Penney Pinched

Apple produces miraculous stuff, but that doesn’t mean it produces miraculous executives.

After a mere 17 months at the helm of J.C. Penney, Ronald B. Johnson, who had helped build up Apple’s stores, got pushed out this week by the Penney’s board. “Mr. Johnson wanted to transform Penney into a shopping wonderland with designer boutiques and stable prices instead of coupons,” the New York Times reported. “But many of his ideas were not tested and soon backfired.”

From the start, Johnson was known for mocking Penney’s business practices, and when employees pushed back against his ideas, he tended to disregard them. When subordinates gave him an in-house study on customer preferences, he likewise ignored that. “Ron’s response at the time was, just like at Apple, customers don’t always know what they want,” a colleague told the Times. “We’re not going to test it—we’re going to roll it out.”

The final verdict by another former Penney’s executive:  “His hubris finally did him in.”

It was a sin that Peter Drucker knew well. “The most common cause of executive failure is inability or unwillingness to change with the demands of a new position,” Drucker wrote in The Effective Executive. “The executive who keeps on doing what he has done successfully before he moved is almost bound to fail.”

Not only did Johnson cling to a mindset taken from Apple, but he also relied excessively on his gut, even when the evidence went in another direction. As Drucker warned in Innovation and Entrepreneurship: “Intuition is not good enough; indeed, it is no good at all if by ‘intuition’ is meant ‘what I feel.’ For that usually is another way of saying ‘What I like it to be’ rather than ‘What I perceive it to be.’”

The Arrogance of Rehoboam by Hans Holbein
The Arrogance of Rehoboam by Hans Holbein

The vaccination against hubris was to be found in what Drucker called “feedback analysis”—a rigorous comparison of results against expectations. Among other things, Drucker said, this process helps identify “the areas where intellectual arrogance causes disabling ignorance.”

Clearly, it’s a tool that Johnson would have been wise to employ.

How much do you think hubris is to blame for Ronald Johnson’s downfall?