Refresh, Reboot, ReinventThere is a great article/column in Forbes this week "JCPenny's New Stragegy A Tough Sell on the Sales Floor". It is a first person account of a family's quest in search of the perfect and perfectly priced sofa. The experiences the author describes ring true, especially for the home furnishings industry because we are very entrenched in discount pricing models and almost used car salesman techniques with artificial mark ups, crazy sales discounts, and spiffs.
However, beyond the initial shopping trip for a sofa is a much bigger lesson that applies to all industries and businesses. When making a strategic change to the business model it is imperative to remember that your team, whether they are in direct consumer sales, b to b service, or just in house administrative--they are your most important customer. If you do not take the time to win over your employees about the strategic shift of the company, then the shift will falter.
When Howard Schultz returned to Starbucks as CEO in 2007 he recognized that first and foremost he needed to focus on the core brand, its values, and its ethos. In order to do that he needed to retrain, reinvigorate, and refresh the workforce. He took the unprecedented move of closing down all the stores, flying managers into a central location and focusing on the details that, when combined are the Starbuck's brand.
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"On February 23, 2008, “I closed every store to retrain 115,000 people – I said we were going back to the roots of the company.” Of course, the media frenzy that ensued from this decision brought many to believe that the end of Starbucks was near – that they were no longer relevant. Schultz admits it was a bold decision to retrain every single employee. His explanation? “It was honest, it was authentic, and it was necessary.” The company lost $6 million that day. And as he said, Starbucks still had a long, long way to go in solving their mounting problems – but this was a start.
Starting over, he said, involved metaphorically asking the question of employees,What does it mean not to be a bystander? “From this point, we had to create, attract and create new customers.” Gone, he says, was the time that Starbucks could do no wrong — that the company was on a “magic carpet ride” – and that profitability and like-ability would happen automatically with every move the company made. Gone was the time that Starbucks was leading the conversation — now, they had to find a way to take part in the larger conversations that were happening." (source)
In the case of JCPenny's where they are trying to basically start an entirely new brand but based on a foundation of an old brand, retail stores, and employees, it is not enough to roll out a new ad campaign, pricing structure, and updated merchandise.
If the railroad cars are not connected to the engine, the engine will still arrive at its destination, but with what to show for it?
JCP needs to take the time to establish and secure the connections between each boxcar before the engine leaves the station. Its too late now of course, but they still have time to catch up. As Schultz proved, an existing brand can be put back together if you take the time to stop the engine. Regroup, reconnect, and redefine together the action plan and shared goals. Hopefully JCP does this.
For all those with businesses that need a refresh, remember that (1) it's not too late and (2) take the time in the beginning and continue to maintain the brand because that is always easier than a mid-journey stop and restart.
