In a conversation with Motley Fool analyst Jason Moser, Ron Johnson, creator of the Apple store and author of "Shop Different," shared insights from his extensive career in retail, spanning Target, Apple, and JCPenney.
Johnson began by recounting his early career at Target. After graduating from Harvard Business School, he chose retail over investment banking, drawn by his love for being in stores. He started at Mervyn's, a subsidiary of Dayton Hudson, and later moved to Target around 1990. This period was marked by intense "discount wars" between Target, positioned as the "higher-price suburban differentiator," and Walmart, the "low-cost rural operator." Johnson played a pivotal role in bringing design to Target, notably through a partnership with Michael Graves, which significantly boosted Target's performance in the 1990s.
His transition to Apple in late 1999/early 2000 was controversial. At the time, Apple was a 25-year-old company that had been "largely defeated," with a mere 5% market share compared to Microsoft's 95% in personal computers – a "19 to 1" deficit. Despite the prevalent belief that the internet would render physical stores obsolete, Steve Jobs believed a retail presence was the "missing link" for Apple. Jobs, who had taken notice of Johnson's innovative work at Target, personally recruited him. Johnson's decision was met with skepticism, given Apple's perceived high risk, Jobs's demanding reputation, and Apple's limited product line compared to Target's vast offerings. Yet, after meeting Jobs, Johnson felt a strong conviction to join.
Johnson articulated the core philosophy behind the Apple store: "We're gonna love our customer." He defined this love not romantically, but as "securing the good of a customer" by addressing their needs. This translated into practices like a warm welcome, understanding customer's purpose for visiting, guiding them to experience products, and a fond farewell. Crucially, Johnson emphasized, "don't try to sell anything," advocating for "serving our way to significance" through relationship-building rather than transactional sales. This philosophy extended to employees, aiming to create a workplace built on love.
Working with Steve Jobs fundamentally shifted Johnson's mindset. While at Target, "radical innovation wasn't really encouraged," and big ideas often met resistance. At Apple, Jobs constantly thought "one step beyond," pushing boundaries and investing personally to ensure the Apple store prototype was "the best." Johnson realized Jobs, who had changed the world multiple times (Apple, Pixar, iPod, iPhone, iPad, music store, and stores), thought "bigger than any of us."
Addressing Apple's leadership, Johnson discussed the successful transitions from Steve Jobs to Tim Cook, and now to John Ternus. He highlighted Apple's enduring principle: they are "never really in a hurry." Steve Jobs focused on creating "amazing products," with profit as an outcome, not the primary goal. Tim Cook excelled at optimizing these products and expanding Apple's reach globally, growing the user base to nearly 2 billion. For John Ternus, Johnson believes the focus should remain on ensuring a great customer experience with existing products and continuous, incremental improvements across hardware, software, and apps. He emphasized that there's no need for a "magic new device" to replace the iPhone, which has proven its enduring form factor. Johnson praised Apple's commitment to "not about being first, it's about being best," citing their approach to AI, where despite initial lags, their focus on privacy has been paramount. Ternus, having been at Apple for 25 years, is expected to protect Apple's core values of "think different," customer love, and deep integration, ensuring continued loyalty.
Reflecting on his diverse career, Johnson shared lessons from both successes and failures. From Target and Apple, he learned how to innovate, be bold, serve customers by prioritizing relationships, and build a positive, love-based culture. His tenure as CEO of JCPenney, however, offered lessons on "how not to transform a company." He admitted to making mistakes, noting that while he believed JCPenney needed radical change, the organization "didn't really" want it. He pushed an innovative vision too quickly without building a supportive team or truly understanding the existing customer and employee needs. He concluded that while he can design great customer experiences and foster innovation, "you're probably not going to hire me to do a transformation of a company because I don't have a good track record of that." This humility underscores his belief that embracing mistakes is "one of the greatest superpowers" for learning and growth.