It’s difficult to watch someone whose work you previously admired for revolutionizing both the technology and department store retail industries fail so dramatically.
Yet fail is what Ron Johnson did during his 17-month stint as CEO at JC Penney. A failure so epic that experts and critics now question whether the 111-year-old retail chain will survive at all.
Unlike what many experts are saying, I believe Johnson’s vision would have been successful if he had just avoided 5 critical but common branding mistakes. Sadly, he made brand culture mistakes he avoided earlier in his career at Apple and Target.
Upon leaving Apple to take the helm at Penney, Johnson attempted to rebuild the retailer’s brand by remaking everything from the pricing to the merchandise to the overall store layout and design. Johnson’s vision featured trendier brands and a more intimate boutique-like shopping experience to replace their standard rows of overcrowded clothing racks. Some of his innovations were radical, like ending discount sales in a department store known for its markdowns. Other changes were typical, like refreshing the company logo and advertising campaign.
Yet no matter how forward thinking Johnson’s changes were, they didn’t work because his approach to rebuilding a brand was backwards. To truly change an external brand, you must change the internal company culture that is so critical in delivering the brand experience. In other words, brand and culture go hand in hand.
1. Brand and culture go hand in hand – You must align employee culture with business strategy.
While I appreciate Johnson’s courage to innovate and take big risks, any visionary is only as successful as his ability to recruit believers and inspire them to follow his grand plan. Johnson tried to make a conservative JC Penney corporate culture jump too far, too fast without energizing employees at all levels to truly believe before taking such a tremendous leap of faith. The C-suite vision, store look, merchandizing mix, external advertising, internal promotions along with employee morale and training were never completely aligned to execute Johnson’s turn-around strategy. Unfortunately, he made this all too common mistake while failing to recognize it was key to his previous brand building success.
2. Customers crave a consistent brand experience – Think Geek Chic at Apple Store.
At Apple, Johnson and Steve Jobs started from scratch and created a unique brand culture for their store and a consumer experience that aligned perfectly with the promise of Apple products and the passion of dedicated employees. Much like the user-friendly and intuitive interface enjoyed on Apple devices, the clean Apple Store design makes the space easy for consumers to navigate and find what they need. From the employee enthusiasm that welcomes you into a store to innovations like geek chic gadgetry, the first of its kind Genius Bar for technical support, and even a cash register-less checkout—all of these factors work in unison to deliver an on-brand consumer experience.
Few outside of Apple believed that Johnson’s Apple Store strategy would make money, especially after Gateway stores had failed so dramatically. Yet under his leadership, Apple’s retail operations have become the most profitable in the consumer electronics industry.
3. Always build upon existing brand assets – Think Cheap Chic at Target.
Before joining Apple, Johnson worked at Target where culture and brand were already aligned. He played to the strengths of brand loyal consumers who intentionally mispronounced Target (Targét) to make the name sound more like an exclusive Parisian Boutique. Experts predicted Johnson would fail at selling high-end housewares and designer labeled goods at what was essentially a discount store, but shoppers still flock to the store for inexpensive, chic merchandise.
Johnson made good products from big names affordable for the masses. The difference? At Target, Johnson had an established culture, ready to embrace and willing to achieve his vision.
4. You can’t transform a company without changing the culture – The hope was chic but the talk was cheap at JCP.
Upon joining Penney, Johnson wanted to start yet another retail revolution. The problem is that he didn’t have an army of brand champions behind him. And, as a result, he fought a lonely battle.
Johnson set out to eliminate sales and lower prices 40% across the board and eradicate coupons from the store’s promotional strategy. He banished the words “sale” and “clearance” in Penney’s new “fair and square” advertising campaign. The ads were colorful, reminiscent of Target, with a touch of Apple whimsy. Recall the TV commercial with a dog jumping through a hula-hoop held up by a cute little girl? The message: “No more jumping through hoops. No coupon clipping. No door busting. Just great prices from the start.”
Interesting strategy backed by a cute, visually stunning TV ad. The agency hedged its bet using two old standbys in the ad, a kid and a dog, but it still failed because it was what Johnson wanted, not his customers. He admitted publicly that Penney didn’t have “several months to waste on testing” because the store needed quick results. Even if these were brand promises consumers wanted to hear, Johnson moved too fast to make them promises his employees could embrace and deliver.
5. To turn around a brand – Turn it inside out.
Johnson tried to spark a retail revolution without a battle ready army behind him. Like any army, his troops needed a cause to believe in, a code to follow, effective weapons and thorough training to have the best chance at victory. Johnson set out to win the war before his brand vision and army were battle tested.
Judging by the company’s prolonged poor performance, I don’t imagine Johnson wasted time or spent enormous resources on internal brand communication testing and training either (few CEOs do). Yet, without informing, inspiring, recruiting and retaining the right front-line employees to deliver an improved consumer experience first, a brand rebuilding will always fail no matter how hard sexy ad campaigns try to reposition it. Since the days of the actual “Mad Men,” corporate brand executives have bought into the mythology that brands are built externally. Frankly, that couldn’t be further from the truth.
History shares countless examples of empty brand promises to learn from. Think Ford back in the day. Was it true that “Quality is Job 1″ when their cars’ gas tanks exploded, brakes slipped and tires caused roll-overs? Ford’s leadership team spent too much time touting their new slogan instead of training and communicating the importance of its meaning to their employees.
While Wall Street may not value strong corporate culture building because it takes time and money, I contend that there is less shareholder value without it. It’s time for C-suites and marketing departments to pay closer attention and commit more resources to internal branding. Super Bowl ads and other splashy external tactics are great at extending brand awareness, but they do not build or rebuild great brands. Employees do.
The ultimate lesson: don’t make the epic mistake Johnson has made after decades of near flawless branding excellence. Never overlook or under value your organizational brand culture. Invest in quality internal communications and inspired brand training for your teams. Your employees are the advocates who keep the brand promises you make and deliver the consumer experience a brand needs to thrive. Take advantage of what your competition forgets. Repeat after me: “culture and brand go hand in hand.”
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