Ron Johnson's 17-month tenure as J.C. Penney's CEO was a catastrophe — an assessment captured in the coverage of his ouster this week: "Former Apple Retail Guru Dumped;" "How Ron Johnson Made JCPenney Even Worse;" and my favorite: "I Am Become Ron Johnson, Destroyer of Worlds." It's true. Under Johnson's leadership, Penney's share price plunged by half and the company lost $4 billion in sales.
Pundits have ascribed Johnson's debacle to hubris, incoherent pricing, drive-by leadership, overpromising, reckless haste, inept deal-making (ask Terry Lundgren), and failing to listen to customers. Surely all of those factors, and many others, fueled the inferno. But let's zoom in on the last one: listening. It's come up again and again in the coverage. Johnson didn't seem to care about what customers thought they wanted, and he didn't ask them. Johnson reportedly rejected the idea of testing his calamitous pricing strategy before an all-store rollout, telling a colleague, "We didn't test at Apple."
Hubris, right? At a time when marketers are ravenous for customer intelligence, Johnson seemed to be indifferent. That's just negligent. Or is it?
Harry Gordon Selfridge, who founded the eponymous London-based retailer, did the unthinkable when he opened his first store in 1909, taking merchandise out from behind the counters so that customers could actually touch it. His character, played by Jeremy Piven in the Masterpiece miniseries, instructs his newly hired managers to scour the earth for irresistible stuff. "I want merchandise that people will desire. I want merchandise that people won't even know they will desire until they see it right in front of their eyes! We are going to dazzle the world!" The quote is invented, but the sentiment isn't; Selfridge famously introduced London shoppers to the idea that shopping could be sensual and fun. To that end, as chronicled in Lindy Woodhead's "Shopping, Seduction, and Mr. Selfridge" he plied customers with "thrilling new luxuries" from signature perfumes to a restaurant with an orchestra.
Fast forward 90 years and we find Steve Jobs, Johnson's former boss, doing the same thing, brazenly — many said recklessly — trusting his gut about what people wanted, but didn't know they wanted. In his best-selling biography of Jobs, Walter Isaacson describes how Jobs green-lit the first iMac's bondi blue case on an impulse — a radical and risky design choice that would define the iconic product line and inspire consumer product design for a decade. "The cost of each case," Isaacson wrote, "was more than $60 per unit, three times that of a regular computer case. Other companies would probably have demanded presentations and studies to show whether the translucent case would increase sales enough to justify the extra cost. Jobs asked for no such analysis." When Apple's head designer Jonathan Ive soon came up with "four new juicy-looking colors," Jobs excitedly summoned other executives to the design studio and announced "We're going to do all sorts of colors!" Recalled Ive, "In most places, that decision would have taken months. Steve did it in a half hour."
Ron Johnson chose the wrong store — regarded by some as a retail backwater frequented by coupon clippers — to roll out his brazen strategy, and his execution was a disaster. But his concept was exactly right. Bricks-and-mortar retail was (and is) in a period of anxious soul-searching, and Penney itself was in deep trouble. The patient needed radical surgery. Johnson didn't have the time or temperament to dicker. When I interviewed him in 2011, just after he'd taken the reins at Penney, I asked whether it wasn't a risky proposition to completely reinvent the department store. "The opposite is what's risky," he told me. "Over the past 30 years, the department store has become less relevant... largely because of decisions the stores have made... They didn't think about the future so much as try to protect the past." The problem, he explained, wasn't the stores' size or location or marketing power or physical capabilities, "It's their lack of imagination — about the products they carry, their store environments, the way they engage customers, how they embrace the digital future."
That's not crazy talk. Johnson saw the problem clearly, he had an appropriate sense of urgency, he had a gut sense about how to get Penney out of its bind — and a belief, like Selfridge and Jobs, that customers needed to be led into the light. Johnson's instinct — some would call it arrogance — had served him well in the past. It's easy to forget that Apple's now-overrun Genius Bars, which Johnson created, were a failure at first. As he told me, "Nobody came into the Genius Bars during those first years." They even stocked Evian in refrigerators to try to attract customers. "But despite that," Johnson said, "I had a belief — a conviction" that the Bars were the right idea.
Must every business decision be backed by big-data and predictive analytics and a slavish deference to the voice of the customer? Is there no place for instinct in strategy anymore? Johnson's debacle will go down as one of business history's epic fails. But I think he was right about one thing: "To do things that haven't been done before," he says, "you need to trust your intuition."