In the 14th century BC, the
Egyptian pharaoh Akhenaten
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replaced his empire’s
traditional polytheistic
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religious practices with
a religion that recognized
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only one deity, the sun god Ra.
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Despite the eradication of
all traces of other gods,
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the change did not last long.
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A collapsing economy and
Akhenaten’s death a mere 17
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years into his reign ended
the cult of the sun god.
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Akhenaten’s successor,
Tut, honoring the wishes
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of a downtrodden people,
reintroduced the cherished gods
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and restored their temples.
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Akhenaten’s story
illustrates the folly
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of trying to force sudden
changes on a culture.
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Throughout history,
human societies
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and business organizations, and
the people who inhabit them,
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have continually
adapted and evolved.
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But cultural change never
happens all at once.
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Attempts to accelerate the
process with quick fixes
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almost always produce a recoil
effect, abruptly ushering back
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the old habits.
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In other words, organizational
culture is sticky.
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Fast forward to 2011 when
we can see another example
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of cultural stickiness.
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At that time, mid-tier
department store JC Penney
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brought in Apple’s brilliant
marketer, Ron Johnson,
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as the new CEO.
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His vision for the company could
be summed up in two words–
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cultural change.
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Johnson wanted to
drastically cut
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ties with JC Penney’s
109-year-old way of doing
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things, pursuing
a brand identity
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and a more upscale market
segment with which he
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had had the experience.
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He had been wildly
successful at Apple,
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creating a brand that was
young, cool, and high-end,
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and was convinced that the
same approach could work
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to bring new life to JC Penney.
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As Steve Jobs did, Johnson
used high-energy inspirational
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events and produced
entertainment-like award shows
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to get employees and suppliers
excited about the new vision.
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Investors were excited
by his vigor and drive
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to revitalize the brand,
yet paid little attention
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to what the details
of his plan were.
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A key aspect of the
new strategy was
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to create a store that was
no longer a department store,
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but rather a collection of
boutiques whose product mix
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drastically reduced the
number of house brands
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and increased the
percentage of branded items.
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Furthermore, replacing the
frequent price slashing
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promotions, of which
there were 590 in 2011,
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would be a simplified
three-tier pricing structure.
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The original price
marked up far less than
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in the past, a
month-long value price,
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and twice-monthly best price.
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The combination of
these two elements
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was intended to attract a
younger, more affluent customer
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who cared more about
higher quality and brands
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than big sales and price cuts.
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Unfortunately, these
potential new customers
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were not swayed by JC
Penney’s upscale image.
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And traditional customers
felt confused and disconnected
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from the stores.
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Long-standing
customers were fleeing,
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and few new customers
were coming in the door.
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Internally, things
weren’t any better.
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One of his first acts as CEO was
to create a new, more stylized
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logo.
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Following the redesign,
he told his staff
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he didn’t want to see the old
logo anywhere in the building.
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He brought in a 10-foot
by 10-foot acrylic cube
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and encouraged
employees to put all
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of their old stuff in the bin
as a sort of time capsule.
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What ensued was a
ceremonial purge
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of all the symbols
of the old JC Penney.
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In order to comply
with Johnson’s mandate,
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employees were even throwing
in their Chairman’s Award
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trophies, the highest honor
bestowed by the former CEO
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to high achievers
in the company.
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Animosity began to develop
between the new management
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Johnson brought in
with him from Apple
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and those who had been
with the company for years.
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Some employees commented
that the two groups
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behaved like high
school cliques,
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with new leadership referring
to the holdovers as DOPEs–
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Dumb Old Penney Employees.
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And in retaliation,
the veteran group
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called the new team Bad Apples.
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The two groups were operating
from completely different
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cultural paradigms.
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The Apple transplants
believed in implementing
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Silicon Valley-like streamlined
ways of doing things,
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while the JCP veterans believed
in the value of relationships
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with longstanding labels.
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During Johnson’s tenure as
CEO, morale within the company
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reached all-time lows.
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And the retailer failed
to attract new customers
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while ostracizing its strong
traditional customer base,
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resulting in huge
losses in revenue
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and a stock price that plummeted
from the mid-40s to $18
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per share just one year
after he took over.
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The board ousted Johnson
just months later,
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and the former CEO was brought
back to take Johnson’s place.
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