What Retail Legend Ron Johnson Learned from Apple's Success and JCPenney's Failure
HBR IdeaCast
Former retail executive Ron Johnson reflects on his contrasting experiences leading major transformations at Apple and JCPenney. He details
Key takeaways
- Steve Jobs prioritized quality over speed, often delaying products like the iPhone to ensure perfection.
- At JCPenney, Johnson's transformation failed because he did not secure the buy-in of existing employees and stakeholders.
Main topics
- Apple Store creation
- Leadership lessons from Steve Jobs
Notable quotes
All innovation stems from your imagination.
Conclusion
True leadership in transformation requires balancing bold vision with
Transcript preview
Speaker 1 (0:01) Turn breakthrough ideas into real results at the virtual HBR Innovation Summit this November with top CEOs and masterclasses on AI and growth. Register by September 30th and save 25%. Learn more at hbr.org slash innovation summit. Speaker 2 (0:32) I'm Arne Ignatius. Speaker 1 (0:33) I'm Alison Beard, and this is the HBR IdeaCast. Speaker 2 (0:43) So Allison, today we're going to look at an executive who has had a fascinating business career, who achieved phenomenal highs and then endured humbling lows. Someone who brought the same playbook to two different companies, and it worked at one and it failed at the other. Speaker 1 (0:58) Okay, I'm definitely intrigued. Who is this? Speaker 2 (1:01) So this person is Ron Johnson, who killed it at Apple, working closely with Steve Jobs to invent and then roll out the Apple Store. He eventually left Apple to become CEO of JCPenney, a more modest department store chain, and there his big ideas simply didn't work. Speaker 1 (1:16) Okay, I followed both of those stories as they were happening, but I don't know all the details, so I'm interested to hear more. Speaker 2 (1:22) Well, here you go. So Ron is the author of a new book, Shop Different, How Retail Revealed Apple's Genius, and we talked about how he delivered on an ambitious vision at Apple, even bringing along an initially skeptical Steve Jobs. And we talked about what he learned when the same brash approach didn't work at JCPenney. Here's our conversation. Speaker 2 (1:43) I want to start with your time at Apple, right? You'd come from Target. You had developed an expertise in retail. Steve Jobs brings you in to create the Apple Store, the challenge of a lifetime, right? Talk about what you learned from that experience, but particularly in terms of how to serve customers. Speaker 3 (2:01) Yeah, well, I had the privilege, as you just said, of creating the Apple Stores alongside Steve Jobs. And I had been 15 years in retail. But it was a whole new thing because at that time, there really wasn't a good technology retail experience. They tended to be operated and owned by people that knew technology but didn't know retail. So I had the chance to kind of think through what the experience should be from scratch. And Speaker 2 (2:28) the big challenge was, like anything you do in business, is Speaker 3 (2:31) who's your customer and what problem are you trying to solve? And Steve and I decided that Apple's big opportunity was to go after all the people. who had yet to join the computer revolution. You know, in 2000, we were moving from analog to digital. And so we were trying to get people who had never bought a computer before. And we thought the Mac offered a much easier, better-to-use solution. And we could differentiate the stores and serve customers by going after people that were, you know, technology novices. Speaker 2 (3:01) So it was on a hunch, right? I mean, you're opening stores in malls for a product that people typically buy. once every few years. I know you had a lot of people saying, this is ridiculous. Talk about how you deal with confidence in your vision versus questioning your vision and the lack of certainty. Like, how do you make the decision, we're going to do this? Speaker 3 (3:23) Well, you got to remember, as you know, back in 2000, the world had a lot less data to rely upon. You know, I came from Target. We didn't use email. Our sales reports would come in once a week, and all of our data was based on weekly sales reports. Sure, if I worked really hard, I could find out what I sold yesterday. It was a different world. And so people were trained to operate on their instinct. Steve famously believed that the only way to create something great was to imagine something that's never been done before and do what you believe is right, and people will understand it when they see it. So I was working for a boss who wasn't that much data-driven or going to work with focus groups. So when we created the Apple stores, we had to trust our instincts. So, for example, the question is, where do you locate a store? As you mentioned, the history would say that if someone's going to buy something every four or five years, you want to locate in a low-cost location. They'll come to you when it's time to buy because it's much more expensive being a place that depends on frequency. The Gap would want to be in a mall because people are buying their clothes all the time. They want to see what's new. A computer will come to you. However, Steve and I knew that it was unlikely that someone would be in a car and drive 10 miles to go check out a Mac. If we were in a mall where people shopped, we had to get them to go 10 feet out of their way. And that seemed like a lot easier problem to solve. And we believed in our bones that if we got people into the store, got their hands on a Mac, talking to one of our highly trained people, we had a chance to win. But the big thing we couldn't do is afford to open a store and not have traffic. Speaker 2 (5:08) So I want to get back to this instinct versus data question because Steve Jobs. was incredible, right? We know this. He had these visions, but he had failures, right? And our most confident instincts are not always going to play out successfully. So, you know, this one worked, but what's your advice in terms of, all right, you've launched something, and in this case, it's like, we're not going to know until we launch it what we've got and how the market will respond. But, you know, how far can you push that before you have to say, all right, maybe this wasn't the perfect idea? Speaker 3 (5:39) Well, you'll know. You've got to read the results of what you did. But I am a believer, and I'm pretty well known for this, for trusting your instincts. You know, I really believe that, especially now, we're in a world with AI where what's common knowledge, whatever's been learned in the entire universe up until today, is a query away. Right. So common knowledge is easy to find. If I were creating the Apple stores today and I was going to interview with Steve, I could say, go to chat GPT. You know, I'm going to build technology stores for Apple. Give me a 10-part strategy. What should I do? Not a single thing it would have recommended back in 2000 is what we did at Apple. And so it kind of shows the power of what we bring to work is our own inner voice. You know, it's that instinct that is formed through our personal life experience. And it's really important. So example, you wouldn't put stores in a mall. We put stores in a mall. Then the next thing people said, you got to hire really. high technology, people who love technology, know technology, and put them on a commission because you're not going to have a lot of traffic. And it's really hard to convince someone to buy a $2,000 computer. But we didn't have anyone on commissions. We hired people from bookstores who were love people first, and we taught them technology. We built a store that was 6,000 square feet. In retail, they'd say the size of the store should relate to the number of products you have. And so if you have a small product line, you can have a small stores and be very productive. But when I talked to Steve, you know, we're trying to get people to believe in Apple as a brand. You're going up against Microsoft, which has a 95 % market share. Is the Apple brand as big as the Gap? Was the question I asked him. He said, bigger. And I said, well, we're in a mall and we want to look relevant. We ought to have a store the size of the Gap. And that got us to the 50-yard line where you want to be in retail. But none of these things would have been supported by data or by some consultant that we might have hired to go do the stores. So we made all these bets. But the problem we were trying to solve is we had to get traffic into the store. The mall did that. We knew people would take four or five times to buy it. We had to have friendly people to get them back. And we had to get their hands on a computer. And once we solved those things, All of it