Banking Exchange Magazine Logo

Apple, J.C. Penney, the U.S. Army, and banker survival

Enjoy past success with a healthy serving of humility--or eat crow later

Reports the other day that J.C. Penney's CEO, Ron Johnson, had been dismissed were no surprise. The whiz kid from Apple's marketing department tried to pull off a remake of the big retail department store chain's marketing strategy and failed miserably.


I'm no marketing expert. But as a senior banker and as a CEO, I have had to deal with marketing ideas and make some, often not necessarily better than the ideas they replaced, work.


Learning from Penney debacle

There were three things about Johnson's tenure that strike me as relevant to what any of us in the banking business may face as we deal with how we sell ourselves and our banks to customers.


First, he didn't do any test marketing.


This is like the guys I used to work for at First Security in Salt Lake City. They assumed that the city my acquired bank did business in--Albuquerque--was similar to the company's other principal markets.


When the marketing mavens introduced new Visa cards with a picture of a mountain chain, they didn't even showcase our own mountains (!).


The characteristically Hispanic culture of New Mexico is, was, and likely will always be different than the culture along the "Wasatch Front" in Utah. They never really got that in the parent company's marketing department.


Second, Mr. Johnson never moved his home from California to Dallas.


Instead he worked at the company headquarters three days a week (and presumably put in many hours in his home office in the Bay Area).


But what can you learn that you don't already know sitting at home? 


You can't assimilate--let alone understand--the nuances of a company's culture from a distance of 1,800 miles or on a part-time basis.


Third, Johnson brought a lot of his own people from Apple with him.


I've got problems on several levels with that. How does this impact the morale of the headquarters people at the new place who suddenly have new, and, from their point of view, "unvetted" senior people? 


Where did Johnson turn for advice and encouragement? 


A likely answer is that he talked to his old Apple colleagues, who became not only a bunch of yes men, but--figuratively--yes men on steroids.


CEOs are constantly dealing with the "court of admirers" that typically frequents a corporate headquarters. It seems unnecessary to import one's own.


Déjà new and déjà vu

I raise these issues not because I'm particularly interested in the success of J. C. Penney's turnaround strategy but because of the ironic situation that the company was doing reasonably well before Johnson was brought in.


The principal shareholder, a large investment fund, was not satisfied with the company's performance compared to peers so the stockholder precipitated a change in leadership.


The new CEO will be the man Johnson replaced ... so 17 months was not only wasted but the company may have been mortally wounded as an independent retailing giant.


A top line loss of 25% of its volume is a very serious wound.


A critical lesson from where America used to shop--and Uncle Sam

I suspect that similar issues are lurking below the surface many community and smaller regional banks these days as they recover from the ravages of the Great Recession. Statistically, the recession is over but the problems it highlighted linger on in a variety of ways.


There's plenty of anecdotal evidence that many banks are rethinking their basic business models and are gradually realizing that there are some important gaps in staff expertise and experience that need to be filled or fixed.


One is succession management across one or more product lines, not to mention executive management suitable to the challenges of a new industry and regulatory landscape.


The larger issue is probably identifying and retaining the skill sets needed for the future. There's lots of room for creativity on what a strategy should be, but not a lot of room for faulty execution. One needs to be careful, though not timid, in dealing with such matters.


My active duty military service was spent as Deputy Finance Officer of Ft. Leavenworth, Kan. The finance office handled the military and civilian payrolls for a permanent staff of about 2,500. We had about a dozen people, mostly long-tenured civilians working on payroll activities and we relied heavily on an IBM punch card system that, while reasonably automated for its day, is understood in today's terms as pretty primitive. My boss was a lieutenant colonel career finance officer and a very smart and savvy manager.


Army headquarters wanted us to automate our system to a central computer typical of the day's technology and my boss enthusiastically tackled the project. Along the way, he decided that we could convert without what is called a "parallel run." So, we made a direct conversion one day, turning off the old and the next day turning on the new. It worked flawlessly too and was a real feather in my boss's cap.


A couple of years later, he was in an overseas deployment as finance officer of an active duty combat infantry division. His success at Ft. Leavenworth in the payroll conversion led him to think that a conversion to a state-of-the-art automated payroll system in the field was doable in much the same way. By this time, we were no longer in touch so I was simply unaware of how his career had fared until many years later.


What happened at the front...

In one of those strange coincidences, I worked with a retired Army colonel in Florida at Southeast Banking Corporation. This man was head of human resources at the Orlando affiliate bank and when I learned of his particular background, I asked about my old boss. Here's what I learned.


He declined to do a parallel run on the division's payroll system conversion and the process was a complete disaster.


The situation went so badly, in fact, that this very bright, qualified man with nearly 25 years of distinguished service was relieved of his duties. The Army sent him home to an early and unexpected retirement.


And my bank colleague had been the senior finance officer of the theater of operations and personally relieved my old boss and dealt with the cleanup of the failed conversion.


Learn from others' mistakes

The lesson is that my old boss thought he could pull off a similar feat a second time. The situations between relying on a team of very experienced, mainly civilian subordinates in Kansas was very different from dealing with military subordinates organic to a combat division. He was incautious in his assessment of the situation and the resources necessary to do the job. This was also a very unforgiving environment without opportunities for second chances.


Remind you of an industry you work in?


The lesson for all of us in these two examples--J. C. Penney and the U. S. Army--is that there are hidden traps and pitfalls in executing strategies.


A certain prudence is in order. And it starts with a healthy respect for the complexity of the current operating environment.


In that sense, banking has never been more challenging or difficult than it is today. We need to keep our wits about us and approach our tasks with humility.


Dwight Eisenhower said it well when he admonished his Army colleagues to always take their jobs seriously but never themselves.

Ed O’Leary

Banking Exchange Contributing Editor Ed O'Leary, a veteran lender and workout expert, spent nearly 50 years in bank commercial credit and related functions, working with both major banks as well as community banking institutions. His last job before retiring was as the CEO of a regional bank headquartered in Alburquerque, N.M. He earned his workout spurs in the dark days of the 1980s and early 1990s in both oil patch and commercial real estate lending. O'Leary began his banking career at The Bank of New York in 1964, and worked at banks in Florida, Texas, Oklahoma, and New Mexico. He served as a faculty member and thesis advisor at ABA's Stonier Graduate School of Banking for more than two decades, and served as long as a faculty member for ABA's undergraduate and graduate commercial lending schools. Today he works as a consultant and expert witness, and serves as instructor for ABA e-learning courses. You can e-mail him at [email protected]. O'Leary's website can be found at

In mid-2016 O'Leary's "Talking Credit" blog received a bronze excellence award for the Northeastern Region from the American Society of Business Publication Editors.

back to top


About Us

Connect With Us