Talbots and JC Penney - Two Failed $BBillion Strategies ?

Strategy Doesn’t’ Matter?   Part 3

The first is the recently ended Talbot’s saga under the leadership of Trudy Sullivan.  In 5 years this CEO oversaw a race to the bottom of a highly regarded mature/professional women’s apparel retailer.  Stock plummeted from $22 to $1.50/share, while she received bonuses every year.  In mid-2012, Talbot’s was purchased by a private venture equity firm, Sycamore Partners, for $2.75/share, or somewhere within the range of $197- $369Million on sales of $1.4Billion!  This represents the lowest price to sales ratio ever paid for a retail company…. in history!  

Apparently unable to exist without the kind of leadership that got them there, after resigning as CEO in December of 2011, the same Trudy Sullivan remained as one of the board’s negotiators.  The result:  Shareholders received $2.75/share - 10% less than the $3.05 offered in early 2012 or $2.95/share originally offered in 2011.  As Motley Fool said, “That's right, in true George Costanza fashion, they held out for less money!”

Speaking of less money, the other story opens with Yahoo Finance reporting JC Penneys made it to the top of the most hated companies in the U.S.  This is the JC Penney saga under ex-Apple president, Ron Johnson.   2012 annual sales have fallen by 24.8% to $12.98 billion and the stock has plummeted from near 62% to around $15/share.  JCP is now valued at $3.3 billion, down from almost $8 billion last year.

When hired Johnson reportedly bought $50,000,000 in shares at just under $30/share.  Although this was both pro-Johnson faith and a pro-Johnson/JCP 6 year equity gesture, why would any individual want to lose $25,000,000+, even on paper?  For that matter, how many could?  We will have to wait and see if his strategy works.  So far it doesn’t appear to have been well designed, unless the plan was to lose $Billions!

An accompaniment to the (so far) failing retail strategy was the expected ousting of Michael Theilmann, the former Exec. VP and Chief HR and Administrative Officer.   As a follower of JCP, one of the bright spots within JCP’s recession performance – where most retailers performed poorly - was the noticeable upgrade in positive, helpful and smiling floor and management people.    

Where these apparently successful People policies will go under Dan Walker, new CTO and former Apple CTO with Steve Jobs and Ron Johnson, is only one of the sagas to be played out.  As of this post, JCP will have shed 25,000 people since Ron Johnson took over.  Apple products are the most highly esteemed and sought after tech products in the world.  New products and upgrades create a stampede of interest.  This is not the retail apparel and department store world.  Only time will tell if the Johnson and/or Walker strategies will be successful.

Next: Why do Strategies Fail?

A New Strategy or a Good Strategy?

Strategy Doesn’t Matter?    Part 2

We’ve all heard the endless stories:  business leaders lament the lack of profit, slow growth, slow economy, European troubles, need to streamline, become more efficient ….  Human Resources lament the lack of influence, no seat at the table, restricted budgets, being relegated to processes, report generation, lack of top leadership’s support to change things…. Business and HR both talk of the lack of qualified people, rate of turnover, bad hires, lack of engagement, lack of interest, poor work attitudes, efficiency or job performance, distracted workers and terrible work habits ….Unless you like these results and you and your company are willing to endure, a good new culture strategy is needed.

Good strategy formation requires you look at your organization from its managerial, employee and/or customer point of view!   Truly successful customer driven organizations have always had the customer/consumer, and their employee’s interaction with those customers, as the top influencers of organizational plans.  Compare this to - or versus – the lip service most companies give to customer service by viewing customers and employees as top down organizations do.  Only those truly comprehending the keys to successful strategy implementation have bothered to get to know their organizational capabilities, limitations, motivations, the feelings of its own people and their consumer/customer base as a basis for forming that successful strategy.

Most companies fail to investigate, study, collect data and assign a proper value to customer’s or consumer’s views, as well as their employee’s direct interaction with those customers.  Without this essential priority in formulating a great strategy, tremendous waste occurs, as described by John Stumpf.  This same waste is mentioned by Brenton Van Breda, in his, “STRATEGIC PLANNING:  A practical approach to developing strategic plans and achieving objectives” https://www.box.com/shared/git0raxd2h.  For those unfamiliar with, looking for a simple outline for, or a compressed version of, a strategy formulation process, I think you will find it very interesting.  For more detailed strategy formulation processes (104 pages) try these slideshare presentations from drawpack.com:

http://www.slideshare.net/anicalena/strategic-management-business-presentation-slides

Thanks John and Brenton

To those of us in retail following what bad strategy, plans and outcomes look like, two recent highly visible overarching strategy change examples have played out or are being played out for all to see:

Next: Two Failed $Billion+ Strategies - Talbots and JC Penney

Strategy Doesn’t Matter?

In December of 2012 John Kotter wrote in Forbes, “Your Corporate Strategy: It Just Doesn't Matter”

According to John Stumpf, CEO of Wells Fargo, a successful strategy is all about execution. “It’s how you hire, how you inspire, your culture, how you reward, how you celebrate victories, how you deal with disappointments. This is easy to talk about, but it is all in the execution.” Otherwise, “it just doesn’t matter.”
"What does NOT work in changing a culture?”  Stumpf goes on.  “Some group decides what the new culture should be. It turns a list of values over to the communications or HR departments with the order that they tell people what the new culture is. They cascade the message down the hierarchy, and little to nothing changes.”  Thank you, John and John

http://www.forbes.com/sites/johnkotter/2012/12/17/your-corporate-strategy-it-just-doesnt-matter/

Wait!!!  Strategy doesn’t matter!?!?!?  No…. how the strategy is executed is what matters (assuming it’s a good strategy).   Companies waste a tremendous amount of time, effort, money and resources in strategic definition and plans without, or a failure to have, a comprehensive tactical implementation plan.  Strategy alone will remain encapsulated, isolated and fail to change the organization. 

Most companies forget to define THE critical step in the strategy implementation….the execution plan.   This is not the implementation itself, but how to implement the strategy.  Some will say it is part of strategy development or implementation, and it might be depending on the leadership, but it is a unique process.  It requires defining an implementation strategy.

The larger and/or more locations involved the more complex implementation becomes.  Instead of being able to “just do it”, various rollout stages and evaluations must take place so problems are minimized, reception is gauged and success of the roll-out is optimized.  Large global and/or geographically dispersed companies require multiple layers of data and need to address language and cultural barriers, geographical/cultural norms and agendas, management training, grading, refining, re-training and goal orientation/attainment for success.

In its simplest format the execution strategy determines “If it can, how it can, through whom and by what means the strategy can be implemented?”

·    How and in what format is the strategy to be consistently implemented? 

·    Who will be in charge/responsible? 

·    Who will implement it and the time frame or calendar for implementation?  

·    What are the criteria, waypoints or benchmarks to track its implementation?

·    Is the implementation being positively or negatively received?

·    Do changes need to be made to succeed (grading and improvement)?  

·    How will we know if it is successful (the proof or data feedback)?
 

This is the first of almost 30 cumulative posts dealing with strategy, HR/Talent/People, what’s happened, recognizing where you are, change, growth and developing simple solutions to start moving you/your company forward.   Please join me as we walk the HR and Employment Culture Jungle.

Next: Decisions - a new strategy or a good strategy?