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  • It Can Take a Long Time to Recover from the Wrong Innovation
  • When a company’s performance is sluggish, it’s tempting to make major changes. Innovation is viewed as an attractive solution intended to reignite a company’s success. But, caution is warranted because the wrong kind of innovation can easily become disastrous. And, companies experiencing disastrous results after inappropriate innovation can find it extremely difficult to turn things around.

    It’s true that continuing to do what you’ve always done will generally get you more of what you already had. That’s why it can seem reasonable for management to pursue big changes. But, big changes that are wrong for the company can do serious damage. And, when that happens, it often takes a really long time to set things right. Not only do huge losses occur during the ill-suited major innovation, but once the company recognizes its serious misstep and attempts to recover, getting back on track can be tough.

    This is what Penney’s went through after bringing in a former Apple executive to transform the company through innovation. But, Penney’s isn’t Apple. And, trying to reignite Penney’s with Apple-like innovation didn’t work at all. Big losses occurred. Soon, the former Apple executive was gone and efforts were underway to get Penney’s business back on track.

    It has been several years since Penney’s tried its massive innovate like Apple effort. Yet, Penney’s is still struggling. Some progress has been made. Penney’s did somewhat better after the massive innovation effort was halted, but not well enough to completely recover. A Wall Street Journal article titled “J.C. Penney Faces Do-or-Die Year“ by Suzanne Kapner on January 22, 2019 tells of Penney’s difficulties. According to the article, Penney’s situation “is prompting analysts and other industry experts to question whether Penney can avoid the fate of fellow department store operator Sears Holdings Corp., which filed for bankruptcy and barely staved off liquidation.”

    Granted, Penney’s is in an industry that has been facing challenges. But, in its effort to revitalize itself, Penney’s made missteps which the Wall Street Journal article pointed out. Penney’s brought back appliances, but as the article stated, “While analysts say Penney’s appliance strategy has been moderately successful, the bulk of its sales still come from apparel—an area the company has neglected as it focused on other priorities. Penney’s spent the last few years chasing millennials, launching new apparel brands…meant to compete with trendy retailers like H&M. But, the move turned off the stores’ core shoppers: middle aged moms.”

    As I see it, based on my years researching business success and failure patterns, Penney’s started with a major innovation misstep as it attempted to bring Apple-like innovation to its business. Recovering from that alone can be a tough challenge and take a long time. But, as Penney’s tries to turn itself around, it seems to have some difficulty resisting its urge to adopt weakly fitting innovations, even well after it stopped the massive Apple-like transformation attempt.

    Although the Wall Street Journal has said that Penney’s neglected its apparel business while focusing on other priorities, as I see it based upon my years of research into business success and failure, Penney’s had good strategic reasons to pursue appliances. Not only did Penney’s have past experience in appliances, but it is an area where, according to the Wall Street Journal article, Penney’s “was trying to take share from an ailing Sears, which had closed hundreds of stores.” And, as I said in a blog post not long ago, opportunity can emerge from what another business shuts down. So, Sears’ contraction can be a plus for Penney’s in appliances. Thus, pursuing appliances does not necessarily mean that Penney’s is hurting its business with priorities other than apparel.

    What does hurt Penney’s, however, is ignoring core strengths. Going trendy, which Penney’s has been striving to do, was not a core strength for the company. Serving those middle aged moms was. Thus, Penney’s problem is not so much neglect of apparel as it is neglect of middle aged moms and their apparel.

    Nonetheless, it has been said by some that Penney’s can’t survive by serving only its traditional markets. It has been said by some that the Apple-like innovation attempt at Penney’s was on the right track, and merely needed to happen a bit slower. I agree that innovation on such as massive scale is typically unworkable and needs to be slowed down. But, tying innovation to strengths can work well and that was missing when Penney’s tried to be like Apple.

    The difficulties at Penney’s are a classic example of what can happen when innovation goes wrong. Not only is there serious damage, but attempts to correct the situation can go on for a long time. Companies in this predicament can easily lose track of their core strengths, much as Penney’s seems to have done. Ignoring those strengths can make the turnaround even harder and longer. And, the longer a company stays away from its core market, the tougher the challenge to get that market back.

    That’s why it’s so important to avoid ill-suited innovation. Recovery from the wrong kind of innovation can take a long, long time.

    If you'd like to better understand what kinds of innovations succeed, or want help evaluating which innovations can work well for your company, just contact us. Our presentations and consulting can help you get innovation and change right.

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    Ezop and Associates
    La Grange Park, IL
    (708) 579-1711