Ron Johnson and the JCP Tragedy: It's All About the Board

I was out and about today, between meetings, when a friend and colleague - both of us great fans of Ron Johnson, the now former CEO of JC Penney - texted me "Ron is out."

I was sad but not surprised. It was looking like it would go this way for a while and I wondered whether the JCP Board would have the courage of its convictions.

After all, when they hired Mr. Johnson away from Apple, it wasn't like they didn't talk with him first. They had to have had an idea of what he might bring - in strategy, technology and customer orientation.

He had a track record - Target before Apple - so no surprises there, either.

So it's down to performance.

Were the numbers bad? Yes. Were they a surprise? No.

Because the strategy that Mr. Johnson laid out not long after taking over the position addressed the fact that the then current JCP customer base probably wouldn't be the base they'd have once all his changes were in place. The new base might be from the same socio-economic group - although even that had expanded parameters given Mr. Johnson's shop-within-a-shop boutique strategy - but it wouldn't be the same people.

Or probably not.

Which meant for any thinking being (which one always hopes resides in the Boardroom) that this was going to be a years-long transition. The changes to the stores could be made in the short term, as could be the introduction of new, more fashionable product lines.

But it would take bravery and commitment on the part of the Board to hold firm when the "always darkest before the dawn" part of the change was going on. Because that would be the real transition period. The time when the old guard customers who never wanted any changes anyway had left and the new base was finding its way in.

These guys didn't pull it off. They caved. And they blamed it on the shareholders.

That argument doesn't hold up anymore either - for which every Board can blame Jeff Bezos and his strategy at Amazon. Bezos cares, of course, about his stock's performance - but he cares a lot more about reinvesting every penny he can into building out the business and capturing even more customers in even more product lines - now b2b and b2c.

His Board doesn't cave. They trust him and they're willing to wait with him as he builds the value of Amazon more and more...and then more.

I honestly believe that Ron Johnson could have done the same thing for JCP had he had the support - and courage - from his Board that was required. He didn't.

Add to that the newbie CEO mistakes he made (e.g., too much too fast with too high expectations of the acceptance of change by the customers and staff, backpedaling on decisions before they had a chance to be integrated, etc.) and you've got dominos just waiting to fall.

And fall they did.

But that still doesn't excuse the Board. They knew who they were hiring and what they were getting. It was their job to support him in every way they could.

So now we'll see what JCP turns into. For my part, as I watched the changes take place, for the first time in years not only was I willing to buy there again but I was recommending it - for product and shopping experience - to my friends. And they liked it, too.

Now I'm not so sure. If it's going to be the same customers as before with the same product lines, you can count me out.

It's a sad day for business. Short-termism won - again - and that's the biggest loss of all.
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