What Retail Legend Ron Johnson Learned from Apple's Success and JCPenney's Failure

SPEAKER_1 (0:03)

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Audie Ignatius (0:59)

I'm Andy Ignatius.

SPEAKER_1 (1:00)

I'm Alison Beard, and this is the HBR IdeaCast.

Audie Ignatius (1:10)

So, Alison, 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 (1:24)

Okay. I'm definitely intrigued. Who is this?

Audie Ignatius (1:27)

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 (1:42)

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.

Audie Ignatius (1:49)

Well, here we go. So, Ron is the author of a new book, Shop Different, How Retail Revealed Apple's Genius. We talked about how he delivered on an ambitious vision at Apple, even bringing along 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.

I want to start with your time at Apple. 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. Talk about what you learned for that experience, but particularly in terms of how to serve customers.

Ron Johnson (2:28)

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 the big challenge was, like anything you do in businesses, 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, we have technology novices.

Audie Ignatius (3:28)

So it was on a hunch, right? I mean, you're opening stores in malls for product that people typically buy once every few years.

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?

Ron Johnson (3:50)

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 with the art, I could find out what I sold yesterday. It was a different world. And so people were trying 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 in a 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 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. You want to see what's new.