Addendum – August 1, 2012: The original post was written in October, 2011, and given the passage of time and JCP’s financial performance since then, it is clearly dated. I still think the Johnson/Francis team could have done great things – problem is they rolled out the re-branding in a big, splashy way before they could bring the product and stores up to the standards of the so-called new and improved JCP experience. So yes, I have a bit of egg on my face. But it just goes to show you – the best plans in the world ain’t worth the paper they’re written on if you don’t execute.
Original Post: If you follow such things, no doubt you’ve heard that Ron Johnson of Apple Retail Stores and Genius Bar fame and, IMO, one of the few true merchants out there (as I’ve discussed before, Mickey Drexler of JCrew is pretty much the only other one) is set to become the new CEO of JC Penney come November 1st. What you may not know is that Johnson spent his formative merchant years at Target – 15 years, to be exact, before the 11 he spent at Apple. Word is that he was a bit of a maverick at Target, which is not really in keeping with their corporate culture but probably served him well at Apple. Today, Target announced that its CMO, Michael Francis, is leaving the company after a decade to join…(wait for it)…JC Penney as its new president. Francis is the creative brains behind Target’s brand positioning and its best known ad campaigns, including the recent Missoni launch. Interestingly, high profile design deals like Missoni, as well as Liberty of London, Michael Graves and others (full disclosure: I was CEO of Swell, one of Target’s “design partners”) don’t live on the merchant side of Target’s business; rather, they reside within marketing, which was in Francis’ purview.
Have you ever been to a JC Penney? I have – once. It was for research. I very nearly died of boredom. Can you recall a single JC Penney ad or product deal or anything interesting they have ever done? Anything they do particularly well? Anything that distinguishes them from any other retail chain? Me neither. I think that’s about to change.
Let’s take a quick stock of the wackiness that has been swirling around the last few weeks. In no particular order:
- Netflix bums everyone out by raising their prices in July, and then pisses everyone off in September by making one, easy to use service two, far less convenient offerings, one of which has a really dippy name. (You can read my post about this here.)
- AOL makes a not-particularly-well-thought-out investment move involving the head of an acquired company who was promised autonomy, only to have it blown up in its face by the head of another acquired company.
- HP bets its future on a new tablet and OS, decides it was only kidding and scraps the whole thing, including its CEO, only to hire a new, “name brand” CEO that knows nothing about any of its businesses.
- In a similar vein, Yahoo!, which is running neck and neck with HP for the dubious honor of having the most incompetent board of any public company, cans its CEO without any succession plan. In an effort to keep their employees from racing to the door, the board sends a rambling, semi-coherent email letting everyone know that all options are being explored, which may or may not include a sale or hiring a new CEO depending upon which way the wind is blowing, only to be followed by a more direct and pointed email from the acting CEO telling employees it’s business as usual for now and have a nice weekend.
- For those of you who still haven’t become fully used to Facebook’s last round of changes, a whole new round has been introduced (with even more coming next month) because fb decided they know better than we do whether, how much, and what we want to share with one another. Massive amounts of bitching ensues.
- RIM reaches a point where they should just gather up their toys and go home.
All of this begs enormous numbers of questions and observations. There is, however, one commonality, which also happens to be the only factor of real consequence. Every one of these companies has taken its eye off the customer. They are all (rightfully) obsessed with iteration, innovation, fear of obsolescence, and the need to stay ahead of the competition – these are critical drivers of every tech company. But when everyone inside a company is breathing the same air (drinking the Kool-Aid, buying the same bullshit – insert your own metaphor here) things start to get really funky. Do you think fb did a lot of research before coming up with Timelines? It represents a fundamental change to what constitutes a fb profile – it’s no longer a snapshot, but rather a mini-biography, some chapters, I’m sure, many people would prefer to forget or at least right the wrongs of the past and not share again. RIM clearly thought email was enough. It’s not like that stopped being true yesterday. The list goes on.
The lesson here, boys and girls, is really simple. Never take your eye off your customer, whether she is internal to your organization, a consumer, or a business client. She’s the ONLY thing that matters.
One day the story of Netflix and the summer of 2011 will be told in an HBS case study, and the students who are required to study it will respond with a resounding and collective…wtf?
Here’s the very condensed version of how that case study will read:
In July, Netflix announces they are scrapping their “unlimited streaming plus one DVD at a time plan” and instead separating their streaming and DVD plans into two different offerings, thereby increasing by at least 60% the monthly cost for those who want a blended package. Turns out Netflix didn’t anticipate that much as they wanted to exit the DVD business, an awful lot of people still want DVDs – if they’re anything like my parents, the word streaming sounds complicated and scary, and if they’re anything like me, they love the immediacy of streaming but also desire access to the vastly deeper catalog DVDs offer – and the economics of their business were no longer working. (Seems they could have avoided that little bit of unpleasantness with some research, but since HBS case studies don’t editorialize – that’s the student’s job – I digress.) Not surprisingly, the announcement was followed by a very loud customer response, and they were PISSED.
Fast forward to September. The company announces its US subscriber figures, which had grown from 6 million in 2007 (when they introduced streaming) to 24.6 million as of June 30, were going to drop by 600,000 over the 3rd quarter ended September 30 rather than increase by 1 million. Ouch.
Netflix’s stock gets hammered (actually, it has been since the original announcement in July). Then comes the long overdue mea culpa of sorts. Reed Hastings, the company’s CEO, explains on the company’s blog why they did what they did and apologizes for the way it was handled. He also announces that they are going to organize their two separate product offerings into two separate businesses – Qwikster for DVDs by mail, and Netflix for streaming – with separate websites, separate credit card info, separate cataloging of your likes/dislikes and recommendations, etc.
Now for my take. His explanation makes good sense, and I applaud him for taking the step, even if it is two months late. You don’t have to look far – AOL, Yahoo!, MySpace – to see how quickly a once high flier can become irrelevant. But if you’re going to apologize, apologize. That half-assed, “I’m-sorry-if-what-I-did-hurt-you” bullshit is no apology at all. And two separate companies with two separate ways for customers to engage? You just pissed off your subscribers and tried to make nice – now you’re going to make it harder for them do business with you? As for the name – Qwikster – it sounds an awful lot like Quixstar, which is the name Amway used for a short time before they recently went back to using Amway (full disclosure: Quixstar/Amway is a former client of mine). Any idea how many millions of customers and employees Quixstar/Amway have? And finally, to add insult to injury, nobody, it seems, bothered to check as to whether the Twitter handle @Qwikster was available before making today’s announcement. Turns out (a) it is already in use by someone whose tweets make liberal use of very colorful language, and (b) misspelled versions, like @quixster, were available, but once the announcement was made, people jumped on ’em.
For a company that has done so many things so right for so long, they were bound to make a misstep – everyone does at some point. But this was botched in a big way. People don’t like their cherished brands that they have loyally supported to turn on them, and that’s what this price increase/two separate offerings has felt like from the beginning. And with Wal-Mart-backed Vudu gaining steam (and having a much better streaming library IMO), there is a strong competitor in the wings. I hardly think the mistakes are fatal; the recovery process will nonetheless be interesting to watch.
You may already be familiar with the flash sale site Fab.com that launched over the summer. It rocks in a big way. If your style vibe is retro/vintage inspired/whimsical/arty/don’t take yourself too seriously, it’s for you. If it’s not, it’s worth checking out anyway. You may find the options a bit hit or miss on any given day (the site typically features @ six or so new designers/artisans/product collections daily), but I promise you’ll find at least one must-have item in the course of a week. And since the price points range from as little as $5.00 to as much as several thousand, there really is something for everyone – well, everyone who shares the above described esthetic.
And that really is the point – there is an incredibly strong product vision at work here, which tends to be missing in most other flash sale sites. In the old days, this used to be called merchandising – picking the right product, combining it with the right product assortment so as to tell a compelling story, offering it at the right price point and displaying it in an appealing manner to a prospective customer that is likely to be receptive to it and want to buy it. There are sadly almost no real merchants left anymore – there’s Mickey Drexler, who ran The Gap during its heyday in the 90s and more recently reinvented JCrew; Ron Johnson, the genius behind the Genius Bar and Apple Retail Stores, who is leaving shortly for JC Penney (I have no idea why); and no one else I can think of. The Fab folks have restored my faith that some people understand there is more to building a successful retail business than a laser focus on reducing the number of shopping carts that are started and abandoned or maximizing the revenue per square foot – it requires a little art and a little magic. And that, my friends, is called merchandising. Not curation (which word should go the way of “synergy” unless used in reference to a museum or gallery exhibit), but merchandising.
Forbes has a nice piece on the company here. Site is by membership only, BUT they’re running a deal now – if you use the link http://fab.com/wfente you’ll get a $10 free credit when you join. The deal expires at 3:28pm ET on Friday, 9/16/11, so go to it. It pays to know Spamothemag…
First, my apologies to my very small but growing group of loyalists – if you’d had a month like the one I just had, blogging would have been at the bottom of your list of priorities too. Thankfully, bones are knitting, surgical scars are healing, and life is returning to something that resembles normal.
One quick post before everyone scatters for the holiday weekend. I have been a Blackberry loyalist for about a decade, and after much resistance, have recently come to terms with the very sad truth that the company’s products are going the way of the Motorola StarTac. (Hmmm, since tech superstar Justin Timberlake is otherwise engaged in reviving one moribund former digital darling, maybe his The Social Network co-star Jesse Eisenberg can help RIM out – I mean, they have similar credentials, right? Just a thought.) Not only have they consistently failed to innovate over the last few years, but their products don’t even keep pace with iOS and Android features. Adding insult to injury, the developer community has abandoned them in droves – the death knell in the era of the smart phone and the iPad. (Btw, can we all agree to abandon, at least for now, the generic “tablet?” The only tablet of consequence is the iPad.) Finally, the enterprise market, which RIM has long dominated by a substantial margin, is migrating in increasing numbers to the iPhone as employees demand the cooler, sleeker and (gulp) just plain better device.
One brave high level RIM employee has published an anonymous open letter to co-CEOs Jim Balsillie and Mike Lazaridis (well-respected tech site BGR has verified the employee’s identity) that gives a straight up account of all that is wrong with the company and some smart, clear cut moves that need to be made quickly to restore the company to its former glory. Kudos to Mr./Ms. Whistleblower – after all, any schmuck can tell you it’s raining, but not everyone has the ability or good sense to give you an umbrella.
I could not pass this one up – The New York Times announced this morning that Bill Keller is out as executive editor, to be replaced by Jill Abramson, a managing editor since 2003. Keller will continue to write for the Times.
Why, you ask, did I find this a “must discuss” story? Ms. Abramson will be the first woman to lead the Times in its 160 year history, which pretty much rocks all by itself. But the powers that be didn’t make the change because they have diversity problems (although the paper has been criticized for its lack of diversity given its liberal slant).
If you ask me, they did it because Bill Keller seems to have become the poster boy for the “He-Man-Digital-Haters-Club,” while at the same time his employer is working mightily to maintain its relevance in the digital age. The article he wrote for the NYT Magazine a few weeks ago didn’t help. To imply that the Gutenberg press had a downside in that it “replaced remembering,” and to liken that to “Facebook friendship and Twitter chatter…displacing real rapport and real conversation” is to suggest that he uses these tools to maintain the appearance of keeping current but hasn’t yet figured out how to use them productively. So rather than come clean on his own shortcomings, he’s decided to take a potshot at the rest of us, claiming that digital technology is only good for giving us more time for Farmville and “Real Housewives.” The fact that he said it publicly suggests that he probably didn’t want to keep his job anyway.
I know I’ve been remiss in my postings (or lack thereof)….I promise to be back tomorrow to dissect the LinkedIn IPO. But here’s a tidbit for you to chew on in the interim. As if Katy Perry’s mere existence wasn’t enough to illustrate much of what’s wrong with the music business, along comes this gem: Drivers Beware: Don’t Stare At Katy Perry | The Smoking Gun.
This is the plain English version of KP’s concert rider – the document that lays out all of her specific demands for her tour dates. It is, in a word, appalling. She is probably somewhere around minute 13 of her allotted 15 minutes, but someone in her camp has decided that pretending she is Madonna is the way to insure her longevity. If you’re a fan see her now – it will probably be your last chance.