Ron Johnson: “It’s Not About Speed. It’s About Doing Your Best”
The former CEO of JCPenney discusses Apple, Target, and lessons learned from a 30-year career in retail.
Ron Johnson in 2013 | Associated Press photo by Bebeto Matthews
Ron Johnson in 2013 | Associated Press photo by Bebeto Matthews
When Ron Johnson started his retail career 30 years ago, the man who would go on to create the retail experience that we now know as the Apple Store, was entering “a startup field.” Venture capitalists were funding retailers not technology companies. “That’s when Mickey (Millard) Drexler first went to The Gap from a department store. That’s when Les (Leslie) Wexner, of Limited fame and Victoria’s Secret, invented the modern specialty store. That’s when U.S. Ventures was funding Staples and Toys “R” Us as startups — ‘cause that’s when big box retailing started.”
Johnson, who began working on the loading dock of Mervyn’s department store after earning his MBA from Harvard Business School, later went on to Target where his idea to sell a teakettle led the discount store to its reputation for selling trendy products with an upscale feel. Most recently, in April he lost his CEO job at JC Penney after failing to turn around the more than century-old department store during his 17-month tenure.
The founder of a new investment fund called Johnson Partners was a guest speaker at the “View From The Top” series on May 19, where he shared with Stanford GSB students the lessons he has learned from working more than three decades in retail.
There is No Single ‘Right Answer’
Johnson learned this lesson while studying hundreds of case studies at his Harvard classes. “And we’d all read the same case, but everyone would have a different opinion,” he says. “That led me to recognize, in part, that there is no one right answer to most business problems, but it will be informed by your own experience, and ultimately, your own intuition.”
Data Does Not Tell the Entire Story
“Don’t just rely on numbers,” Johnson says. “If you rely on data, and the data’s going to drive the evidence that drives the decision, well, most companies would come up with the same approach. And, ultimately, when you have an approach that’s like a commodity, it doesn’t do very well. Most of the great businesses had a spark of innovation.”
Learn by Doing
At Mervyn’s, Johnson asked to start at the lowest job instead of going directly into an office job at its headquarters. “I unloaded trucks for three months, and I got really fast at it,” he says. But he also learned how the merchandise got packaged, how it was on a trailer, how it was stocked efficiently, and how to make sure goods got to the floor. “It gave me lifetime knowledge, which I value today. So I can walk through a store and I see things, probably, that I wouldn’t see if I hadn’t done that.”
Follow Those Intuitive, Instinctual Moments
Early in his career at Target, Johnson was in charge of the home products section; he was traveling to Europe often and also had bought his first home. “And I was struck by all the beautiful objects of art. I love things that are beautiful that you’d find in these really high end boutiques that were expensive, but there was nothing like that available in a store like Target.” At the time, he says, merchants would buy something, copy it later at a low price. “And it hit me, why do the small expensive brands create, when the big brands with all the resources copy? It didn’t make sense. And why are beautiful objects not available to everyday people?” Johnson then did something that was a breakthrough in the early 90s: He asked designer Michael Graves, who had designed a bestselling, pricey teakettle to create a more affordable one for Target. Graves said yes.
Prepare to Battle “Reality Filters”
The concept of designing and selling teakettles was far removed from what Target was doing at the time. Not surprisingly, top executives were skeptical. Johnson says he was bombarded with questions such as “Who’s Michael Graves? Why do you think our customers will like design?” It is challenging to explain innovation because it grows from one’s imagination, he says. “Any time you imagine something, you’re going to be stuck battling reality filters, you know — the kind of assumptions about the business that are embedded in the company you’re at.” Target put the Michael Graves collection on its shelves in 1999, and that “led to a series of things that helped Target differentiate itself, really become preferred.”
Be Willing to Start Again
One day, before Apple opened its first store in May 2001, Johnson was riding with Steve Jobs to a weekly planning meeting about the store Johnson was charged with designing. Johnson told his boss, “Steve, I’ve been thinking. I think the store’s organized all wrong. We’ve organized it like a retail store around products, but if Apple’s going to organize around activities like music and movies, well, the store should be organized around music, and movies, and things you do,’” Johnson recalls. “And he looked at me and he said, ‘Do you know how big a change that is? I don’t have time to redesign the store.’” Then, 10 minutes later, at the meeting, Johnson recalls, “Steve walks in and the first thing, he looks at the group and he says, ‘Well, Ron thinks our store is all wrong.’” Jobs then added ‘And he’s right, so I’m going to leave now and Ron, you work with the team and design the store.’” That lesson, of not doing it fast, but doing it well, “carried through to so many things I’ve done,” Johnson says. “It’s not about speed to market; it’s really about doing your level best.”
Sometimes, You Will Get it Wrong
Johnson’s plan with JCPenney, he says, was to get a younger, and more profitable customer base, eliminate discounts, and to move quickly even if it meant there would be dropping sales in the short run. But in retrospect, even as he thinks his plan would have succeeded, he realizes his pace was too fast for such a traditional company. “I think it was kind of arrogance. I just had such — I’d had such success, you know? Most of the things I’d done at Apple and Target worked and so you think, well, this will work too. And the reality is, you know, we moved too quickly.” It was too fast for the board, the customers, employees, and shareholders, he says.
Know Your Fit
In the end, Johnson realized that JCPenney was not the place for him. “It was disappointing because I really believed we would make it work, but it was a relief because the lesson I learned is I was a terrible fit for JCPenney,” he says. “I believe in change, this company’s much more comfortable, like many people are, with the status quo.”
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