There’s No Room for Revolutionaries on Wall Street

By Doug Stephens

Several months ago, JC Penney CEO Ron Johnson and his newly formed executive team  made some significant changes to the pricing and promotional structure for the chain.  These changes almost immediately met with speculation from investors, anger from customers and second guessing by the market.  Ultimately, Penney’s President Michael Francis became the sacrificial lamb, resigning his post this week.

So with that, here’s my entirely unsolicited advice to Penney’s CEO Ron Johnson…

If he wants to keep existing customers, shareholders and Wall Street happy, here’s how he might go about it.  First, he can’t aim too high.  He wouldn’t try to revolutionize anything.  He wouldn’t even think in terms of transformation.  No more of that crazy talk!  He would ensure that JC Penney clung vigilantly to the status quo and introduced only incremental, comfortable, almost invisible levels of change –  the kind of change that’s so tepid and benign, it doesn’t really change anything.  He might commission a useless brand identity study or two. This would at least make it appear as though he’s taking action.  He might survey his customers to ask them what they want and then put those findings under advisement…indefinitely.  And he wouldn’t forget about layoffs.  Wall Street loves layoffs! Once he was through ratcheting down head-counts and operating costs to boost the share price he might want to leave the CEO position before sales take the inevitable plunge.  Then let the new CEO pick up the pieces.

But Ron Johnson blew it.  First, his goals were way too lofty!  He had the gall to actually try to inspire people, and get them to believe that JCPenney could be different. That JC Penney could lead –strategically and morally.  He tried to open imaginations up to what the department store experience could be.  He challenged the archaic, he ruffled old feathers and perhaps most audaciously, risked losing a customer or two on the way to creating something unique, exciting and sustainable.  He tried to chip off decades of brand decay and assumed he might get more than one fiscal quarter in which to do it.  In short, he tried to inspire a revolution – a revolution that would take time, courage and faith.

Unfortunately, Wall Street has no interest in revolutionaries.  Customers, shareholders and the Market essentially want companies to do the same things that they’ve always done only better, faster and cheaper.  They want only that which will eek out a quick lift in share price.  Whatever gets them through the day, the week, the quarter.  They’re not interested in transformation, game-changing strategy or making history.  Given the choice between a quick nickel and a slow dime, they’ll choose the nickel every time.

So, if you’re planning to hold a revolution, don’t hold it on Wall Street.  There’s no room there for revolutionaries and that’s a really sad thing for JC Penney and for all of us.