Leadership Blindspots

A JCPenney for Your “Blindspot”

After a century in operation, the JCPenney department-store chain needed a jolt of new energy. The firm named a new CEO, Ron Johnson, former head of Apple’s profitable retail division.

Johnson revamped JCPenney. He shifted the firm from its traditional role as a trusted supplier of private-label, discounted merchandise to a purveyor of popular brands at low prices. Knowledgeable insiders warned Johnson about moving too far and too fast. They reminded him that he was a stranger to JCPenny’s retail market. Self-confident and certain of his own vision, Johnson ignored all of that advice.

Johnson’s plan failed quickly. Without JCPenney’s usual deep discounts, previously loyal customers took their shopping elsewhere. The company suffered a $1 billion loss during Johnson’s first year as CEO. As one business-school professor put it, JCPenney “had been run into a ditch when he took it over. But rather than getting it back on the road, he’s essentially set it on fire.”

Mid-range fashion retail, where Johnson had minimal experience, was a big switch from selling iPhones in trendy Apple stores. Though he was in unknown territory...