‘Turnaround Kid’ Says Microsoft Should Learn From J.C. Penney’s Mistakes

Steve Ballmer

American International Group (NYSE:AIG) Chair Steve Miller has said that Microsoft (NASDAQ:MSFT) needs to be mindful not to compete the mistakes of J.C. Penney (NYSE:JCP) in looking for a new CEO and attempting to revitalize its business.

Miller has spent his career helping to revive struggling companies and titled his autobiography The Turnaround Kid. He spoke about Microsoft’s efforts to turn itself around in a Bloomberg TV interview with Stephanie Ruhle and Erik Schatzker on Friday. “What must terrify them is the example, say, of J.C. Penney,” Miller said of Microsoft. “They decided they needed to change, they brought in Ron Johnson, did a radical shift in their whole strategy, and it was a complete failure.”

Ron Johnson was scooped up by J.C. Penney as the store looked to change its image amidst a tough retail landscape. Johnson rid the department store of discounts, got rid of merchandise, and restructured Penney’s to look like a collection of boutiques within a larger store. The results were disastrous and Johnson was fired in April. Things haven’t gotten much better since. The U.S. Securities and Exchange Commission is looking into the company’s finances after a share offering to raise $810 million was announced and bankruptcy rumors have been piling up.

“Microsoft has a tremendous platform, but the technology business changes so fast, and companies that two years ago were great are all of the sudden on the skids. And if you don’t get ahead of that curve, you know, you could see Microsoft going down fast,” Miller went on to say.

Microsoft has been looking for a new CEO since Steve Ballmer announced in August that he was planning to leave the company within 12 months. The CEO shortlist has been reportedly narrowed down to five candidates. Miller thinks that whoever takes that job needs to be wary of making drastic changes too quickly, like happened at J.C. Penney.

In an interview with the Wall Street Journal last month, Ballmer acknowledged that his own efforts to quickly restructure the company threw Microsoft into disarray. Microsoft needs to take a lesson from J.C. Penney and take a more cautious approach to its turnaround, even though the company does have to catch up in mobile as soon as possible.

Follow Jacqueline on Twitter @Jacqui_WSCS

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