Ron Johnson and the Fickle Gods of Innovation

Scott Lyon
Apr 10, 2013 · 3 min read

When the end came for Ron Johnson as CEO of JCPenney, the wrath and judgment of the Gods of Innovation seemed clear: Start-ups are one thing, but don’t you dare mess with a storied retailer in an established industry.

Although there was some noise in the data (Johnson’s plan could have worked IF given more time, or IF the implementation were better, or -- one of the more popular conspiracy theories -- IF he wasn’t such an asshole), it’s pretty clear that the Monday morning retro-consensus is that Johnson was doomed to fail for presuming that such a hidebound entity as a department store chain could be re-invented.

That is an understandable but misguided assumption, and one worth debunking because it reinforces the modern conceit that start-ups are paragons of innovation virtue that usually win, and “big companies” are, well, innovation ghettos that inevitably fail.

It is, of course, brutally hard for incumbent players such as a JCPenney to genuinely change, for all the reasons so well articulated by my former professor Clay Christensen. And yet, some do. IBM (and Apple, ironically Johnson’s former employer) had several near-death experiences and emerged triumphant in the high-tech space, as did Ford in the auto category, and 3M continues to find ways to generate a disproportionate share of their revenues from “new products.”

Moreover, we forget sometimes that there is an equivalent set of Darwinian laws that makes starts-up hard: According to a recent Mashable infographic 90% of tech start-ups fail, for example, not counting the zombie companies such as Zynga, which exist but have nowhere near their former status. And many represent new entrants to a category but not a new approach, e.g. one more dry cleaner or one more boutique ad agency.

This, then, is my ultimate concern, that in the gilded age of Instagram and Summly acqui-hires, we have simultaneously demonized big companies and glamorized start-ups to the point where the innovation challenges and opportunities in both environments are wildly mis-represented. Start-ups are indeed the lifeblood of our innovation economy, but we also need some of our best and brightest to take on the leadership challenge of innovation within larger companies.

Ron Johnson’s madman vision of a department store without coupons and circulars may not have been embraced by the current JCPenney customer demographic, but my hope is that his high-profile “failure” does not brand companies such as JCPenney as recruiting haunting grounds and deter imaginative and talented potential managers.

As usual, the stock market had the last laugh, and perhaps puts the judgment of the gods in better context. Although JCPenney stock rose significantly (+10%) upon the confirmation of Johnson’s ouster, the shares subsequently “imploded,” according to Business Insider, dropping some 20% in after-hours trading with the news that the previous CEO was returning to the top slot. I’d say that means the collective market wishes that the job opening for leader and innovator of the retailer was still open.

Ron Johnson update!

I. M. H. O.

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    Scott Lyon

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    New venture whisperer and brash contrarian | current project in stealth mode

    I. M. H. O.

    The Editorial Page

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