Raikkonen Lotus
Posted on April 13, 2013 ยท Posted in Management

When a large company chooses a new CEO, their candidates generally fit into one of two categories. Successful companies will usually choose a caretaker CEO who continues the current business model and generally works to optimize existing product and service lines. Struggling companies have to choose maverick leaders who come in guns blazing and often have to rearrange, discard and downsize in order to try and get back to black.

Successful maverick CEOs have to balance internal relationships with the reality that eliminating struggling divisions and changing business as usual is often easier said than done. Corporate turnarounds aren’t impossible but when you go into a struggling company with the idea that the reason the company is struggling is because everyone is stupid … you get a 17-month long train wreck that JC Penney was all too happy to end.

Hopes were high when Ronald Johnson was appointed CEO of JC Penney in November 2011 as shareholders pushed the company to shake up its image and grow sales. Johnson was seen in the light of his Apple halo because in 2000 he worked to develop the Apple Store concept that helped to fuel the company’s resurgence and turned the electronics purchasing experience into a hip, club like experience.

He was seen as a visionary rockster who immediately fired many top executives and his turnaround plans were an initial hit on Wall Street as the stock jumped to $43. His new vision was a store concept that incorporated trendy brand boutiques and removed traditional coupons and discounts in favor of a WalMart-esque “Always Low Prices” model (oddly enough WalMart ditched that slogan in 2007 after using it for 19 years).

Johnson commuted from his California home to the company’s Plano office via private plane and spared no expense in promoting himself through lavish parties and an ideology that everyone needed to be a believer not a skeptic.

According to internal sources, he despised everything about the brand from the customer base to their marketing program. Sales immediately fell as consumers bristled at the new pricing scheme but anyone who attempted to raise objections got nowhere.

His attempt to pry Martha Stewart from Macy’s has now become an expensive legal battle. He revoked access to sales data that kept managers in the dark about what was selling and what needed to be ordered and revenue fell 25 percent.

Though he later backtracked on some of his earlier decisions, the damage was done and the experiment ended 17 months after it started with the company in far worse shape than it was.

So where does Kimi Raikkonen fit into the equation? I bring him up because of his famous run in with his Lotus engineer.

The difference is that Kimi Raikkonen may want to be left alone because he knows what he’s doing but he also realizes that a competitive car requires input and dialogue between himself and his team of mechanics and engineers. Kimi knows how to drive but he can’t build the car himself. Too bad Ronald Johnson failed to understand this basic rule.