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April 12, 2013

Lessons Learned from Ron Johnson’s Tenure at JCPenney

Posted in: PurpleCar Drive: All About Motivation,PurpleCar Park

blogtalkradio logoToday I was a guest on the featured BlogTalkRadio show “Views from The Top” hosted by Adrienne Graham (@talentdiva). The episode was entitled “Know Thy Customer”.

Ms. Graham and I gave a quick rundown of what seemed to happen with the short tenure of once-Apple employee Ron Johnson (the genius behind Apple Store’s Genius Bar). This Harvard Business Review article has a positive spin on what Mr. Johnson did right. Adrienne and I talked briefly (the show is 30 minutes) about the communication strategies that perhaps Mr. Johnson didn’t use.

My main point in the interview (which is made with the acknowledgment that we don’t fully understand all the details behind Mr. Johnson’s ousting) was that when a business must pivot to match a new economic situation, then the internal communication is as important if not more important than the external communication. Externally I felt Mr. Johnson did a great job. I saw innovative and daring ads, personal letters and valuable spending cash from him.

So why didn’t it work? Adrienne and I pondered if Mr. Johnson had considered the phenomenon of “loss aversion” within the staff and whether or not he dealt with it.

Loss aversion” is the rule, cited mostly in the study of Behavioral Economics, that people will stick to the status quo as long as possible. The loss of an established possession or process is 2 to 3 times more painful than the loss felt when not receiving a gain that was promised to you. In other words, losing 10 bucks from your pocket today feels way worse than not getting the 10 bucks your friend said was waiting for you at your desk.

JCPenney’s board seemed to want some major changes and innovation to turn the fate of the department store around. Ron Johnson seemed like the instigator extraordinaire for the job. If you have a half an hour, go take a listen to the conversation in iTunes.

 

I hope JCPenney survives the sad turn of events of this morning. If you’ve been following the story, let us know what you think. Do you think JCPenney gave Ron Johnson a chance?


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