A METAPHOR ILLUSTRATING THE DIFFERENCES BETWEEN BELIEF AND REALITY.
How might this apply to great teams and cultures?
Our perception of the world is being generated by our brain and can be considered as a 'map' of reality written in neural patterns. Reality exists outside our mind but we can construct models of this 'territory' based on what we glimpse through our senses.
How might this apply to great products?
There are times when an old map, one that worked in a particular context, does not apply to a new context.
Even the best maps are imperfect because they are reductions of what they represent. If a map were to represent the territory with perfect fidelity, it would no longer be a reduction and thus would no longer be useful to us. Scribbling on the map does not change the territory: If you change what you believe about an object, that is a change in the pattern of neurons in your brain. The real object will not change because of this edit. A map can also be a snapshot of a point in time, representing something that no longer exists. This is important to keep in mind as we think through problems and make better decisions.
A DEEPER LOOK…
Case Study: J.C. Penny
Every day, leaders make decisions about maximizing current cash flow and profits or reinvesting and building for the long term. But if decisions were as easy as moving money around from budget A to budget B, there would be a lot more successful businesses. A substantial portion of business failures–from the costly to the catastrophic–can be attributed to not paying attention to the right balance between maximizing current performance and building future potential.
Apple’s Ron Johnson made the radar in 2011. Handpicked by Steve Jobs to build the Apple Stores, he is also credited with playing a major role in turning Target from a K-Mart look-alike into the trendy-but-cheap Tar-zhey by the late 1990s and early 2000s.
By 2011, Apple stores the most productive retail per-square-foot basis, leaving Tiffany’s in the dust. The gleaming glass cube on Fifth Avenue became a more popular tourist attraction than the Statue of Liberty.
Asked to apply his success from Apply and Target to J.C.Penny’s, Johnson was hired by Bill Ackman, Steven Roth, and other luminaries to turn around the tired old department store. The chain was attempting to reinvent themselves, leaving behind the core customer in an attempt to gain new ones. This was a much different proposition.
Johnson pitched his idea in with standard Apple suspense and fanfare. JC Penney’s stock price went from $26 in the summer of 2011 to $42 in early 2012 on the strength of the pitch.
The idea failed almost immediately. His new pricing model (eliminating discounting) was a flop. The coupon-hunters rebelled. Much of his new product was deemed too trendy. His new store model was wildly expensive for a middling department store chain – including operating losses purposefully endured, he’d spent several billion dollars trying to affect the physical transformation of the stores. JC Penney customers had no idea what was going on, and by 2013, Johnson was sacked. The stock price sank into the single digits, where it remains two years later.
What went wrong in the quest to build America’s Favorite Store? It turned out that Johnson was using a map of Portland Maine to navigate Portland Oregon. Apple’s products, customers, and history had far too little in common with JC Penney’s. Apple had a rabid, young, affluent fan-base before they built stores; JC Penney’s was not associated with youth or affluence. Apple had shiny products, and needed a shiny store; JC Penney was known for its affordable sweaters. Apple had never relied on discounting in the first place; JC Penney was taking away discounts given prior, triggering massive deprival super-reaction.
“All models are wrong but some are useful.”
— George Box
In other words, the old map was not very useful. Even his success at Target, which seems like a closer analog, was misleading in the context of JC Penney. Target had made small, incremental changes over many years, to which Johnson had made a meaningful contribution. JC Penney was attempting to reinvent the concept of the department store in a year or two, leaving behind the core customer in an attempt to gain new ones. This was a much different proposition.
The main issue was not that Johnson was incompetent. He wasn’t. He wouldn’t have gotten the job if he was. He was extremely competent. But it was exactly his competence and past success that got him into trouble. He was like a great swimmer that tried to tackle a grand rapid, and the model he used successfully in the past, the map that had navigated a lot of difficult terrain, was not the map he needed anymore. He had an excellent theory about retailing that applied in some circumstances, but not in others. The terrain had changed, but the old idea stuck.