December Issue

J.C. Penney: A Case of What Not to Do for Business and IT Leaders

The missteps and misfortunes of this retailer offer some classic warning signs that any enterprise would be wise to heed.

Much like a corporate version of What Not to Wear, the story of struggling retailer J.C. Penney is a cautionary tale of What Not to Do for business and IT leaders everywhere. Pieced together from financial documents, public transcripts and interviews with retail and management experts, our story "Tech and Exec Disasters Put J.C. Penney in a Bind" is a case study of a company tumbling from one management disaster to the next, dragging its IT strategy along like a hostage.

"Since 2011, the 112-year-old department store chain has lost $3 billion as two different CEOs whipsawed employees and customers alike with radically different business strategies," writes managing editor Kim S. Nash. "Now a third CEO is due to take over in August. Along the way, J.C. Penney's IT group has seen three CIOs, one CTO and three e-commerce leaders."

These damaging bouts of executive whiplash have meant abandoned technology projects, half-baked business strategies and a darkening outlook. "What does the future look like when you can't attract future shoppers?" one retail expert asks. (Company executives declined to answer Nash's questions as she was researching and writing this story.)

But beyond the missteps and misfortunes of one retailer are some classic warning signs that any enterprise would be wise to heed. They raise three big questions I think every CIO should be asking today:

Are we moving fast enough? While other retailers were installing new technologies to keep pace with mobile customers looking for omnichannel options, J.C. Penney was bogged down "by hundreds of custom applications whose maintenance... ate up 95 percent of the $400 million IT budget," Nash writes.

Do we understand what our customers want? J.C. Penney customers didn't want the iPad-enabled "shopping experience" one CEO dreamed up. They wanted bargain-priced clothing and easy checkout.

How well do we manage change? Retail management experts give Penney's a failing grade for pushing through changes that weren't carefully considered, like tagging clothes with RFID sensors that were easily thwarted by shoplifters, thus driving up inventory losses from theft.

Reading this story will make your heart ache a bit for the IT organization caught in the churn of a flailing business strategy. Some elements may remind you of your own company's troubles. If that's the case, maybe your CEO should be reading it, too.

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