSAND people shown the door and facing hardship during challenging economic times. No doubt a chunk of them were associates who would greet your question with a vacant stare, but surely many were good workers with years of service, many from smaller areas where they had longtime connections with customers. Customers who didn't show up anymore because of one guy's insistence on speaking instead of listening.
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