Chapter 13: Strategic Entrepreneurship 437
the “everyday low prices” were actually “low enough”
compared to competitors’ prices.
Innovation was at the core of the second part of
the new CEO’s vision, with one objective being to give
JCP a more youthful image. The innovations Johnson
implemented to create this image included establishing
branded boutiques within JCP stores. To do this, JCP set
up branded boutiques “along a wide aisle, or ‘street’ dotted
with places to sit, grab a cup of coffee, or play with Lego
blocks.” With an initial intention of having 100 branded
shops within JCP stores by 2015, Johnson asked people “to
envision an entire store of shops with a street and square
in the middle representing a new way to interface with the
customer.” Disney was one of the brands to be included as
a shopping destination, as were Caribou Coffee, Dallas-
based Paciugo Gelato & Café, and Giggle, a store dedi-
cated to making “it a whole lot easier to become a parent”
by offering innovative and stylish “must-have baby items.”
In addition, and as noted in Chapter 4’s Opening Case,
Levi’s, IZOD, Liz Claiborne, and Martha Stewart branded
items were to be included as part of the boutiques.
But, these innovations and the strategy used to exploit
them did not work. So what went wrong? Considering
the components of the model shown in Figure 13.2 yields
a framework to answer this question. While it is true
that Johnson had an entrepreneurial mind-set, cross-
functional teams were not used to facilitate implemen-
tation of the desired innovations such as the boutique
stores. In essence, it seems that Johnson himself, with-
out the involvement of others throughout the firm, was
instrumental in deciding that the boutiques were to be
used as well as how they were to be established and oper-
ated within selected JCP stores. In addition, the values
associated with efforts to change JCP from its historic
roots of being a general merchant in the space between
department stores and discounters to becoming a firm
with a young, hip image were not shared among the firm’s
stakeholders. Finally, Johnson’s work as an entrepreneur-
ial leader was, seemingly, not as effective as should have
been the case. Because of mistakes such as these, the level
of success desired at JCP through internally developed
innovations was not attained.Sources: 2013, J.C. Penney ousts CEO Ron Johnson, Wall Street Journal,
http://www.wsj.com, April 8; D. Benoit, 2013, J.C. Penney asks customers for
second chance, Wall Street Journal, http://www.wsj.com, May 1; D. Benoit, 2013,
Ackman thought Johnson could turn around ‘Titanic’ JCPenney, Wa l l
Street Journal, http://www.wsj.com, April 8; S. Gerfield, 2013, J.C. Penney rehires
Myron Ullman to clean up Ron Johnson’s mess, Bloomberg Businessweek,
http://www.businessweek.com, April 11; S. Clifford, 2013, J.C. Penney’s new
plan is to reuse its old plans, New York Times, http://www.nytimes.com, May 16;
S. Denning, 2013, J.C. Penney: Was Ron Johnson’s strategy wrong?
Forbes, http://www.forbes.com, April 9; M. Halkias, 2012, J.C. Penney’s Ron
Johnson shows off his vision of future to 300 analysts, Dallas News,
http://www.dallasnews.com, September 19.Case Discussion Questions
- The new CEO tried to be innovative. Were the innovations
introduced, more incremental or more novel? Please explain. - Do the innovations implemented by JCP sound interesting to
you? Would you shop at a store with these features? Why or
why not?
3. What are the reasons that the innovations implemented by the
new CEO failed?
4. What recommendations do you have for turning around the
performance of JCP?
NOTES
- B. Fritz, 2015, Disney unveils details on ‘Star
Wars: VIII’ and ‘Frozen’ Sequel, Wall Street
Journal, http://www.wsj.com, March 12; M. Lev-Ram,
2015, Empire of Tech, Fortune, January 1,
48–56. - B. Yu, S. Hao, D. Ahlstrom, S. Si, & D Liang,
2014, Entrepreneurial firms’ network
competence, technological capability, and
new product development performance,
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687–704; A. Lipparini, G. Lorenzoni, &
S. Ferriani, 2014, From core to periphery
and back: A study on the deliberate
shaping of knowledge flows in interfirm
dyads and networks, Strategic Management
Journal, 35: 578–595.- L. Dai, V. Maksimov, B. A. Gilbert, &
S. A. Fernhaber, 2014, Entrepreneurial
orientation, and international scope:
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S. A. Fernhaber, P. P. McDougall-Covin, &
R. P. van der Have, 2014, Beating
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value of geographically balanced networks
for innovation, Strategic Management
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What is an attractive business opportunity?
An empirical study of opportunity
evaluation decisions of technologists,
managers and entrepreneurs, Strategic
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