Much has been written about the incredibly quick rise and fall of Ron Johnson as CEO of J.C. Penney. Central to his failure was his decision to forego testing his sweeping changes in merchandising and pricing / promotional strategy in a sub-set of Penney’s stores to gauge consumer reaction prior to rolling them out chain-wide.
Lesson #1: When you’re Apple, you are in the incredibly rare position of leading the market; meaning you have built so much equity with consumers that they will follow you wherever you take them. So, it’s less about appealing to the whims of customers and more about introducing experiences and products that they will likely accept and adopt based on their trust in the brand. And, if a brand like Apple does misstep, customers may be temporarily miffed; but they won’t stop buying.
J.C. Penney lives in the world of the 99% of brands who do not wield the power of an Apple. Consumers have many suitable alternatives and their relationship with the brand is based far more on price/value than emotional qualities. As such, as the company implemented change, consumers had no problem defecting with the result of 25% sales declines in the year in which the strategy was rolled out.
Which brings us to lesson #2: Brands must beware putting their futures in the hands of leaders who succeeded in completely anomalous situations. Granted, Ron Johnson contributed mightily to Apple’s retail success; but the cult of Apple was already a reality, giving Ron a brand foundation (not to mention unlimited access to capital) on top of which to build the most productive retail concept on the planet.
Ultimately, his success at Apple clouded his perception of how difficult it is to introduce change in the real world – how diligently a brand needs to understand customers and how delicately it needs to treat them in order to evolve towards a position of greater brand strength.