HIP-ify IT!

The Panama Canal was initially begun by the French based on their great success with the Suez Canal.  However, the challenges of building it, particularly in fighting both malaria and yellow fever, which were rampant, were totally unexpected.  Huge numbers died in the process.  They eventually gave up and handed it off to the United States.  The success hinged in part on controlling the diseases.  The great physician William C. Gorgas was one of the first to recognize the mosquito as the primary culprit and implement methods to control them, including drainage, grass cutting, and oilage.  By dealing with the root issue, the problems were solved.

In the 1980s and early 1990’s the poor neighborhoods of Brownsville and East New York and their streets were crime-ridden.  Adding more police and jails only treated the symptoms of the problem. To solve its crime situation, New York City implemented the Broken Windows theory, which states that if a window is left un-repaired then people walking by will assume no one cares and no one is in charge. Graffiti, public disorder and panhandling are the equivalents of broken windows. In other words, when a place is messy, people add to the messiness. That was the root cause of the crime in New York City. The solution that the Broken Windows theory provided was to clean up the city. Then, people would have an inclination to keep it clean. That in turn would reduce the serious crime. The Broken Windows theory solution was put into effect in all of New York City when Rudolph Giuliani became mayor. They fixed all broken windows, stopped panhandlers, and painted over graffiti. They literally had the streets cleaned up.  They arrested people for small crimes like not paying their train fairs, sending a signal that no crime would be tolerated. The broken windows theory worked. Crime dropped precipitously. People started caring; they felt someone was in charge.

A strategic mistake made six years ago by celebrity CEO Ron Johnson continues to haunt popular retailer JC Penney.  JC Penney’s woes began with a change in the retailer’s pricing strategy --replacement of coupon sales with everyday low prices.  The old pricing strategy has been popular among retailers, because it hypes shoppers, making them feel smart and encouraging them to talk with other consumers about it.  JC Penney abandoned this strategy after Ron Johnson assumed the leadership of the company, modeling the company's stores after those of Apple. The company eliminated coupon discounts, changed the floor merchandise; and added boutiques.  J. C. Penney’s strategic mistake came from a misunderstanding of a crucial difference between retail stores and Apple stores: Apple’s Word-of-Mouth and unique products already hype its customers. They know what they want; they don’t need conventional sales promotions to be lured to the stores.   But retailers like JC Penney don’t have a similar marketing machine, and its products aren’t unique either; they are carried by Macy’s, Kohl’s, Wal-Mart, and Target – to mention a few.  They solved the wrong problem and in fact created another.