Penney Offers Training Program for New CEO

Discussion
Jun 21, 2011
George Anderson

More often than not when a major retailer hires a new chief executive it either goes outside and brings in someone with previous CEO experience or it hires someone from within that has been groomed for the job.

Occasionally, companies go looking outside for a rising star without previous top job experience to come in and shake things up. That, it appears, was the case with J.C. Penney’s hiring of Ron Johnson from Apple.

Mr. Johnson, who is widely credited for the success of the Apple Store, will join the company on Aug. 1 as a director and then become CEO on Nov. 1, taking over the title from current chief Myron "Mike" Ullman who will become executive chairman of the board.

In a departure from what normally happens, however, Mr. Johnson will not assume the full duties of a CEO on day one. Instead, he will focus on marketing and merchandising with the goal of improving the shopping experience in Penney’s stores. Mr. Ullman will be responsible for continuing to oversee accounting, finance, logistics and other aspects of the CEO’s duties. During the period between Nov. 1 and Feb.1, Mr. Johnson will be transitioned into his other duties.

Thomas Engibous, lead director for the J.C. Penney board, told Dow Jones Newswires, "Ron and Mike both believe it would help the transition to have a short period during which they will work together to lead the company."

Interestingly, Mr. Johnson told Bloomberg News last week, "It’s our job to rethink everything. Retailing’s always been about creativity; it’s about creating exciting new ways for people to shop, new products for people to purchase, new ways to do things."

It seems that new way of thinking extends to on-the-job training.

Discussion Questions: What do you think of J.C. Penney’s plan to transition Ron Johnson into his job as CEO of the company? Is this a common practice in retailing?

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15 Comments on "Penney Offers Training Program for New CEO"


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Lisa Bradner
Guest
Lisa Bradner
9 years 10 months ago

Sounds a bit like they’re not really sure he’s up to all the aspects of being the CEO. I understand the desire to have him focus on customer experience as that’s the heart and soul of Apple and clearly what Penney’s is hoping to replicate but I’m not sure how Johnson gets long-term authority over the merchants and everyone else if he doesn’t come in strong.

Apple stores are a closed loop system–other retailers are not. To the other article in today’s Retailwire discussions – I wonder why they didn’t bring him in as Chief Customer Experience Officer with a (quiet) promise to be CEO in six months. This way seems to undermine his authority before he’s even in the door.

Paula Rosenblum
Guest
9 years 10 months ago

This was very disappointing news to me. Mr. Johnson was not put in charge of STORES…to me, that’s a big deal, since that’s where the rubber meets the road, and where department stores have their biggest challenge.

I need to get more input on this, but my first thoughts were “You bring someone in to change everything, but first create a long window for him to get inculcated into the way things are.”

It sort of floored me, to be honest.

Dick Seesel
Guest
9 years 10 months ago
News flash (from today’s Wall Street Journal): The JCP board has now decided that Ron Johnson will have full responsibility as of next February 1st. Functional areas like stores will only report to Mike Ullman for a three-month window, starting when Mr. Johnson assumes the CEO title on November 1st. Apparently the board met over the weekend and pushed this timetable, since many board members were caught by surprise when they learned about the original transition plan. Some lessons learned here: 1. If your company has “activist” board members who push the hiring of a new CEO, don’t leave them in the dark about a transition plan;2. If you are hiring a new CEO, don’t muddy the waters with unclear lines of authority;3. If you are hiring a CEO in order to reinvent the store experience (among other things), give him or her the responsibility needed to be a change agent from day one. Penney is left with a short-term black eye in terms of corporate governance, and is also lowering expectations about when Mr.… Read more »
David Biernbaum
Guest
9 years 10 months ago

It’s a sensible practice for all CEO’s to be gradually exposed to his or her role in a new company and especially when this person comes from such an unrelated background. However, it’s important that the CEO be allowed to bring his or her own influence and new ideas to the company as opposed to inadvertently being shaped and molded to do the exact same job as his predecessors.

Steve Montgomery
Guest
9 years 10 months ago

Certainly on the surface it appears to play to Mr. Johnson’s strengths. He will be able to initially concentrate on marketing and merchandising and hopefully generate the same customer experience (and sales results) we have all been reading about over the past weeks.

The approach may not be a common one but, it really doesn’t matter what we think as long as it works for Messrs. Johnson and Ullman and the internal Penney team. The issue for them is to ensure Penney’s management is not confused about who they are working for (or to be politically correct with). I am sure Mr. Johnson would not have taken the position if he were not sure on the path to full CEO status.

Paul R. Schottmiller
Guest
Paul R. Schottmiller
9 years 10 months ago

Mr. Johnson is saying…”It’s our job to rethink everything. Retailing’s always been about creativity; it’s about creating exciting new ways for people to shop, new products for people to purchase, new ways to do things.”

It will be challenging to balance this ambitious innovation agenda with the operational responsibilities of the current business (esp. being new to a CEO role) with only a 3 month ramp focused on Merchandising and Marketing.

Ian Percy
Guest
9 years 10 months ago

The reason M&As seldom pay off is that an organizations is acquired for its unique qualities and then is destroyed for the same reason. The same trap awaits those brave and insightful enough to bring in fresh perspectives for executive roles.

90% of what most businesses need to know can be found outside of its sector. So J.C. Penney’s strategy is brilliant. But if the overlap is supposed to help Johnson learn what J.C. Penney is all about, they’re milking the cow and then kicking the bucket over.

I’d say let him go in Cold Turkey and ask all kinds of naive questions. That freshness and innocence is the most value resource – but it has a shelf-life of only a couple of months. For goodness sakes don’t be afraid of it. My guess is that J.C. Penney wants that Apple vibe and doesn’t want that Apple vibe at the same time. But Ullman is there as a ‘safety net’ if that makes everyone feel better.

Doug Stephens
Guest
Doug Stephens
9 years 10 months ago

Not a common practice but it’s a smart move. Why saddle the new guy with all the extraneous CEO nonsense before he has a chance to fix what you hired him to fix? I still say though, that Johnson’s role has little to do with retail and more to do with changing the mindset at Penney. I sum it up in the article, “Why Ron Johnson’s New Job At JC Penney Has Nothing To Do with Retail.

Doug Fleener
Guest
9 years 10 months ago

Let’s be realistic. No matter how experienced and how good you are, it takes time to get up to speed on a new company. I think it makes perfect sense to have Mr. Ullman keep driving the day to day business as Mr. Johnson transitions in.

The real test will be in November when Mr. Johnson assumes the CEO role but Mr. Ullman will still be the executive chairman. Don’t be surprised to see Mr. Ullman step aside even earlier.

Camille P. Schuster, PhD.
Guest
9 years 10 months ago

Getting up-to-speed on what JCP is currently doing is one thing. A 6 month period to learn how things are done now seems like an obstacle to rethinking everything. The thinking that creates the situation is not the same thinking that changes everything.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
9 years 10 months ago

Or, when a major retailer hires a new chief executive it looks for someone with a particular skill set, like Chainsaw Al Dunlap (some success, some failure, but innovative). Frankly, I think Ron Johnson should conduct a management boot camp for the top dawgs at JCP, not the other way around. I am definitely with Ian Percy on this one.

Roger Saunders
Guest
9 years 10 months ago

Every associate, including CEOs, need a transition period whereby they are shepherded through change in a successful manner.

And, just as all managers/leaders should be evaluated in regards to “change,” Myron Ullman and the JC Penney Board are on the line to bring Ron Johnson through change in a successful fashion. That means that the later two groups will have to be supportive, and be willing to “let go.” It will be a mark of their leadership skills, and one worth watching.

Lee Peterson
Guest
9 years 10 months ago

Good idea! The transition from Apple to JCP just couldn’t be wider–from product to service to customer to culture, there probably is no wider divide. So, why rush into it? There’s a LOT to do.

I had previously written the RJ hire off as another shot at salvaging a doomed brand, but this moves gives it some hope. I truly hope he can navigate the hairball and change the course of what looks to be inevitable.

Ed Rosenbaum
Guest
9 years 10 months ago

It appears there might be some questions about Mr. Johnson if they are not letting him take the reins from day one. While I agree there is a learning curve; he was brought in to make changes. Goodness knows, Penney’s could use that. So let him make changes and lead the company out of the past.

Kai Clarke
Guest
9 years 10 months ago

Wrong, wrong, wrong. JCP hired Ron Johnson for who he is, not whom they can make him. JCP needs fresh, new perspectives and analysis. Ron brings this to the table and JCP needs to empower him from day one. Doing anything less will only cause frustration and endless confusion among the employees and ultimately the customers of JCP. You cannot manage the transition of a sinking ship. You need to jump in and start to bail! Ron can help right the JCP ship only if he is empowered to do so from day 1. Give him the power and let him do what he does best! Does JCP want 90 more days of JCP (during the most critical time of the retailing season) or do they want Ron Johnson to swoop in and share some of his magic with their organization before 2011 is over?

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