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Paul Denlinger, Independent Analyst
First of all, Ron Johnson did a great job at Apple as VP Retail. Perhaps unconsciously though, it gave rise to blind spots, which have hit him hard after he became JCPenney's CEO.
- At Apple, Ron Johnson could do whatever he liked, and he never had to worry about the share price. Basically, he had to convince one person that he was on the right track: Steve Jobs. This is not the case at JCPenney's; his critics are mainly Wall St. analysts and hedge fund managers. These are people who are not interested in operations and marketing; they just want the share price to hold. When it doesn't, they call for his head.
- Selling Apple products was easy compared to selling JCPenney's merchandise, which is not designed or made by JCPenney's. Apple is a vertically integrated company; JCPenney's is not.
Because of his long service at Apple, Ron may have overlooked these very basic differences and was overly optimistic about how fast he could turn things around. Before Apple, he was at Target, where he built up a good reputation in retail. It would serve him well to think about what he learned at Target, which is now considered a retail success.
Some of the things he can do:
- The first Apple store was built in a warehouse so that it could be tested in terms of display, people flow, etc. Apple employees were asked to provide input in a closed setting. The same should be done with JCPenney's. Test on a small scale, then roll out. When it works, then market locally, not nationally.
- For the CEO of a public company, Wall St. and the business media are a curse, but are also a necessary part of the equation in doing business in the US. Ron needs to go out there and explain what he is doing. He needs to 'fess up and say that he was over-optimistic about how soon he could turn the company around, but that he has a top team that is working on finding the right answers. In the meantime, panicking about share price will only erode the investors' own position.
- He needs to meet one on one with major shareholders to communicate the same message and ask for their support.
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