A 19% decline in same store sales took place in the first quarter of 2012 for J. C. Penny; followed by 350 employee layoffs and the departure of President Michael Francis (Turner, 2012).
This led to a prototype of their new store concept in order to save the company. CEO Ron Johnson, responsible for the redesign of Apple stores, was bought on as part of the team to make this turnaround successful. Unfortunately, Johnson struggled to implement his new company vision to make this transformation which was originally dependent on discounts and coupons to drive sales.
Johnson launched a three-tiered pricing scheme meant to make the shopping experience simpler and attract more customers. Advertising and direct mall received new eye catching attention. Also the company changed the concept of constantly have sales to consistently having lower prices. Incomplete execution of the change is why the intended results failed to produce (Basin,2013). A complete transformation was attempted by J. C. Penny, but failed to instill every customer touch-point. Merchandising, Marketing, Customer Service, Store Environment, and its new character were the areas that needed 100% focus and planning.
The most important agents of change, the employees, had not been completely brought on board. This being the case, the strategy failed to generate the urgency and excitement required to make the change successful with employees and customers. “One of the big mistakes was perhaps too much change too quickly without adequate testing on what the Impact would be,” said Bill Cancan, the principal shareholder of J. C. Penny(Edwards, 2013). As good as Johnny’s Intentions really were, he was not experienced with bringing a retail store above ground.
The director image is the image that best suits this organizational situation of changing how J. C. Operates on a day-to-day basis. This image is based on an image of management as control and of outcomes being achievable (Palmer, 2009). It is up to the change manager Monsoons) to direct the organization (J. C. Penny) in specific ways to reach the desired outcome. It is assumed that the change is a well-planned choice that managers make and the well-being and survival of J. C. Penny depends on them. The objective is to be a better-performing, better-aligning organization.
You cannot change the organizational culture without knowing where your organization wants to be or what elements of the current organizational culture need to change. When an organizational culture Is already established, people must unlearn the old values, assumptions, and behaviors before they can learn the new ones. Executives must lead the change by changing their own behaviors. It is extremely important for change. Members of the organization must clearly understand what is expected of them, and must know how to actually do the new behaviors, once they have been defined.
The culture of the change is that the sales have plummeted significantly, employee layoffs, and the departure of the president (Townsend, 2013). The role culture played in the change is that the economy changes and so do people and what hey desire. What might have worked in the retail business one year might not work the next. The changes that took place in the J. C. Penny Company were most definitely Second order, discontinuous change. This change “is transformational, radical, and fundamentally alters the organization at its core” (Palmer, 2009).
What Johnson is trying to do is seen as large-scale and disruptive, and so is second-order change. J. C. Penny is transforming the nature of their organization, not developing. This is already an established and well known company; it Just needs to turn itself around to be saved. For example, if we were to go skydiving it wouldn’t be successful to Jump out while we were not flying. Therefore in order to arrive at a successful place to make the Jump, we have to stay in the same plane and fly around to move to the right spot. Johnson is a new face to the company and customers and should not come in and totally throw out all things “old”.
Instead of this drastic change to wipe out all that is old, the old and new should be integrated. Not everything that is old is broken and it once worked perfectly fine. However since the beginning of the business opening there have been changes, and now they Just aren’t working. Empowerment and teamwork should be seen as assisting in the development of functional and divisional structures rather than replacing them” (Palmer, 2009). Since this major change is restructuring and reengineering, this is altering the basic functioning of the company and therefore is transformational.
In order to deal with highly competitive changes in the business environment, producing a fundamental reorientation of J. C. Penny is needed. Some of the key challenges with J. C. Penny are increasing quality and customer value, enhancing innovation, motivating staff, and enhancing competitive advantage. These challenges can easily be met if the right rationales are put in place. To increase quality and customer value Johnson needs to increase customers’ expectations (Palmer, 2009). Without customers, retail store would be non-existent. Enhancing innovation needs to meet customers’ expectations.
Customers’ Expectations are hard to only assume without doing proper planning. Motivating staff needs to gain effective contributions. This is one of J. C. Penny’s horrible faults. The employees were not properly trained and knowledgeable about the new changes. Being excited about the opportunities of a many and being able to convey that message to current and future customers is everything when a new system is rolled out. The method for implementing the change was simple, or so Johnson thought. Johnson thought it made sense to cut to the chase by listing realistic prices from the get-go and foregoing nonstop sales.
It does make logical sense. However, customers are often drawn to stores not by the promise of fair pricing, but by the lure of hunting for deals using coupons and price markdowns. The “How Much You Saved” line at the bottom of the receipt serving as a score is nice to look at until one day it disappears. Even Johnson acknowledged the mistake the stores had made when sales started falling even more in summer 2012 be known as having consistently low prices. The vision of the company is the most important thing to know so you know where to start with plans, objectives, and budgets (Palmer, 2009).
Vision usually paints a picture of the future and is inspirational. If J. C. Penny had a well-specified market vision, this would have helped to identify how the company would have grown and competed. Meaning is created throughout the organization about what it is the organization does when the vision is aligned with the internal dimension of organizational beliefs and values (Palmer, 2009). The change that J. C. Penny went through was communicated poorly. J. C. Penny failed to insure every customer touch-point. Customer service, Marketing, Merchandising, store environment, and employees were not fully developed (Edwards ,2013).
The biggest downfall was the employees not being fully onboard. If employees are confused or unsure about a new change than it would be impossible to share this with someone else. This caused a lack of urgency and excitement that the company needed to make the change successful. On a scale of 1-10 of the change agent’s work in the execution of the new vision for J. C. Penny, I would give him a 2. While his intentions were good and he thought he had the experience needed, he failed to research what customers really wanted. He guessed.
He assumed he knew exactly what had to be done based on how he feels as a customer, but everyone is different and likes different things. Nut and Babcock identified three different approaches for crafting a vision and the leader-dominated approach fits the description of the J. C. Penny situation (Palmer ,2009). In this approach the CEO revived the strategic vision for the organization. This is similar to the “telling” and “selling” strategies. Telling is when the CEO creates the vision and gives it to staff. It is used when involvement is not seen as important. This is where Johnson went wrong.
He took on all of this by himself and didn’t want involvement from the rest of the company so much that the employees themselves were confused about the new vision and what to do with it. “Selling” on the other hand is when the CEO has a vision that he or she wishes to sell to staff (Palmer, 2009). He didn’t include the staff and that was a major problem. This is used when the CEO is attracted to the vision and wants others in the organization to adopt it. If Johnson would’ve done both the “telling” and the “selling,” then maybe this would have had a different outcome.
Making J. C. Penny a leader in style with good products and honest business practices would’ve helped increase success of the project. Leaders must make sure that the entire organization understands the business case for change. Everyone must understand why the change needs to be made. Johnson should over- communicate the business case for the change so that people will believe that it’s OTOH real and urgent. Also J. C. Penny must be certain that all levels of leadership are on board with the change and are communicating the same message.
Deadlines will probably be missed and excuses will be made for not implementing the new changes if employees do not feel confident in what they are supposed to be supporting. Have we sufficiently rallied the troops? Do they all clearly understand the opportunity ahead? Are they excited by the opportunity and know how they can help the company succeed? These are some good questions that need to be addressed when taking steps to increase the success of the project. Coping with hyperactive business internal and external strategic collaboration is a way to be able to plan everything out thoroughly (Palmer ,2009).
Outsourcing of activities in which the organization has no distinctive competence is very important to get rid of things that are not needed in the J. C. Penny vision. Empowerment is the introductions of mechanisms to provide employees with the authority, resources, and encouragement to take action. This recommendation keeps popping up but it is the most important thing with following through with a big change. Another recommendation is to reduce internal and external boundaries. This reduction helps to encourage communication and resource sharing (Palmer, 2009) as there wasn’t much communication going on at all.
Use techniques to focus people’s attention on the importance of change to meet the challenges of J. C. Penny. Also Johnson could use multiple channels to constantly communicate the vision that Johnson created for the big system change (Moratoriums, 2013). Becoming informed and helping the CEO and leadership team to articulate personal vision for the future of the organization by examining external impacts, trends, and core beliefs. Also visit the future and think ahead five years about the reputation, what competitors and customers think of you, contribution to the community, and what people will say about your company (Palmer, 2009).
To ensure the success of any company, the proper steps need to be followed even if it takes longer than you originally planned. Skipping steps might get you there faster but it will hurt your business in the long run. J. C. Penny is still currently trying to get back on track. J. C. Penny’s largest challenge going forward is whether it can capture market share from Macy’s and other mid-tier retailers and eve from losses to profitability.