The Customers are Always Right

Learning about the fate of Ron Johnson, the ex-CEO at JC Penny had me thinking about Robert Moses and his efforts to create The Algebra Project. Moses details his effort to initiate the program in his book “Radical Equations.”

Most don’t believe that the men have much in common. Both, however,  are turnaround artists. Moses worked in the most isolated and dangerous places in MIssissippi to fight for voting rights for blacks in the 1960s. Twenty years later, Moses launched The Algebra Project to encourage educators, students and parents in minority and poor communities to embrace math literacy with the same fervor that people embraced reading literacy.

Johnson helped create the highly popular Apple Stores found in big city retail districts and malls such as University Park. JC Penny’s board noticed Johnson success and tapped him to become Penny’s CEO. Board members hoped that Johnson could improve the experience of shopping at the department store and increase customer traffic and sales.

Johnson remained on the job for 18 months before the board fired him after his initiatives caused a customer revolt. Why did Johnson fail? Analysts believe he made changes too quickly and too soon. The changes alienated many of Penny’s customers.

You might recall receiving those burgandy coupons offering five, 10 and 20 percent discounts on Penny products. Penny’s customers loved them. Johnson, trained at Apple not to offer discounts, did not. He ended the coupon program and promoted Penny as a store that offered low prices everyday.

Johnson had good reasons for stopping the coupons. As this Marketplace story explains, coupon recipients think they are getting a good deal. But that’s not the case. The store made a profit, and the customer still overpaid for the product.

Post-coupon prices might have been in line with Penny’s competitors. Penny trained customers to believe coupons signaled a sale. Now customers believed the store was ripping them off. They took their business to Kohl’s, Target, TJ Maxx or Amazon.com.

Johnson compounded the mistake by immediate chain-wide change. Retailers usually test major changes in a few stores.Customers stayed away in droves. Johnson got a golden parachute and the gate. Johnson made the twin mistakes of thinking his experience at Apple would apply at Penny and of not understanding or respecting his customer base.

Moses never forget the lessons he learned from Ella Baker while working to win voting rights for blacks in Mississippi – community involvement and buy-in is vital. So when veteran Mississippians such as Amzie Moore said winning it was crucial for black Mississippians to win the right to vote, Moses listen. Moses had these conversations in 1961 and 62 when headlines focused on sit-ins, freedom rides, and James Meredith’s push to integrate the University of Mississippi.

Moses and the other civil rights activists who worked on voting rights in the state faced harassment and violence. Some even lost their lives. However, 50 years later, Mississippi has more black elected officials than any state in the country.

As Moses wrote in “Radical Equations,” “the organizer becomes part of the community, learning from it, becoming aware of its strengths, resources, concerns and ways of doing business.” That is a lesson that Johnson’s successor at Penny (who is actually the company’s former CEO) will do well to take to heart

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