Fair and Square

Okay, let me start by saying I believe this idea is never going to work. It violates the very principles that this blog preaches about in regards to corporate culture. First what is the new Fair and Square marketing plan from J.C. Penney?

J.C. Penney's new "fair and square" plan cuts prices by 40 percent from what they were a year ago. The idea was to get off the promotional treadmill, away from the steady stream of specials, coupons and "doorbusters" that drain retailers' profits. But they are still running sales. This undermines that strategy since sales aren't really going away. Each month, they select some items to discount further, and on the first and third Friday of each month, they hold "clearance" sales with even lower prices.

So do you see the issue here? The culture. If you want to transform the culture of your business to be one of fair and square pricing where there is no need for a sale, the first people you have to convince are the employees. And if you continue to run sales, then what are you reinforcing with your employees? Simply put - that fair and square is a marketing and advertising plan and not a real change in the corporate culture's values. They will buy in at first. There will be big meetings and fun internal marketing programs to "get the word out." But each time they run a sale, an employee knows that these prices are just different. Plus, they know that you cannot reduce your prices by 40% without changing the products. So they are left asking is this a better deal or cheaper goods?

Don't get me wrong, it will work for awhile. But the Culture Cycle (the cycle of how a corporate culture develops and sustains) will kick in and the new ideas brought forth with this concept will be swept away by the reality of the culture. The employee and the customer will not believe it.

Apple, where Ron Johnson now CEO of J.C. Penney came from knew this very well. And they performed it very well. They were models for how to align the employees with the culture. But, that was a "ground up." Process, In fact, Apple closed the first few stores they opened and started over again because the stores did not align with the corporate culture values.

Our friends who work at JCP have all shared that they are "confused" by fair and square and do not understand who it aligns with who JCP is and worse yet, do not know where JCP is going. JCP is an established company with an established culture that needs to be changed. The simple fact is that it is 100 times harder to change a culture than it is to start one.

There is a long road ahead of JCP. And, we hope that Wall Street gives them time to work it out. But learn the lesson here. You must program the future to accept this new value as a company. Otherwise, the culture will strip away every part of your plan.