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.