In a recent interview with the Harvard Business Review new JC Penney CEO Ron Johnson was asked whether it wasn’t a pretty risky proposition to completely re-invent a department store?
His answer was clear, concise and spot on: “The opposite is what’s risky.”
Years ago, when I was at Sears, we had many debates about how risky it was to take our dominant tools and appliance franchises “off the mall.” Mainly we were concerned about how such a bold strategy would cannibalize our core mall-based department store business. Now, more than a decade later, virtually all the value that’s been created in the retail tool and appliance industry has been captured by Home Depot, Lowe’s and others that responded better to shifting customer desires. And the core business we tried to protect now seems headed inexorably toward extinction.
Whether you study Blockbuster or Borders–or myriad other brands that fell hard from lofty perches–you don’t have to be much of a business historian to see how industry incumbents consistently get the risk equation wrong. And by the time their platform is fully on fire, it’s far too late to recover.
Defend the status quo and you’re likely to be the proverbial frog slowly boiling to death.
Challenge the status quo, walk through your fear and at least you give yourself a chance to survive and thrive.