From the Baseline Scenario – “Maybe it was Apple”

by Gilbert Keith

"A little over a year ago, iconic but fading department store J.C. Penney hired Ron Johnson as CEO. Johnson was head of retail operations at Apple—which, in case you didn’t know it, is just about the most successful retailer in the world by a bevy of metrics.

It brings up a common feature of external CEO hires. Companies in a perceived crisis often look outside for a new leader, hoping for a superman (or -woman) who can singlehandedly turn around the organization. Not completely illogically, they tend to look for people at successful companies. “Make us more like X,” they pray. In Penney’s case, X = Apple.

There are two important questions they tend not to ask, however. First, was Apple successful because of Johnson, or was he just along for the ride? Yes, he was the main man behind the Apple Store (although, according to Walter Isaacson’s book, Steve Jobs was really the genius behind everything). But was the success of the Apple Store just a consequence of the success of the iPhone?

Second, even if Johnson was a major contributor to Apple’s success, how much of his abilities are transferable to and relevant to J.C. Penney? There’s a big difference between selling the most lusted-after products on the planet and selling commodities in second-rate malls. When someone has been successful in one context, how much information does that really give you about how he will perform in a new environment?"

It seemed like there was lots of optimism. It was also apparent early last year that a major revamping was under way. Stores were much cleaner, the amount of inventory was more manageable. I thought it made the stores easier to use, and would’ve been more willing to shop at JCP had I not decided at some point that buying more stuff was evil. I haven’t really bought many clothes and/or other items I’d buy at a department store.

Perhaps JCP would have done well had a large proportion of its shopping base been myself circa early 2012.

Gautam Kandlikar