reinventing: culture and managing change part one

Sorry, this is a little long-form, but it ticks a couple boxes on my list of Things That Bug Me. Corporate culture and reinvention – which includes managing change.

The buggy issue is that corporate culture can prevent a successful transition. Old ways die hard when entrenched in culture. Especially when that culture influences how employees react to the day-to-day. It has become habit, dutifully enforced by all your colleagues. Defy the sacred practices, and you’re in for chakra realignment.

I am by no means an expert on corporate culture, nor on the process of reinventing a Very Large (Fortune 500) Corporation. However, I have lived both, personally shepherded transitions, and therefore have first-hand experience – and that makes me an expert on my experience.

MarketWatch ran this little slide presentation titled 10 most-hated companies in America.  

Why are they hated? A lot of reasons, but in my opinion a couple major reasons come to mind. Company execs don’t listen to loyal customers and they don’t train and/or support their employees.

And of course, the all-knowing experts tell customers to hate them.

Just like me, the pundits can have any opinion they want. But they have a lot more reach, and therefore can influence public opinion. Imagine that.

All those experts may own more street cred, but in my world, they’re wrong. A couple of hated exceptions on the list, like Dish and T-Mobile, probably earned it because no one has ever liked their TV or phone service.

So what do I know about reinvention and culture? I’ll speak to the changes at JCP aka J.C. Penney through a little story of my own: 
I joined the Nordstrom corporate marketing department after they abandoned their “Reinvent Yourself” campaign. Customers hated it. All on their own. They didn’t even need the press to tell them.

Nordstrom diverted from their staple of print and direct mail that was created in-house, to a complete shift to broadcast – developed by their agency, Fallon. The corporate marketing department had major staff reductions as a result of this departure.

Nordstrom also changed their merchandise mix to reflect a more ‘hip’ style. Oh, and orange was the new pink.

A few months into the campaign, when same store sales dropped (up to 10% in one store), and alienating their core customers – they changed course, realizing how powerful (and profitable) a loyal customer can be.

Nordstrom may be a Fortune 500, but they are a family company – that has a very strong, uncompromising culture. The fact that they took a very expensive dive into a radical change was remarkable. And it didn't work. They forgot their customer – then they heard from them. And they reversed course.

JCP is truly reinventing. 
The reason they are Most Hated, as cited on MarketWatch, is the failed pricing structure. Simple pricing (aka Low Everyday Pricing), like $10 for a shirt. Doesn't that just make you hate?

Newsflash – that isn’t the reason they’re hated. People don’t care what the price tag says.

Wholesale changes were made to an old company, from top to bottom, and were not explained to the employees or their loyal customer base. Did they address corporate culture? How did the employees deal with the massive changes, other than accept that everything was going to be…better?

If the powers-that-be thought that advertising would explain everything then they are delusional. New store, new look, touch screens – where are my favorite socks?

When the changes came, which were significant, they weren't explained. What is this store trying to be – Target? I don’t know, but JCP, tell me. How about a meaningful PR campaign to rebut the dismal press? Push back Mr. Johnson, tell them what’s going on and turn this into a success story.

And then you have MarketWatch to support staying with the same old store with ‘modest challenges’. Simple pricing is the culprit that put JCP at Number One on their 10 most hated list? Oh, please.

And a word about pricing: JCP’s base was addicted to sales. Yep, the loyal shopped when there was a sale. I shopped there before the Big Change, and there was plenty of merchandise that was shop-worn due to endless rotation and mark-downs. Wasteful. Expensive. Time consuming. Dumb. Company and customers entrenched in that cycle. Do you ever pay full-price at Macy’s? Addicted to sales. I rest my case.

Bottom line – reinventing means you are going to change everything you do. And that means you are going to change the way people work, how you interact with your customers, and your product (output). That has to happen with thorough preparation which includes engaging and educating your employees, your customers, and perhaps, your culturally stagnant C-suite.

Nordstrom and JCP have been in business for a long time. Strong culture, familiar name, loyal customers.  One was working well – and decided to reinvent their product – didn't work. They adjusted. The other was barely surviving in aging mediocrity – and decided to reinvent everything – will it work? I hope so. I like the new JCP.

If there’s anything I know about managing change, it is this: plan, prepare, train, inform, roll-out – and re-group. Nothing is so awesome that you can’t make adjustments.

Transition is hard in an entrenched corporate culture. But it seems to be much harder to change culture that is no longer relevant. Culture is clingy and permeates everything. It bugs me when you ignore that.