Fortune has dissected just how bad things were during CEO Ron Johnson‘s brief and stormy tenure at the head of J.C. Penney.
You may know that J.C. Penney (or “JCP” as the newcomers tried to re-brand it) is a department store chain in deep trouble. What you might not know, however, is just how many colossal business blunders JCP’s leadership team made in their failed attempt to change the company’s fortunes. Writer Jennifer Reingold calls it a tale of “big dreams, arrogance, infighting, and delusion.”
Here are five colossal business blunders no company can afford to make:
1. Ignoring Your Customers. In their quest to remake the company, Johnson and his new team tried to go upscale while ignoring their existing customer base (not to mention all-important demographics and price points). Actually, they drove them away by doing away with popular clothing lines (you know, the clothes their loyal shoppers liked).
2. Ignoring Your Employees. Not only did Johnson and his colleagues shun advice from the “old” management team, but they also had contempt for them. One newbie reportedly referred to the holdovers as DOPES (dumb, old Penney’s employees). And when Johnson talked about the “6 P’s” of his plan during JCP’s lavish relaunch party? “People” wasn’t one of them.
3. Separating Digital from Bricks & Mortar. This one really had me scratching my head:
“Oddly for a former executive of a tech company, Johnson decided to separate JCP.com’s buying groups from the store buying groups–the way Apple did–severing coordination between what was stocked for the website and what was available for stores… As a result, a customer could no longer find, say, four colors of underpants in the women’s department and be confident that the four colors would also be available online.”
Digital ubiquity and seamless integration between online and bricks & mortar are critical.
4. Nixing Market Research. Johnson eschewed focus groups, testing strategies, and other methods of determining what customers might and might not like. (And people who suggested market research were axed in favor of those who kept quiet or drank the Kool-Aid. ) Need I say more?
5. Ignoring Corporate Culture. Like it or hate it, J.C. Penney had a corporate culture. Johnson and his team thought they could just throw out the trappings of the old (they literally had employees throw away everything with an old J.C. Penney logo on it) and everything would magically be different. When that didn’t happen, they just got rid of everyone, removing critical institutional history and the people who actually had a pulse on the company’s business model and customer base.
The article, How to Fail in Business While Really, Really Trying, is pretty long. It’s also behind a pay wall. But it’s worth it if you are looking for lessons learned or want to read about board members that were more concerned about what they were being fed than whether they were good stewards of the business.
What colossal business blunders have you seen?
Photo by Jeepers Media (Flickr).