It seemed like a good idea at the time. When J. C. Penney hired former Apple retail chief Ron Johnson in late 2011, pretty much everyone agreed that things could only get better for the struggling department store chain. The man’s track record spoke for itself—he worked for Apple, for God’s sake! What could go wrong?
A lot. Just as Apple itself has endured some bruising in the past year, Mr. Johnson’s performance at JCP tastes less like Honeycrisp in October than rotting-on-the-ground crab apple surprise. He’d have been better off preserving his reputation and leaving the game on a high note. But the chance to show he was bigger than Apple was too alluring to pass up. One wonders if he wishes he could take it all back now.
There’s no debate about his most colossal misstep, which was eliminating Penney customers’ “cherished” discounts in favor of more transparent pricing. Penney’s sales are down 25 percent since Mr. Johnson’s arrival, in large part due to that move alone. Shares are down 50 percent over the same period, and this while the S&P 500 has risen more than 25 percent. In short, Mr. Johnson hasn’t yet managed to turn J. C. Penney into something other than what it is—another K-Mart—but we’ve definitely been paying a lot more attention to its accelerating decline. Of course, it’s only been one year. Even Apple took longer than that to make us want our iPhones more than we want real human connection. Turnarounds are hard enough to pull off without a deadline. Has our tendency toward short-termism finally gone too far? Why the rush to judgment?
There’s a common logic to the guilty verdicts: instead of doing what he should have, which was ask Penney customers what they wanted, his
Apple-borne arrogance made him think he could simply tell them what that was. And there’s been a kind of enhanced glee at the comedown as a result: even if he really thought he was doing customers a favor by putting an end to the annoying game of the ever-changing discount, it seems that the masochists who shop there actually enjoy that particular kind of pain. Nothing goes down easier than when the highfalutin are brought down by their misreading of the mob.
At this point, no rock of potential criticism is being left unturned. Bloomberg lambasted Mr. Johnson last week for letting key hires—many from Apple—live a plane ride away from the company’s Plano, Texas, headquarters, and quoted an executive recruiter named Howard Gross saying that doing so sent “a very, very bad message.” Ouch! The article also quoted unnamed Penney sources moping about the emergence of the acronym DOPE—which stands for “dumb old Penney employees”—as evidence that Mr. Johnson has insulted not only his customers but also his staff. (Those poor DOPEs certainly have it better than the 43,000 people he let go during the year, but we’re all the center of our own little universes, aren’t we? Just ask David Foster Wallace. Remember: this is water, people.)
James Surowiecki deconstructed Mr. Johnson’s precarious position on the financial page of The New Yorker last week. And whereas being the subject of a traditional profile in that august magazine invariably signals that you’ve achieved a singular sort of fame, finding yourself on that particular page is more a sign of its diametric opposite. One of the tricks Mr. Surowiecki uses to generate thoughtful business-related output every single week is to run the profile process backwards. He does tell your story, but with the primary aim of identifying what’s not unique about it—in other words, he generalizes you. Rammed through that filter, Mr. Johnson emerged as nothing but another in a long list of beneficiaries of “the fundamental attribution error”—we gave him too much credit for Apple’s retail success, and so his failure to turn Penney around really shouldn’t be that big of a surprise. It certainly hasn’t surprised former Penney CEO Allen Questrom, who has of late been telling anyone who will listen that Mr. Johnson’s a bust. It’s a clear violation of the you-had-your-turn-now-shut-the-fuck-up rule of leadership, but it’s hard to ignore the conclusion.
So let’s tally the votes: customers, employees, investors and the media all vote guilty of a failure to deliver. At this point, there’s no one left to write him off but the company’s board, and it’s under growing pressure to do so. If universal bearishness is usually a BUY signal in the stock market, it doesn’t quite work that way in the corner office. Mr. Johnson is a goner, and there’s nothing left to do but wait for the white smoke announcing his replacement.
But let’s do as Mr. Surowiecki does and look at things through a more general lens. Meaning: whose judgment day comes next?
If you’d asked me a year ago, I would have predicted that Hewlett-Packard’s Meg Whitman would go down before Mr. Johnson. She’s been airborne on a little of that fundamental attribution wind herself, having received more credit for eBay’s early success than she deserved. But you’ve got to hand it to the woman: she’s somehow convinced HP’s board that it would be irresponsible to grade her performance before giving her five years from her hiring in September 2011 to do her thing. Mr. Johnson may deserve more than a single year to fix a broken company, but five? Ms. Whitman will have siphoned $75 million in compensation out of the place before someone realizes it’s the same story as Penney dressed up in Silicon Valley clothes: HP is toast, no matter who’s in charge. Not surprisingly, investors have shown less patience than HP’s board and marked the stock down 39 percent in 2012.
Yahoo’s Marissa Mayer—who bolted from Google for the top job at Yahoo last July—can also count on a little more time before her own Google-related attribution guilt will be decreed. Those seeking a speedier rush to judgment have floated both last week’s universally derided $30 million acquisition of some British teenager’s “newsreading” app and her controversial decision to end the company’s policy allowing employees to work from home as early evidence of future failure, but that jury is not quite ready to vote. Mr. Surowiecki himself ran her through the working-from-remote generalizer the week before his Johnson column. When she actually is canned, the odds are that he’ll take a woman-in-the-
corner-office approach. (My own policy is never to touch that third rail. Generalizing about women has never ended well for me.)
BlackBerry, of course, is another “turnaround” that’s about ready to fail. The difference? That company’s board didn’t go the fundamental attribution route when selecting CEO Thorsten Heins to succeed company founders Jim Balsillie and Mike Lazaridis in January 2012. Mr. Heins was an inside man, having been with the company since 2007. He hasn’t entirely escaped Mr. Surowiecki’s gaze, but a February 2012 column on the decline of the formerly high-flying company did stop short of mentioning him by name. Which means Mr. Heins has probably got more time than either Ms. Whitman or Ms. Mayer. It’s hard to sell postcards of your hanging if nobody even knows who you are.
UPDATE: An earlier version of this story mischaracterized the circumstances under which RIM founders left the company. The Observer regrets the error.