Ronald Johnson Gambled and Lost at JCP, but that Doesn't Mean He Made a Bad Bet

Categories: Schutze

SHZ_GetOffMyLawn_TitleImageV2.jpg
What to make of the big boot at JC Penney? CEO Ronald B. Johnson came tumbling out that door grabbing for his hat like a riverboat gambler evicted from First Baptist. Sometimes it's hard to look cool.

But what's the big picture in this picture? Is there ever a big picture in bedsheets and towels?

Johnson bet the farm on a quirky personal intuition that JC Penney customers were tired of being penny-pinchers and wanted to be cool instead. Now he's out the door. But is his demise an indictment of all intuition or just his?

See also:
Does Anyone Have a Notion of What JC Penney Even Is Now?

Penney really is a Dallas story. They thought their move in 1990 from New York to Plano would be a rejection of Big Apple edge and an embrace of ... something else. But by transplanting themselves to the North Texas suburban veldt, they landed in the vast post-geographic space station of people waiting to be told what to be.

For a long time Penney had no idea what to tell them. Then Johnson did. Be cool. Apparently the customers looked at that option, weighed it and said, "Nope." It happens. Give people a choice, they'll make a choice. Win some, lose some.

Ron_Johnson.jpg
Ronald Johnson
A story in The New York Times today and a piece in The Dallas Morning News by the shrewdly observant Mitchell Schnurman both suggest Johnson was pretty full of himself. Schnurman quotes Allen Questrom of Penney/Neiman/Barneys fame saying Johnson flew by the seat of his own tight pants too much and didn't test big ideas before turning them into big mistakes.

Yeah. I don't know. Questrom can say that, we can't. Newspaper people telling other industries what to do: kind of like nautical advice shouted from the kneeling decks of the Titanic.

Most of the daily newspaper people I ever worked for -- most of whom are now engaged in the industrial version of Kubler-Ross' five stages of grief -- spent their time and money studying themselves, looking at what they were already doing. Let's do a big study, for example, of putting more color sports art on Page One.

I worked for a paper once that turned around one time and did a huge study of readers, for a change. Not us. Them. The results were devastating. The data came back as one big shout: They thought the whole daily newspaper thing was boring, the A section, the local section, sports, business, the enchilada. Nobody knew what to do with that. What's our strategy now, shoot ourselves? As far as I could tell, that study was shelved and ignored.

During his tenure at Penney, Johnson said something that was important and valuable: Customers don't know what they want. They do know what they don't want. And they do want something. It's the job of Ali Hakim, the itinerant peddler in Oklahoma, to surprise and dazzle the yokels with wondrous items brought all the way from Kansas City, frilly notions the yokels never had dreamed of before seeing them on Ali Hakim's brightly painted wagon.

Isn't Johnson right? Endless data drilling can be the refuge of business bureaucrats studying themselves into the grave. Somewhere at the apex of the business rainbow, business is art, and art must be inspired.

Here's the thing. Even if the people living in the space station don't know what they want, they still want it. Everybody wants something. It's just that out there in the free-tumbling post-geographic void typified by North Texas, nobody knows exactly what. If you're Johnson and you guess wrong, you're out on your Italian-suited ass. But what if you're Johnson and you guess right?

Far down in The New York Times piece was this bit: "Ken Murphy, senior vice president at Standard Life Investments, said that 'many retailers, while openly cautious and dismissive of the JCP experiment, were actually nervously watching JCP's plans unfold with some concern that if their strategy worked, the industry would be required to adapt faster than expected to a new trend in retailing.'"

Yeah. There was always that chance, was there not? What was Steve Jobs' big business insight? It's not the chips and whistles inside the computer that make your sale but the box you put it in. Aren't all true strokes of genius sort of simple-minded? Isn't that why the people who pull them off are always such idiot savants? Couldn't Johnson just as easily have been that guy?

Data mining is so seductive now because it's so easy. A retailer should be able to find out the pant size of every single potential customer. But what if, instead of knowing their pant sizes ahead of time, you told people not to wear pants anymore? Maybe tomorrow the streets would be jammed with people in their underwear, and you would be a business genius. You think that's far-fetched? Been to the airport lately?

If you pulled old Mr. Penney out of the grave, revived him and put him on a bench at that airport, I bet he would die laughing. Nobody even 50 years ago could have predicted what people look like now, because the big changes are inspired and crazy instead of incremental and predictable. In that sense Johnson was right. He just happened to be wrong.


My Voice Nation Help
11 comments
mavdog
mavdog topcommenter

btw, Johnson walked away from a package of stock options at Apple that were worth approx. $102 Million. He resigned from JCP with no parachute, no serverance package, and JCP stock options that were worth 50% of their strike price.

so yes, Johnsom personally DID gamble, he personally lost a lot, and in hindsight it was a very, very bad bet.

PerryMoore
PerryMoore

It really isn't rocket science. The five-and-dimes died off years ago, and--oops!--now we have the dollar store phenomenon. Gradual, often painful re-invention. If you are younger than 50, you will easily live to see the re-invented JCP, but it probably won't be called JCP. Hell, newspapers died off, and here we sit, talking back to the smart ass journalist, just as if he were still (or ever) relevant.

mavdog
mavdog topcommenter

No Jim, Johnson wasn't attempting to convince the JCP customer that he could make them "cool", or to tell them what to wear or what to buy.

Johnson was attempting to reset the way the customer was deciding to spend their $.

Johnson wanted ELP, that's "Everyday Low Prices", and not the gimmicky coupons and planned promotions that the department stores, and majority of specialty stores, use to bring in the buyers.

But what he failed to understand is that these gimmicks have the consumer hooked, and the retailers are hooked, too. It's a drug. It is very, very difficult to get off of it. The consumer wants to believe they got the item at a good deal, only idiots pay full price!

Johnson put JCP, and the shopper who went into their stores, on cold turkey. It didn't work, the consumers couldn't stand it, and almost killed JCP.

TheCredibleHulk
TheCredibleHulk topcommenter

So sorry - Old Navy has already cornered the market on "Campy Cool". He's out because he doesn't have any original ideas, not because he's ahead of his time and the rest of us are behind the curve.

Daniel
Daniel

I'm still trying to figure out how a pants-seller (or clothier in general) would be a "business genius" for convincing the public not to wear pants. After that, no shirts. socks, underwear or garments of any kind, and presumably this business genius would be wealthier than God on high. It's the "how" part that eludes, tantalizes, an average man such as myself. I am meditating on the subject. I am probing its facets, even as I discover new ones. Jim, I am wearing no pants.

if6were9
if6were9

Everybody is waiting to be told "what is cool". I don't think it's only the "suburban veldt". Dallas ain't really that trendsetting, no matter, where one hangs their fedora at; heck, New Yorkers are also waiting for the "cool" what's next thing, to happen. JCP's demise came with offering the "cool" over the "on the budget this'll do" thingy, which you espoused on, but the marketplace is full, as is, and maybe it was just its time to fail. Sad, but maybe true. 

Daniel
Daniel

P.S. The airport? Why, Jim? Is this a clue?

anon
anon

@if6were9 And New York is waiting for Europe to tell them what's cool. As for JCP, they are simply not as well run as the competition. Kohls has done a great job partnering with well known designers and convincing its customers to pay a little more for something with some brand name cache. Wal Mart and Target both tried this as well. Wal Mart failed and went back to selling you crappy clothes at the absolute lowest price you can find. They figured out that they're good at one thing - squeezing suppliers to lower costs. Meanwhile Target succeeded. His idea wasn't anything groundbreaking.

JimSX
JimSX topcommenter

@Daniel 

People at the airport look to me like they're wearing pjs, spandex super hero costumes, spangled undies, bed sheets, burkas, and clown suits. Am I missing one?

Now Trending

Dallas Concert Tickets

From the Vault

 

Loading...