THE BLOG
04/12/2013 10:31 am ET | Updated Jun 12, 2013

Blame the Board for JC Penney's Woes

When the JC Penney board hired Apple executive Ron Johnson to turn around this century-old American company, I thought he had been miscast.

When Johnson forced JC Penney's off the coupon drug, I thought the timing was a mistake.

When same store sales fell 25%, I thought it was foreseeable.

When Johnson axed his chief marketer, I thought it was cravenly.

And when the board sent Johnson packing, I thought it was inevitable.

Johnson had done great work at Apple, so the JC Penney board expected him to bring Apple-like results to their ailing company. But the nature of the challenges in Apple's retail operation could not have been more different than the ones that JC Penney faced. Anybody on the JC Penney board who didn't see that is in the wrong role. Anyone who did see it but still worked to bring Johnson on shouldn't be on any board.

It is often said that the ultimate job of a board of directors is to hire the right CEO. In selecting Ron Johnson, the JC Penney board failed in its most important role. You'll now hear retail analysts and pundits expound on Johnson's supposed shortcomings. But darned few if any will address the root of the problem.

The JC Penney board is out of touch with the company and its customer base. They don't understand the basic nature of the problem the company confronts. Will the board use this most recent crisis to reevaluate its understanding of the situation, or give itself a pass, concluding that the last hire "just didn't work out"? They'll never find the right guy this time if they're operating from the same viewpoint as last time.

JC Penney is a venerable brand that has a lot of loyalty among a segment of its shoppers. Despite the downturn, Penney still boasts $13 billion in annual sales. The people spending that money are not fools. They have all been to Wal Mart and Target. They all have the internet at home and work. They are not shopping at JC Penney without a reason. They did not sleepwalk into those stores.

Retailing is a hyper competitive arena. But it was never an easy one. Sam Walton obsessed over his business with a singular focus on bringing the customer what she wanted at the best possible price - for decades. So the lament that "it's just SO hard nowadays" is an unoriginal dodge.

Shoppers "hire" a retailer to do a number of things for them. Each successful retail brand is defined by what it does, for whom, and how. That definition is the answer to the question "why does this company exist?" New businesses arise to provide new answers to those questions. Sometimes, rarely, old businesses successfully transition to a new set of answers when the old answers don't matter to customers anymore.

Like every successful company, JC Penney needs to discover and then doggedly champion what it does, for whom, and how.

The answers are there, in the heads of the customers who shop at JC Penney now. JC Penney needs to be wise enough to seek those answers and humble enough to accept them, even if the answers are not as ego-satisfying as the answers customers would give about Apple.

JC Penney needs to focus on what it is positioned to do better than anyone else. Then, it needs to dramatize those answers to its employees and its customers, with whom the answers will resonate as authentic, attractive, and true.

When the JC Penney board understands that this is the next CEO's priority mandate, then they'll find the right one and they'll understand how to help that person--and the company--succeed. If they don't, then the new CEO would be wise to follow Johnson's example and negotiate his or her severance package up front.