THE BLOG

JC Penney's Ron Johnson: A Study in Failed Operations and Failed Communications

04/16/2013 12:22 pm ET | Updated Jun 16, 2013

"The purpose of any business is to create and keep a customer." - The late Peter F. Drucker, management guru and ultimate business thought leader.

Clearly, Ron Johnson didn't follow Drucker's advice. By the time the embattled executive was ousted as CEO of JC Penney, the venerable but stodgy middle-America retailer was reeling with losses millions of customers, revenue off almost $1 billion in the last year.

The chain lost $985 million along with almost a third of its customers last year, and around 20,000 employees have reportedly been shown the door. Popular website Business Insider called Johnson's fourth-quarter numbers "probably the worst quarterly performance ever in the history of retail."

And Johnson did all that in a scant 17 and a half months.

The sad truth is that the former Apple store honcho's controversial turn-around plan may have been doomed as much by his weakness as a communicator as it was by poor operational execution. According to the great majority of folks her that I know who have come into his orbit here in Dallas, the guy comes off as being, well, a jerk.

Let me hasten to say that this criticism may be completely off-base; it is pretty common for folks to dance on corporate graves at times like this. And, given the difficulties of the past year, it's understandable if he is not always the model of goodness and light.

Still, the scorn that Johnson has elicited is palpable. Most of the analysts who cover the company seem particularly pointed in their criticism, and the business press has also taken particular glee in roasting him. Those are signs that he has rubbed a lot of folks the wrong way.

To put this in context, look at some other CEOs who made disastrous business decisions without suffering the flogging that Johnson has:

One of the most famous corporate blunders of all times was Coca-Cola's introduction of New Coke in 1985. The resulting uproar from consumers, bottlers, retailers and the press forced the nation's number one consumer brand to retreat back to its old product.

But, as costly and embarrassing as the fiasco was, neither the company nor its CEO at the time, Roberto Goizueto, suffered anything close to recrimination that Johnson has faced. Why? Because, in the eyes of most opinion makers who interacted with him, Goizueto was a straight shooter whose communications style was open and engaging.

Or consider a more recent example: JP Morgan Chase CEO Jamie Dimon was the golden boy of Wall Street until the "London Whale" trading scandal of 2012. That debacle has cost the firm more than $6 billion in losses -- many times more than Johnson lost at JC Penney.

Yet, while he has come under fire from man observers, Dimon's public chastening has been a fraction of Johnson's. Again, the difference seems in large part to rest in the fact that Dimon has taken the time to build trusting relationships with key influencers through savvy and frequent communications. That list of influencers includes the likes of U.S. Senator and Wall Street watchdog Elizabeth Warren and Treasury Secretary Jack Lew. Not bad shipmates when the waters get choppy.

Obviously, we shouldn't cry too many tears for Ron Johnson. While his firing is certainly a huge embarrassment, he can take solace in the more than $150 million severance package he walks away with. And there's speculation he might even get his old job back running the high-toned Apple retail stores.

And if he is like most of the corporate chieftains I have worked with, Johnson likely still insists that, even after thousands upon thousands of jobs cut and more than $3 billion of shareowner value down the drain, his strategy would have worked had it just been given sufficient time. And who knows? He may be right, though I (and a lot of people smarter in these matters than me) doubt it.

But one thing we do know for sure: At the end of the day, Ron Johnson wasn't enough an empathetic enough communicator to make himself a more sympathetic leader, and a lot of people are now hurting because of it.