Can Apple's 'Genius' Sprout Far From the Tree?
Apr 17, 2013 5:00 AM PT
Messianic tendencies are seldom healthy, but they can be doubly destructive in business, where a misstep, missed trend or messy product launch can turn last year's wunderkind into this year's washout.
So it's interesting to consider why Silicon Valley -- along with much of the rest of IT -- is so fixated on "rock star" executives. If you think an industry that prides itself on innovation would be immune to self-indulgent behavioral clichés, you'd be wrong.
A problem with such execs is that they often fail to garner much enthusiasm outside their own home turf. Ron Johnson, the now-former CEO of stalwart JCPenney, is a painful case in point. Considered a retail genius for his pioneering work at Target, where he launched the Michael Graves consumer product line, as well as Apple, where he helped conceive and then managed the company's Apple Stores org, Johnson was hired in November 2011 to inject some badly needed, highly caffeinated mojo into Penney's stodgy, somnolent brand.
You can't fault Johnson for shyness. Following practices that made Apple Stores a success, he eschewed traditional retail-design test modeling and conservative staged rollouts. Instead, he instituted a radical, chain-wide makeover that added specialty "mini-shops" to Penney's locations, and also eliminated the company's traditional paper coupons and advertised sales for what was called "full but fair" day-to-day pricing. When customers resisted, then rejected his visionary strategy, Johnson dismissively opined that they needed to be "educated" about how the new system worked.
Déjà Vu All Over Again
The result, which has been described as "one of the most aggressively unsuccessful tenures in retail history," officially ended on April 8 when Johnson was fired without ceremony and replaced by Myron Ullman, the former JCPenney CEO whom Johnson first supplanted, then had ousted from Penney's board of directors in January 2012. Thus, the entire sorry chain of events seemed karmically imbued with what NY Yankees star catcher Yogi Berra called "deja vu all over again."
Why Johnson's reinvention of JCPenney failed has been the subject of numerous op-eds, but the simplest answer is that he appeared to forget or ignore the critical role that "culture" plays in virtually every corporate turnaround. Business culture is multidimensional, touching management, employees, customers, partners and shareholders alike -- though not necessarily equally. If any one of these critical constituencies feels forgotten or disrespected, the result for the business can be disastrous.
Remarkably, Johnson seemed fully capable of ticking off virtually all of the involved parties, often simultaneously. In a retail environment rife with both bricks and clicks discount options, willfully alienating customers and allies alike resembles myopic professional suicide rather than genius behavior.
Can Apple Execs Survive Far From the Tree?
That brings us back to Apple, Johnson's previous employer and the location of his greatest triumph. By virtually any measure, Apple Stores have been a huge success, exceeding US$1 billion in annual revenues just two years after their launch and leading U.S. retailers in terms of sales per unit area -- that is, dollars per square foot of floor space. However, it's a common perception that Apple Stores essentially reset practices and expectations for modern retail sales as a whole, not just consumer electronics and personal computing devices.
Given Johnson's time at JCPenney, that claim seems deeply flawed. In fact, if his experience is the litmus, Apple's business model may be ineffective or even unsupportable outside the company's rarified atmosphere. While that doesn't matter much to Apple, a common measure of business success is whether a company's strategies are replicable, and if so, how broadly.
We've seen this time and again in industries and markets, including IT. IBM's shift away from commodity products and toward hardware- to software-led development and sales strategies inspired a software-focused scramble among competing system vendors. EMC's remarkable acquisition strategy helped transform the company into a leader in emerging virtualization, cloud and big data solutions while maintaining its primacy in enterprise storage. Not surprisingly, many competitors have tried to follow suit.
Apple has certainly reinvigorated and even reinvented seemingly moribund sectors, including MP3 players, smartphones and tablets, inspiring a host of competitors in the process. Unlike IBM, EMC and others, though, where executives who cut their teeth at those companies have repeated and expanded on their successes elsewhere, it's difficult to think of any -- let alone many -- Apple execs who made memorable achievements after leaving the company.
That may be because Apple's generous stock options mean most senior executives walk away with well-lined pockets. However, I believe Apple's corporate culture also contributes to this dynamic. Steve Jobs, who led Apple from 1996 till his death in 2011, fit the "rock star" leadership model to a black turtleneck "T" and generally surrounded himself with a talented band of specialist backup players -- not charismatic or highly skilled businesspeople who might have stolen his spotlight.
The main exception, of course, was Tim Cook, who joined the company as chief of worldwide operations, then became EVP of worldwide sales and operations, then COO before being named CEO after Jobs' death. Cook is obviously a very bright and able guy, but figuring out where to lead devoted fans after Elvis leaves the building is an unenviable, perhaps impossible, task.
Ron Johnson's experience at JCPenney will be more painful for the company than it was for him. He left it much as he found it -- still badly in need of a fundamental transformation but back in the hands of a previously replaced CEO and doubly gun shy of changes that might irk or discommode traditional customers. Johnson himself can argue that he was simply doing what he was hired for, that no gain comes without pain, as well as a litany of other plausible homilies which are the business equivalent of a washing of hands.
Johnson's experience at Penney is also likely to have little if any effect on Apple. Tim Cook may not be a rock star, but the company is still wildly profitable and will likely remain an IT stalwart for years or even decades to come. Though Apple certainly makes sleek, attractive products, what really differentiates its offerings is their reliable, friendly and common user interface design.
In the end, it isn't hard to imagine the company evolving into something of a Rolling Stones of consumer electronics, whose continuing success has more to do with cranking out recognizable greatest hits than creating revolutionary new music.
That would also help answer the larger question: whether Apple is a radically transformative market entity or one whose influence is largely or entirely confined to its own employees and fans.