Transcript of Ron Johnson: Business Lessons From Apple’s Success and JCPenney’s Nearly $1B Failure | Entrepreneurship | E417

Most people thought it was insane that Apple was gonna open stores, including a couple of the board members. Steve said to me, he goes, Ron, we have $4 billion in the bank. If I could write a check for $1 billion today and have 100 stores, I'd be happy.

When Ron Johnson joined Apple in 2000, the company had a tiny share of the computer market. Ron helped create and launch the Apple Store and Genius Bar. Ron takes us behind the scenes of his work at Target, Apple, and JCPenney while sharing what he learned about innovation, leadership, and decision-making through both his greatest successes Steve believed after that experience that if Apple was gonna win, it had to control the customer experience.

Because the reality, Dell's done pretty well selling computers over the internet, and Gateway selling PCs is closing its stores.

You came up with the concept of Genius Bar, correct?

I called Steve and I said, Steve, I got the name. I wanna call it the Genius Bar. And he said, you can't do that because anybody you find who can talk about technology is a geek. So if you wanna call it the Geek Bar, maybe that would work. I said, the main reason I want that name is—

How did that impact your ego? Like, did you feel down or like that you were a failure because you had failed?

I was a failure. Make no mistake about it. When you're the CEO of a company and you do something, fails in everyone's mind, and you walk away from it, you failed. I think even today there'll be times I wake up and my stomach churns about—

Ron, welcome to Young and Profiting Podcast.

I am so excited to be here. Nice to meet you, Hala.

Nice to meet you as well. Thank you for flying out, being here in person. You've got such incredible experience. You've been with Apple, Target, JCPenney in the C-suite, and you've done such an incredible job transforming these stores, especially Apple and Target. So I wanna start with Apple.

Sure.

I learned that you convinced Steve Jobs to put in Apple Stores before they were even a thing in really expensive malls when Apple only had 5% of the PC market share and 4 products.

Right.

How was that not a completely insane idea at the time?

Well, most people thought it was insane that Apple was gonna open stores, including a couple of the board members. But I didn't convince Steve. Steve wanted to open stores.

Okay.

Steve had come back to Apple in 1997. launched that cult hit, the iMac, which had rave reviews, even made the COVID of Time magazine.

Wow.

But it didn't change the game for Apple. It sold to the Mac faithful. And Steve believed after that experience that if Apple was gonna win, it had to control the customer experience. So it wanted to open stores. So he called me to come out and talk to him about stores.

So he poached you from Target.

He recruited me from Target. But during that first conversation, interestingly, I said, so, Who's the customer? How big can this be? He said, Ron, we've got 5% market share, which it turns out it was 2 or 3, but he said 5. And he said, if we go after the creative consumer— now Apple does a great job with creative apps for pros. We have high market share in the marketing departments, the creative departments, but not as much on the business side. I think we can double our market share and get to 10%. And later he told me the board wasn't supportive. And I said, well, you know, the board might be right if all you want to do is double your market share. Because the reality, Dell's done pretty well selling computers over the internet.

Yeah.

And Gateway selling PCs is closing its doors. So maybe the board is right. And I said, but I don't know why you wanna sell the Creator Pro only. And I had come from Minneapolis, so that's where I was living, working with Target. And in Minneapolis, very few people had computers. And it turns out only 50% of American households had a computer. And I said, you think you've lost the PC war to Microsoft? There's half the market to go.

Yeah.

And I said, now, if you wanna go after everybody, that'd be interesting. And I had that idea because I just brought design to Target, which became Design for All, and people loved it. Once I told Steve that, he got real excited and he said, no, I could do that, but where would we put stores? And I said, well, we'd go where they shop, where people shop. That's the mall.

And he hated the mall, right?

He goes, I hate malls.

Why did he hate them?

He hated, he said they're filled with crappy stores and they're crowded. And I think for him, it was a little bit back to Steve had become a celebrity at age 24 when he launched the personal computer.

Yeah.

And founded Apple. Pixar. And it was hard for him to be in a public space.

Yeah. So he didn't do it.

And, and, but it was pretty clear. I said, look, Steve, if you wanna find your customer, you gotta be more convenient than a remote parking lot where all the computer stores have been located because they're bought every 4 or 5 years. So why would you pay for expensive mall traffic? Was common wisdom.

Yeah.

And the next time I met Steve, a couple weeks later, The first thing he said to me is, Ron, I'm gonna offer you the job. I thought, wow, that's pretty good. You know, one discussion. But he said, but you're right about malls. We should put stores in malls. So I didn't really have to convince him.

Yeah.

It was pretty obvious once we decided we were going after everybody that the only way to do that would be in a mall. But Steve said to me, he goes, I realized I might not be able to get someone to get in their car and drive 10 miles to check out a Mac. But I could get 'em to get, walk 10 feet out of their way.

Yeah.

And that's all we have to do in a mall. And he was right.

Yeah, it's, it's so interesting that there was some initial pushback, but he, he said that he was gonna give you $1 billion basically to build these stores. Is that right?

Yeah, so Steve offered me the job. I came out 2 weeks later with my wife Karen to kind of just talk to him one more time. He took me to a Macworld. Super exciting. You see just how interesting Apple is as a company, how strong Steve is as a leader. And we went and toured Stanford Shopping Center. And at the end he said, so any other objections? And I said, Steve, you said the board has approved a test that we should open 4 stores and see how it goes. I said, unfortunately, I won't come for a test. Not gonna change your whole life just Well, I said, I'm not gonna give up the career, have a target for a test, but more importantly, I won't be able to recruit any A-players to come for a test. If you believe in something, you need to be all in. Well, that's Steve's nature. He's always been all in. Everything he's done, he's been all in.

Mm-hmm.

And he quickly just looked at me and he said, Ron, we have $4 billion in the bank. If I could write a check for $1 billion today, and have 100 stores, I'd be happy. Well, I knew it wouldn't cost $100 million to build out 100 stores. And then I said, okay, let's go do this.

Yeah. You know, very cool. So let's talk about some of the principles that you used, uh, when designing these stores. Yeah. You really wanted the store to be a place of belonging. Mm-hmm. You really wanted to be, to be more about relationships than transactions. Talk to us about what your philosophy was.

Yeah, it was, well, it was pretty obvious. This is 2000. When we're talking about the stores, we're at the height of the dot-com bubble. It bursts like 4 months later. We're in the middle of designing stores. But people, there were literally smart people who thought stores were gonna go away. People, some people still believe that today.

Yeah.

Even though it couldn't be further from the truth. But when you're designing a store in the midst of the internet, which is taking off, You have to think through, what could I do that the internet could never do? And that's essentially create a place to belong, to deliver an experience. So we had to design a store that had so many advantages to shopping online that everyone would prefer to come to a store. And the beauty is because Apple had such a small product lineup, 4 total products.

Yeah.

Computers only. 2 portables, 2 desktops, that's it. We could present the entire product line in 30 square feet, but we built stores that were 6,000 square feet big.

Wow.

And we did that because that was the size, basically, to get a great space in the mall. That's what The Gap had, and they were like the leading specialty store. And Steve agreed that how you present yourself has a big impact on how people perceive you.

It was like the dominance of the mall, basically.

Yeah, we wanted to be a brand that was like a Gap, you know, because he said we're much bigger than the Gap. And that enabled us to have the space to create experiences.

Yeah.

So we devoted very simply, first rule, half goes to new customers, the ones we're trying to attract. That'd be the front of the store, and everyone could try every product. Up until then, you couldn't try products in a physical store. Yeah, they were just things on display. But we had to connect them to the internet, figure out how to keep them current with software, you know, et cetera, et cetera. But the half went to the products and the other half went to owners, assuming people buy. How do we help them get over— overcome their fear of technology?

Yeah.

'Cause that was the enemy. The reason people didn't own computers, they were too complicated. They were scared they'd buy this and never use it. So we put it in theaters where you could take classes and tables where you could get training one-to-one eventually, and a Genius Bar where you could get face-to-face help. So we put in all of these services along with the thing, and the stores became immediately one of the most popular stores on the mall.

And when you first launched the stores, you actually had basically like designed the stores, and then last minute you realized that you had designed them wrong.

Well, that was the instinct I had, yeah.

Yeah.

You know, Steve and I had spent a long time designing, and Steve had spent a lot of time. Now, Steve's obviously a really busy person.

Yeah.

He's running 2 companies at the time.

Yeah.

CEO of Pixar and Apple, you know, leading Apple. And we got this new initiative called retail. And he had come over every Tuesday for 4 hours in a warehouse to help design the store with me and the team. Put a lot of energy into it. Steve called me every night the first year at 8 o'clock. for me to get to know him so he could delegate and trust. He put a lot of energy into it.

Yeah.

And then one day I was flying back, I was commuting from Minneapolis, and my wife had just completed another beautiful scrapbook of my 2-year-old son and 4-year-old daughter. And it hit me that I live in an analog world. On the weekends when I'm with my family in Minnesota, But in Cupertino, I'm in a digital world where we're inventing all these apps to like get rid of the scrapbook. And I talked to Steve one night on a Thursday and I said, Steve, have you ever thought about this? You know, the Mac, if we succeed, it'll be the center of someone's digital life.

Mm-hmm.

Yeah, where I am, my wife makes, takes pictures. We go to the grocery store, we get the film developed. She cuts 'em up, puts 'em in a scrapbook. It's wonderful. And I come to Cupertino, we're making digital scrapbooks. And that's true with movies, that's true with music. And I said, the Mac's kind of the center of your digital life. And Steve said, can you write me an email on that? And I said, sure. And I wrote him a little note the next day. And then Monday he bounces into E.T. And I think my conversation's probably crystallizing thoughts he had from many other conversations. So I'm not taking credit for this.

Mm-hmm.

But he walks in, he doesn't sit down like he always does, hardly says good morning. And he goes up to the whiteboard and he goes, I've got the future of the Mac. He said, we're gonna call it the Digital Hub.

I love that.

The Hub. And he said, the Mac will be in the center. You'll have your devices like your Canon camera or your Sony camcorder. And we'll create a layer of software in the middle and we'll be able to take your data, your content from your camera, you know, into the Mac and through our applications like iPhoto. iMovie, iTunes. We will do things you couldn't do before. And that's how we'll position the Mac. And so we talked about that at EDT. And then that night I woke up about 2 in the morning. I couldn't sleep. I said, well, if Steve really believes in the digital hub, we've designed our store around products. They should be designed about around the digital hub, about what people can do.

Yeah.

So the next morning, It was Tuesday, which is when we have our retail meeting. And Steve used to like me to go to the main building at Infinite Loop in Cupertino and ride with him to the store just so we could catch up and chat about what we're gonna do that day. And I got there and he said, you look tired. I said, well, I was up. And I said, you know, I've been thinking about the store and if you love the Digital Hub, you know, I think the store's wrong.

Hmm.

And he looked at me, he said, tell me more. And I told him what I just told you. And he said, God, dude, you know, you might be right, but do you know how much work I put into the store? Let's go. I don't want you to talk about this today. Let's work on what we're going to work on, because you might be right, but I don't know if I have the energy to design an entirely new store.

Hmm.

I said, okay. And we got in the car and quiet. You know, usually we chatted the whole way there. It's, you know, 8 to 10 minutes depending on traffic lights.

Yeah.

And we got there and we walk in. He hasn't said a word yet since I talked to him. We meet, there's a group about 15 people there waiting. You know, Steve's coming. Who's gonna get to go first? You know, there's all that pressure of now Steve's in the room. And Steve looks at everyone and he goes, well, Ron just told me that our store is all wrong. And he's right. And so we're going to start over. But I'm going to leave now and leave it up to you guys to figure it out.

He's like, you guys figure it out.

But he told the story then really affectionately to the group that every great thing he'd done, there became a moment in the project when he'd had the courage to do a U-turn or to start over. And he told a story about Toy Story, you know, one of the great movies, first great movie with Pixar. And he said, you know, we gotta have the courage to do it right. And that delayed the first store about 6 months, but it allowed us to create a place that really became the Apple Store we still see today.

Yeah. What a cool story. I love that story. What did that teach you about decision-making and being flexible enough to, to change direction while also Being like firm in your original decisions? Like, what did that teach you about decision-making?

Well, it became a lesson that I really learned from Steve. Steve used to say, if you think through any problem hard enough, you'll come to the inevitable only answer, and everyone will agree with you. Super counterintuitive to what companies like Facebook do today, where let's just get stuff out there and test it, and the customer will tell, we'll evolve.

Yeah.

Steve believed in thinking things through, with a small group of people and putting your best, best foot forward. That's how he designed products. That's how he created movies. That's how we created this store. And Steve was never in a hurry. You know, he wasn't driven by product timelines. You know, there were a lot of products we thought, is it ever going to come out?

Yeah.

The phone was actually quite a bit beyond when we initially thought we could bring out a phone at Apple, right? So the lesson I learned from that was you get one chance to launch a store. You get one chance to launch a product. Do it great. If you have a better idea, have the courage to make a change.

So you came up with the concept of Genius Bar, correct? Mm-hmm.

Yeah.

What was your initial reason for it? I know, sure. I know that people were not familiar with computers, so obviously to educate, but what else beyond that?

Yeah. Well, first, you know, I get credit for the Genius Bar, but I wouldn't take ownership. Everything is done by groups of people.

Yeah.

And so I had been in a meeting at offsite, which was really fun, with 18 people talking about, how do we build the store? What's the service philosophy? And, uh, in that conversation, it became very clear that people felt like they get Sold to its stores, but great services in hotels, especially 5-star hotels. So we asked the question, I said right away, okay, let's just spend 2 days designing the Apple Store service as if we were a 5-star hotel. What would we do?

What a great activity.

It was really fun. And it led to, and the reason we decided, you know, stores, once you leave, we don't know you're coming back. So stores tend to try to close Uh, they use commissions and things to get someone to buy today. Hotels, you've already booked the hotel. You're not leaving.

Yeah.

You know, they depend on you coming back same time next year or telling a friend. So they're truly in the service business. And, and I knew at the time that people would take 4 or 5 visits to buy a Mac. So in many ways, we were gonna be like a hotel. You're not gonna sell anybody on the first visit. So why would we not do that? And as we looked at the hotel, we ended the first day, had a great day. And I said, tomorrow we're gonna talk about customer service. You know, it's something that most people hide in a technology store because you don't want the customer to fear tech. They're already scared of technology. You don't want 'em to say, well, this thing's not gonna work. Look at that big service counter you have, right?

Yeah.

And that night I was sitting there thinking about it. I said, so what is there in a hotel that could be a metaphor for service? And I said, well, every hotel has a great bar.

Hmm.

And, you know, think about bartenders, they're really friendly. And if I wanna learn about what I can do for dinner, bartenders tend to know 'cause they talk to people all the time. And, you know, they dispense alcohol. What if we dispensed advice? And I said, came in the next day, I said, what if we build a bar for service? And let's make it the most important part of the store. Let's stick it out, you know? And, you know, people kind of reacted pretty well to the idea. And I called Steve and told him about it. He said, that sounds like a great idea. What are you gonna call it? I said, I don't know. He goes, well, tell me when you have a name. I said, okay. And a few days later, I was kind of watching like I love to do. For some reason, I turned on the old Apple great Think Different ad, which we all know.

Yeah.

That Steve used when he came back to Apple to motivate the teams. And the last line said, while some people da-da-da, we see genius. And I said, Genius Bar. It just seemed to make sense. And so I called Steve and I said, Steve, I got the name. I wanna call it the Genius Bar. And I explained why. And he said, you can't do that. And I assumed it was because, you know, you didn't wanna leverage the Genius branding. He said, no, because anybody you find who can talk about technology is a geek. So if you wanna call it the Geek Bar, maybe that would work, but you should think about another name.

Hmm.

And this was during the day sometime. And Steve, as I said, would call every night at 8 o'clock. We had an agreement to do that for a year. And he called that night and I was prepared. And I said, Steve, I wanna talk to you about the name again. And I said, the main reason I want that name is I wanna be in a position where we have everyone in every city we put a store fighting to be one of the geniuses. 'Cause who wouldn't wanna be the smartest Apple person in Minneapolis, the smartest Apple person in New York City? 'Cause that's what the genius is. And I said, then we won't have any trouble getting people who can serve.

Mm-hmm.

and help with technology. Steve said, interesting. And the next morning I went into work and I was going up to my office and I walked by our general counsel, Nancy Hein, and then Nancy said, Ron, what's a Genius Bar? Steve asked me to trademark that name. You know, so Steve, you know, quickly, as always, you know, if you had a good idea, he was the first to get behind it.

It's really cool that he was able to kind of change his mind and that you guys actually had a relationship where you could challenge him and then end up getting your way.

But everyone did on the ET.

What's ET?

This is the executive team at Apple. You know, this isn't unique to me. If you were talking to Jony Ive or Phil Schiller or Tim Cook, they'd all say the same thing. Steve wanted the best ideas to win and he loved having A vigorous debate, a conversation with people that were really smart and passionate like him to get to the right answer. Nothing, you know, I think, I don't wanna use turned him on, but got him excited, you know, than a good debate about something that hadn't been done before.

So Genius Bar was really innovative. The way that you guys laid out the Apple Stores were really innovative. And you talk a lot about, like, what is, what does it truly mean to be innovative? Help us understand your, your opinion on that.

Yeah, to me, this is the big mistake people make, is they don't understand the difference between improvement and innovation. In my mind, innovation always is doing something that has never been done before, right? And things that have never been done come outta someone's imagination. And that's what makes them disruptive. Most people, you know, are comfortable. They pay attention to what's going on in the world, especially at their competitors, and they take an idea a competitor's done and it's new to their company, but it's mere improvement.

Yeah.

Right? And there's nothing wrong with that. We should be doing that all the time, paying attention to what our competitors are doing, shamelessly taking their best ideas and using them. Apple's done that many times. Facebook does that all the time, right? Right? There's nothing wrong with that. That's competition, but it's not improvement.

Yeah.

It's not innovation because everyone's doing that. So the real question when you're trying to improve is, can I improve faster than somebody else, right? Innovation starts in the imagination, and it takes a whole different level of courage and a whole different level of skills to pull it off. And some companies are great and some aren't, as I learned when I went to JCPenney.

Yeah. Uh, and I definitely wanna talk to you about how to test innovative ideas and what the right approach is. Mm-hmm. Uh, but first let's talk about your time at Target. So you worked at Target before Apple.

Mm-hmm.

And you were really responsible for like the whole like Target movement, right? Mm-hmm. Where Target became sort of like the fancier Walmart, the, the more like design-forward version of Walmart. And I remember growing up, we used to call it Tar-jay, and like, it was like a nicer store. So when you first started at Target, like, what was your initiative? Like, what were you charged to do?

Again, let me not just be humble, let me be really honest. I didn't come up with Tar-jay. You know, I think if you read the Target history, someone in Duluth or Minnesota in the 3rd store called it Tar-jay. You know, it's just kind of the French pronunciation of that word. And it kind of stuck below the surface. In the '90s, when Target really took off as a company, I was there from '90 to 2000, the stock went up 12 times because Target really got its footing and emerged, filled that gap between what people thought they could find at a discount store.

Mm-hmm.

And what they're finding at the specialty stores in the mall or department stores, which were really the leaders on where you'd go to find new ideas. And Target took that over. When I got there, you know, the CEO, Bob Ulrich, a great CEO, said, let's differentiate from Walmart. Because Walmart now was making this move from rural America. Target and Walmart started the same year in 1961.

Oh, wow. I thought Target started later.

No, 1961. 20 years later, you know, they were the 2 leading discount stores. There were still 10. Kmart and Venture and Hills and every region had a discounter. 'Cause the only way to grow, there wasn't an internet, you had to open stores. And it was good to put your stores in one area so your marketing got leveraged. But Target owned suburbs, Walmart owned rural. Well, Walmart was coming into the suburbs 'cause they had pretty much done all the rural stores they thought they could.

Mm-hmm.

But Walmart had a lot lower cost structure. Part, they designed, you know, less expensive stores, but they were also better at systems and different things. So they were a big competitor. So the only way Target could win was by being different than Walmart. And different probably had a little higher price point, but a lot of times different wasn't better, it was just different.

Hmm.

So the buyers at Target would take something like a high-volume toothpaste by Crest, And Walmart was so low in price, they'd get some other ounces and assume the customer couldn't calculate and just charge a different price.

Mm-hmm.

'Cause different—

It'd be like a smaller toothpaste, basically.

Smaller or bigger, but it was more per ounce.

Mm-hmm.

But they got away with it because there wasn't a direct competitive SKU, or stock keeping unit, right?

Mm-hmm.

So I came up with the idea that what if we could be different and better And I called it preferred. You know, something's preferred, you'd probably say it's different, and it means more to me.

Yeah.

And for the home area that I had at the time, I started in toys, then I hit all kids, and then I went into home. The home was emerging in the late '90s as the category. People were buying homes and moving even more aggressively to the suburbs. But the retailers that had not dominated the '80s, like The Gap and The Limited, were now being dominated by people like Crate and Barrel and Pottery Barn and, you know, Williams-Sonoma and Restoration Hardware. And so the home era is becoming a hot area. And at the same time, design was becoming a thing in the world. I think Tom Peters called it the decade of design. Volkswagen did their Beetle. Steve and Jony were working on the new iMac, you know, just on and on.

Yeah.

And I said, what? if Target won on design, instead of carrying a tea kettle at $9.99, what if we had a tea kettle that was special, that didn't just, you know, boil water, it lifted your spirits every time you looked at it? And so I had this idea to, you know, do design, and I thought home was the perfect place to do it. And coincidentally met a guy named Michael Graves who had been a great architect in the '80s.

Mm-hmm.

and had done home products for companies like Alessi, Italian-made leader in design. And I was introduced to Michael and I quickly became friends. And I said, how would you like to design for Target?

Hmm.

You design, we build. We'll go make 'em 'cause we've got great sourcing. And he said, Ron, I'm the head of the architecture practice at Princeton and not a single one of my students can afford one of my products. I would love to do that.

Oh, I would've expected him to be like, I don't wanna water down my brand, or something.

Well, that's what his team said. His team didn't want him to do it. But Michael, I don't know, he was— we, we just got along great. But he had no objection. And I remember the first time we toured a Target store together, I came with a packet of Yellow Pads, yellow stickies, you know, from 3M in Minnesota nearby. I said, just put one of these on any product you think you could do better. He said, Ron, you didn't bring enough stickies. And so he went through and, you know, just— and then we launched with 140 items. Uh, it was probably— doing design at Target was as much fun as creating the Apple Store.

Really?

It really was. It was hard. Uh, no one thought it would work. And Michael used to say, you get 10 great days in your life. You know, and he told me about several of them. And I think the day we launched Michael Kors was one of my great days. We were in New York. Target didn't have stores in the Northeast yet. We had taken over the Whitney— we had the courage to take over the Whitney Museum, the first floor, for like a week. But for the night of the launch, we invited all the press and influencers from New York.

Mm-hmm.

And the press people said, nobody's gonna come. And if you're going to say any remarks, do them in the first 15 minutes because they'll stop by and leave. And, uh, we took over the floor. We took all the items, some of the items that were coming in, like the tea kettle and the clock, and we treated them like museum pieces. We had like 50 clocks that made the Target bullseye at the entrance. We had chandeliers with stainless steel kitchen tools. Did all these beautiful things.

That's really cool.

And, uh, You know, people came in and you could just feel the energy. It was packed. We didn't talk for an hour and a half 'cause people were too busy wandering around. And there was alcohol, which maybe helped too. But, you know, the thing started about 7. When Michael got up, he was really funny. And he said a few things. And when he was done, we had given everyone a whistle. I don't know, 'cause the whistle's on the tea kettle, you know? And all of a sudden everyone starts blowing whistles. It was this moment where you knew, you knew it was gonna work.

Yeah, you knew it was gonna be a success.

Yeah, everyone was shocked. People, we finally kicked people out, turned the lights on about 10 o'clock, but it was like an event. It was a moment. And it's kind of like the first Apple Store when we opened. You kind of had a sense it was gonna work. And I've been lucky to be a part of some great moments in my career.

Yeah.

And that was one of them.

Really cool. So, so you decided you were gonna do home goods, fashion, from what I read in your book, like it, like the trends changed too quickly, but you did innovate.

Well, no, here's what I'm trying to, in the book, I'm, the point I was trying to make in the book.

Yeah.

And this was the business case for design, because when you do something innovative, you're in the business to make money. You've gotta think, why does this make sense? So Target had in their business model, 2 categories of merchandise. We'd say we had basics. In basics, you had to price with the market. Whatever Walmart charged, we charge.

Okay.

And therefore the prices, the margin tends to be low, but they drive a lot of volume. Then you have fashion. And we had, you know, 30% of the store on things like apparel for kids and family and men's and women. That you can take a high markup, but you gotta mark it down every season. You know, unfortunately summer goes away.

Yep.

You know, then we have fall and then we have holiday. So fashion for a store like Target, you know, it's not a luxury brand that gets 80-point markups.

Yeah.

Would, you know, make a little higher margin than basics, but not a lot. I viewed design, you could get the markup of fashion because it's got that same appeal, but a great item would be in the assortment 10 years from now. You'd never have to mark it down, right? So whereas we were making, if you fuzz your eyes, 30 points on basics.

Yep.

40 points on fashion. We could make 50 points on design. So if design became 10% of our volume, that would add 1.5 points of margin to Target's bottom line. We could fit that in and grab a new customer. So it was a good business case, but convincing people at Target to do that was hard. Because they saw our big competitor being—

Cheaper, yeah.

Cheaper, Walmart. And now we're going up further? This is gonna change the image of Target if you're successful to where no one from Walmart's coming.

Yeah.

But we did it. And Target, what it really did is it reinforced the idea of Target.

Yeah.

You know, and then people—

Premium, all that, yeah.

Just, you know, we got the customer who was shopping at the mall to come to Target. and buy home and more apparel and more discretionary purchases.

Yeah. Uh, you did something pretty innovative with children's fashion too.

I did.

The story goes, from what I understand, is that, uh, the sizes were really off and people were having trouble finding the right size of clothes for their kids.

Yeah, yeah, I guess. Let me try to— yeah, if I could. And this goes back to— it's because this is an example where I'd say we improved Target's kids department, but it was a radical change.

Okay.

So I had admired The Gap from the '80s. I mean, Mickey Drexler was, you know, if you're a young retailer, he was it. I remember one time I was in Hong Kong at the Regent Hotel and he walked through the lobby and it's kind of like I later would see Steve walking into Macworld. You know, Mickey was pretty the guy.

Yeah.

And they had launched Gap Kids, most beautiful kids store you'll ever see. But what they did is they made every product from size 2, a toddler size 2, to size 20, which is big for a boy or girl, end of the range, every product available in every size. Well, that let them have clean presentation.

Hmm.

They didn't have to break the Gap Kids store into a little toddler area, a little kids area, a big kids area. And that's how every department store and discount store was merchandised. So when I took over kids, we had a toddler section, we had boys, we had girls, we actually had little boys and big boys. And little boys got character t-shirts and big boys got things that were closer to like juniors.

Mm-hmm.

But kids weren't naturally that. There's big kids and they didn't want to have characters on. They're a little kid. It was just a mess.

Yeah.

And so I figured Target had a pretty small children's floor. And I said, if we had the courage to do what The Gap did, we could double our assortment. Instead of offering all these things for little kids and big kids, let's have one kids and let's have the courage to take our sizes and collapse them. So instead of having a 4 and a 5, we had a 4/5. Instead of a 6-7, 7-8, we had a 6-7-8. They're a little big, but kids could grow into them. But doing that let us double our assortment. But to do this, I got a lot of pushback at Target.

Yeah.

Because we would have to redo every pattern, everything we're doing, you know, to create that consistency. So it was a shockingly hard amount of work. to do that, but it worked. And Target's kids area ran well ahead of the other apparel areas after the first 6 months or so were tough for the next probably decade, you know, because we fundamentally changed, gave Target a benefit that nobody else had. And no one else really did it because they didn't understand it.

Yeah.

You know, and that's what I call it, you know, that was improvement. I found the idea at The Gap. It was pretty innovative for discount stores and department stores to do that.

How did you get your, your ideas? Like all these different ideas that you had for the stores that you worked for, the brands that you worked for, how did you generate your ideas? What was your process?

Well, I don't, there isn't really a process. You just, you love what you do. You know, if you love what you do, you're immersed in it. Mm-hmm. You know, I probably have visited as many stores in my lifetime as anybody my age.

Yeah.

You know, I still do that. When I came to see you, I had a chance to walk through the stores in front of us, you know? And so when you're in stores a lot, you learn to become a student of stores. And if you have a mind that's always looking for what's next, but wanting to do it now, you pick up on newness.

Yeah.

You know, and you get an eye for it. And then when I used to take over areas, I used to ask myself, How can I do something in the time I'm gonna be here, like in toys, what can I do in my maybe 2 years I'll be in toys that will permanently improve Target's position in toys? So that forced me to think not about, you know, what should I carry in aisle 3? What can I do at a higher level that will endure?

Hmm.

That's what sizing was. It wasn't about, you know, getting great colors and basic t-shirts and, Getting a great fashion statement and getting that new dress. Start at the higher level. What if we sized our merchandise different? That was design in home. It wasn't about, okay, let's make sure we're picking the right things from the vendors and fighting for allocation, which are all good things to do.

Yeah.

But the next person who takes over will try to do the same thing. They might not be as good at it as whoever had it before. Design was a permanent change in how Target competed that no one else was doing.

Yeah.

Right? So I think it's more how you frame the problem that leads to the innovation, okay? So being, loving what I did, being in stores, combined with how I framed the problem, plus courage, you know, I just, Always have had courage.

Yeah.

You know, to do things.

And I think it's, you've been in retail for a really long time.

Yeah.

So it's, it's the expertise in retail. So I'm an expert in podcasting and similarly I can like easily spot the trends.

Well, that's why you have a network.

You know, so to easily be able to like spot the trends because I'm always reading about it. I'm always curious about how to grow, how to do this, how to do that. And like, we'll find things that like people wouldn't notice, But it's probably very similar where you're just such an expert in retail that you walk in the store and you're like, oh, that's interesting.

Well, that's what, you know, you probably get asked all the time by friends, can you talk to my daughter or son who are thinking about a career? And my advice to people all the time is, you know, when you think about what to do, pick an industry you can love for a lifetime and become an expert.

That's great advice.

You'll never get bored.

You, you're at Target. We talked about your experience at Apple. And after Apple, you got an offer to be the CEO of JCPenney.

Mm-hmm.

And when you first initially got that offer, how did you feel about it?

Well, I wasn't, I was open for a change.

Okay.

'Cause I was turning 50. I'd been at Apple for 12 years, 11 years when I started to think about it.

Mm-hmm.

And I kind of was thinking, you know, most things I've done have been in 10-year cycles. And if I'm gonna do something other than stay at Apple, now would be a time to think about it. And a couple of guys from New York, a guy named Bill Ackman, who's a well-known investor.

I think I interviewed him.

You probably have. Bill's a very smart guy, risk-taker. And a guy named Steve Roth, who was CEO of Vornado, one of the big real estate firms. They had taken an activist position in JCPenney. And as part of their investment, Penney said they could join the board and add one more board member. So I got a call out of the blue, would you like to talk to Steve and Bill about joining the Penney's board? And so on one of my trips to New York to visit a new Apple Store, we were opening a store on the Upper West Side, I stopped over, spent time with Steve and Bill at their apartment. at Steve's apartment. They didn't have one together. And Bill walked me home and he was excited to have me join the board. And I thought, you know, why not? I've known Penny's forever. I used to work at Mervyn's and Target and Kids. I know the company, how it competes. I've watched it. And I went out and met all the board members and they were ready to bring me on as a board member. But then the CEO who'd been there 6, 7 years, was probably 66 at the time.

Unfortunately, he had a car accident.

Hmm.

And it was pretty bad. And he survived it, which was great, but it made the board think about succession planning. And I don't know where it came from, but I get a call, well, Ron, how would you think of— how would you like to think about becoming CEO instead of a board member? And I just thought about it. I said, well, that'd be interesting. I wanted to do something really hard. And I loved the department store 'cause I grew up, they were the king.

Yeah.

You know, in the '60s when I grew up, they were the king. And I always thought they had, you know, inadvertently lost their way 'cause they hadn't competed well enough. And traveling around the world as I did with Apple Stores, there were great department stores, Harrods and Selfridges in London, Printemps, Galeries Lafayette in Paris, Hong Kong. You know, the department store wasn't dead. It was kind of dying in the United States.

Yeah.

I thought that'd be a big challenge. So I decided, oh, why not? So I did.

I think your dad talked to you about that and basically was like, how much success do you need?

That's good. You've read the book. I'm impressed. No, my dad's attitude was, why are you doing this, Ron? You've got a young family. And my kids were in, I think they were, 12 and 14, 13 and 15, going into their most important years of their young life for the years that Karen and I would, they'd be living with us.

Mm-hmm.

And, you know, Apple's doing great. It was kind of a hobby for me 'cause the store, everything we opened worked and we had built a great team.

Mm-hmm.

And the team was doing the work. I was kind of leading and having fun designing new stores and stuff. But I wanted to take on a challenge. And my dad thought it was more pride than purpose.

Yeah, like the prize of being CEO.

Yeah, prove what you can do. Not even being CEO, just proving you can turn around the department store. You know, you helped make Target Target. You created the Apple Store. No one thought it would work. Here's another one.

Yeah, another challenge.

And, you know, looking back, there was some truth to that, even though I didn't wanna face it. There always is. And you can create in your own head, you know, no, I'm doing this because, you know, I'd like to take a new challenge. I'd like to help all those employees in Texas compete for another century, you know. Um, you can always talk yourself into it, but you got to be really thoughtful what's really motivating you.

So you went to JCPenney and you wanted to help turn around the stores because, like you're saying, department stores still are kind of a dying breed in the US. What were some of the things that you wanted to change about JCPenney?

Yeah, well, it's interesting. The department store is actually having a good little period right now.

They are?

Yeah. Macy's is, you know, they've got a new team in place and they've got their bold new chapter and their stock's up maybe double from the floor.

Oh, okay.

A couple years ago. They're competing better. It doesn't mean they're winning.

Yeah.

But they're starting to make more money. And even Kohl's has gone up a little bit of late. Nordstrom has taken the company private. They're doing a little better, you know, so they're coming back, but they're a lot smaller than they were when I joined JCPenney years ago. They're about half the number of stores in that group.

Yeah.

But, you know, I just felt that if we had the courage to reimagine the store to get at what we needed, a younger family customer, we could have another day, you know, because the reality is Like, Penney's had 600 great stores that were pretty productive. They just had an aged customer. You know, the customer was 55 to 65 years old.

Yeah.

When I was at Target, they were 25 to 35. And you get a young customer, they're gonna have families, and they're gonna live with you for the next few decades, where the Penney's customer was going away. And that's why market share was going down. You know, so how do you get a younger customer? Well, we had basically free stores, 'cause we're an anchor in the mall, right? And they're 30-year leases. So all we have to do is redo everything about the store, but we could create something quite compelling. So number one, okay, pricing. Everything we sold was 60% off. We ran 13 ads a week.

So many coupons, so many discounts and coupons at JCPenney.

Discounts and coupons. Nobody else was shopping that way. If you walked through the specialty stores, it was all full price, and you'd have clearance when it didn't sell.

Mm-hmm.

You know, Starbucks, everything you do. But the department store had this reliance on coupons. Well, imagine instead of telling someone it's worth $40 and selling it for $10, just make it $10 every day. Make every day a great day to shop. Now I've restored my brand credibility on pricing. That would allow me to attract all these people to Penney's, new brands from all around the world, but most importantly, direct-to-consumer. Now, back in 2011, that's when people like Warby Parker went online with glasses.

Yeah.

That's when, you know, mattresses and everyone was creating these, Bonobos, all these things. Well, they need a place to put stores, and we're in the mall, but we could offer 1,000 square feet to each of them at much better prices, 'cause we pay— we're free. The mall being 100 feet down the road, it's gonna be $60 a square foot.

Hmm.

You know, so we could reimagine the interior of the store instead of having, you know, 60,000 square feet of racks, 100 unique specialty stores, the best of the Penney's brands plus others and reinvent how you shop. So now we got great pricing every day. We got a whole new environment inside. We've got new merchandise that you can't find somewhere else. And suddenly shopping at Penney's is like an adventure. You know, it's like the Apple Store. It's a place to belong. And in the center, and not— we're not putting a Genius Bar, we'll put a town square, a place where we'll run fashion shows and do things for kids and families and—

Hmm.

You know, we can make this an experience. And so I wanted to do that.

It sounded like a great idea.

Well, I think most people thought it was a good idea. However, I learned a lot of lessons, right?

Yeah.

So I went to Penny's and I basically asked them to implement my idea of America's favorite store. It wasn't their idea. And if you're gonna make a change, you gotta get people to buy in. It starts with trusting you as a leader. They didn't know me. They saw me as the Apple guy, even though I'd spent more time in apparel than technology. They never knew about my working before Apple.

Yeah.

You know, and I'm a new guy and I'm well-to-do and know-it-all, and, and, and they just didn't buy into it. And I didn't have the courage to let people go. I don't like firing people.

Yeah.

You know, I said, I'll convince them. You know, the big mistake happened my first month on the job. I was at a board meeting and I asked the board a really important question, one little question. If you're gonna make a major change to a retail strategy, the time to do it is February, March, because you've gone through Christmas, you have your most clearance, you have time to get people ready for the next year.

Mm-hmm.

If we're gonna do it, we either have to do it this February, Or we wait a year and do it a year from now. If we wait a year, we can focus on our teams, getting the inventory right, and making sure everyone understands it, da, da, da, da.

Yeah.

Yeah. But if we went now, we're not gonna go through another year of, you know, kind of tough business.

Yeah.

And the CEO, Mike Ullman, who I replaced, just said, Ron, from my perspective, what do we have to lose? It sounds great. And the board all kind of nodded. And I made the decision. I made the decision. Let's go.

Yeah.

I told the team, we're gonna go. In 6 weeks, we're changing everything.

Oh my gosh, it's not a lot of time.

But the team did a phenomenal job. I mean, they— we had to go through and figure out prices on thousands and thousands of items and change price tags and figure out signing and how to communicate this and create advertisements and But the reality, we went way too fast.

Yeah.

And so the team didn't understand it. The board didn't truly understand what we were doing. Investors didn't understand it. And most importantly, customers didn't understand it. And so we alienated that coupon customer. And, you know, in many ways we fired our customer.

Your most loyal customer.

Our most loyal customer. Now, the one that's not gonna carry us to the future, but we had thought sales would be down 15%. they were down 20% right away. You know, but outside investors didn't know what the plan was because we didn't really communicate as well as we could.

Yeah.

And they thought, who's this idiot running JCPenney? How are you as a board letting him do this? And all the board members get called by their friends, what are you doing? And it was a really tough year. Now the NPS was through the roof. So sales are down 20%, That means 80% of the people are buying or new customers are coming.

Okay.

And they were loving it because they found all these beautiful new shops. We had put in maybe 20 shops as we went through the year. There was a Levi's shop. It was the best place to buy Levi's in the country by far. And sales in Levi's were up 40% year over year, you know, but it was early. But the overall picture was things are going down. And I had real personal trouble with it 'cause I had had 25 years of success.

Yeah, you just had one success after the other.

But I had never gone through what I went through that year. And eventually a year later, I said to the board, look, I'm not having fun. If you're not having fun, you think we're doing the wrong thing here, the sooner you make a change and go back, the better. You know, because every month that goes by with this strategy, would be harder to go back to your old strategy, 'cause that's what some of the team wanted to do.

Yeah.

And after 3 months they said, Ron, we're gonna go back. And they actually brought back Mike Ullman to do it. And they tried to do a U-turn. Unfortunately, that didn't work either. You know, when Mike left 2 years later, the stock was down another 50%. And then they brought in Marvin. And after he left 2 years later to go to Lowe's, Stock was down another 50%. You know, so Penney's was having trouble when I came in. The failed transformation took it down. The U-turn took it down. So we really missed an opportunity, I think, to save JCPenney.

Yeah.

And I think the lesson is, you know, if you're gonna make a change, you gotta stick it out.

You gotta stick it out.

Yeah.

Was there any sort of like, testing you wish you did or talking more to the customer?

Yeah, you know, I do. You know, it's funny, at the time I told people I don't believe in tests because by and large, I don't. We didn't test sizing at Target. We did it.

Sometimes the customer doesn't even know what they want.

They don't. That was Steve's approach, right?

Yeah.

But I look back, Steve changed his mind a few times, you know? Like the iPod, he said, I'm not gonna bring that to Windows. Hell will freeze over before I make a Windows iPod. And 3 years later he did, and that's what made the iPod, that's what really made Apple, that catapulted our ability to get Windows customers. So Steve changed his mind.

Yeah.

You know what I mean? And so I was pretty darn stubborn on the pricing in particular. That was the real difficult part.

The no discounts.

Yeah, and if I had done it over, And we had a year. I would've at least tested the marketing messages. You know, you can do that without testing with the customer. That would've been helpful.

Yeah.

You know, there are a lot of ways we could've rolled out. I was worried about the cost of having 2 teams, one doing the new pennies, one managing the old. I thought it'd be too much work for the buyers to do both. So I thought of it as an either/or. But the big thing, you know, quite honestly, I was arrogant.

Mm-hmm.

I was situationally arrogant. Everything I'd done for 25 years had worked.

Yep.

You know, and because I had the courage to make change. And so when the board said go, I said, let's go. You know?

Yeah.

And on hindsight, we should have tested a lot of things.

How did that impact your ego? Like, did you feel down or like that you were a failure because you had failed this transformation with Chasey Penny? Oh my God.

I was a, I was a failure. Make no mistake about it. When you're the CEO of a company and you do something that fails in everyone's mind and you walk away from it, you failed. We fail every day. But when you come back to work, you fail, have not a great podcast, you come back, you do another podcast.

Yeah.

When you lose the chance to keep going and when it's over, That's when you fail, right?

Yeah.

And so I did, I failed. It was hard. I think even today, there'll be times I wake up and my stomach churns about what could I have done different? And why did I go there? Why didn't I listen to people? Why did I go so fast?

Why didn't you fire who you wanted to fire?

What could I have done different? You know?

Yeah.

You agonize over those things. They never leave you.

Yeah.

Yeah, that's part of life. Now I've been lucky. I, I got lucky too.

Mm-hmm.

You know, the Apple Stores worked, you know?

Yep.

And Target did pretty well.

Yeah. You've got a great, you've got a great legacy.

Well, I've had, no, I've had, I guess if anything, I've, I've tried.

Yeah.

You know, I've tried.

Okay, let's play a game.

Sure.

So I was, when I was reading your stuff, I thought that you had a lot of quotes. Now, not every quote comes from you, but I thought we could play a game called Quote GOAT. Do you know what GOAT means? Greatest of all time.

Okay.

Okay, so I'm gonna say a quote. You tell us what this quote—

Are these my quotes? The ones I—

Some of them are your quotes. Some of them are quotes that you say.

Yep.

It's all quotes that you're familiar with.

Sure.

If there's a story about the quote, tell us that.

Sure.

Or tell us the meaning behind it, whatever comes to your mind, okay?

Yeah.

Good things happen when people come to the store.

That's absolutely true. That's absolutely true. And that's the Apple Store.

Yeah.

You know, I mean, I just believed in traffic. Right? That's why you build stores, to get customers to come in.

Mm-hmm.

And no matter what they're coming for, you know, we ran summer camps for kids, and kids would come in 5 days a week in the morning. Almost every employee was dedicated to camp.

Mm-hmm.

And customers couldn't buy because the kids were over all the computers. But I knew good things would happen from that.

Mm-hmm.

So good things do happen when you come to the store.

Every hour has its leader. Every leader has their time.

Yeah, that's absolutely true. That's from the Talmud. I don't know if you know that.

Oh, I didn't know that.

That's from the Talmud. I read that in a book by Marianne Williamson, A Return to Love. But the idea behind that is really simple, that leadership is something you've gotta give away. And whoever's, like in this podcast, right now you're leading. You've got this thing about the GOAT, right?

Yeah.

You're leading, I'm following, right? When I'm speaking to you and answering your question, I'm leading. That's true in a store. When one of our employees are the customer, they're the most important person in the store. It's not the manager, right? They're leading that conversation. And so I think we have to all recognize that we are leaders and we're followers. All day long, right? And you gotta be willing to give away leadership, you know? And that's a really good life lesson.

Yeah. Make love visual.

I really think when you see 2 people smiling, when you see brain cells multiplying like you do in an Apple Store, that's an act of love because together you're improving each other's lives. And when you see that in a store, you're making love visual. So I used to tell my friends, the thing I love about the Apple Store, you see love everywhere.

Like people helping each other.

Helping each other. And it's a beautiful thing. Like when I go to the grocery store, and I do this too, but you see a customer getting out of their car and taking shopping carts that were left in the parking lot. And you're walking into the store, just return 'em and put 'em where they belong. When I see that, that's an act of love.

Yeah.

And it's visual. That person didn't have to do it. He's securing the good for the store, but it's just the right thing to do.

Yeah.

When someone stops down to pick up a piece of paper that's on the floor and put it in a trash can, that's making love visual, right? When you walk an old lady across the street, that's making love visual. And great stores do that.

I really like this one. The conversational nature of reality.

Yeah, no, that's not mine. That's from David Whyte. David Whyte's a poet, but he had this philosophy that everything in life comes from a conversation. And the most important conversation is the one you have with yourself. So think about that.

Yeah.

You know, every day you're thinking.

Yeah.

Well, what are you thinking? You're going, okay, like, I've gotta go to the airport later today. I'm going, well, if I leave at what time? I look at Uber. If I leave at this time, I'll probably be on time. I'm having a conversation with myself and making a decision I'll leave at this time. When I thought about the Genius Bar before talking to Steve on the phone, I had a conversation with myself, which led to a conversation with Steve, which then led to a decision. So the reality is the world's about a conversation. Now, the best conversations are the ones that have no end in mind. The conversation will reveal knowledge that you didn't come into the conversation with. You know?

Yeah.

Too often, unfortunately, we go into a conversation, okay, I wanna convince my spouse, I wanna convince my kids that this is the way to do it. So I don't go in and seek to understand. and then maybe be understood, as Stephen Covey would say. Yeah, that's another great quote.

Yeah.

You know, but the idea, I think life is a conversation, and we've gotta become better conversationalists. And unfortunately, with all this screen time and social media, we're spending less time connecting, and we need to spend more time convening. And convening is really, you know, it's interesting, the word convene, The root word is, it's the root of the word convenience. And that's the opposite of what we do when things are convenient. We tend to not convene. Now we gotta go back to convening more, having conversations, and being aware of how that reveals knowledge.

Mm-hmm.

ChatGPT can't reveal knowledge, right? It can reveal what the world knows. But it doesn't reveal new knowledge. That's gonna come through conversation.

Okay, last one. People want to do significant things.

Yeah, we all do. We're born to have meaning, have impact. You know, there's a great little story in the book, and I forget the name of the guy, but years ago, someone ran an experiment and they, in an infant, you know, I should know this, I'm a new grandparent, but in the baby's crib.

Okay.

They put one of those mobiles.

Okay.

And once that was up there, the little kid would touch it and they couldn't stop touching it, 'cause they loved to know that if I touch this, the thing moves, right? By definition, we enjoy having impact. We like to influence things, right? The bigger the influence we have, the more excited we get. Right? And I think everyone wants to do significant things.

Yeah.

And that takes encouragement, that takes kindness, that takes a vision. So I've always practiced with my teams, you know, you gotta set a north star, and the higher that star, the bigger the vision, the easier it is to accomplish it. If you have something relatively small, it's just another thing on the to-do list. The thing about a North Star is they're up, which is the direction of values, but it's also so far out we're never gonna get there. And that means you have a strategy that will never end. The Apple Store kept innovating even to this day. 25 years later, the Apple Store feels new and vibrant. It's got a heartbeat. You walk in the store, you feel—

Yeah.

The soul of the store, right? That's because we had a great North Star.

What was the North Star?

It was to enrich lives. Very simple. Enrich the lives of the employees and the customers. And everything was designed around that objective in mind.

So I wanna switch gears a bit. I wanna talk about AI.

Sure.

So when you started the Apple Store, people thought stores were gonna go extinct because of the internet.

Yeah.

Now a lot of people think AI is going to be impacting work in general, Perhaps retail. How do you think AI is going to impact retail?

It's gonna have a huge impact. It's gonna impact the in-store experience, and it's gonna impact the online experience. However, it's not gonna change where we shop. I don't think it'll change at all how often we go to stores. It's just gonna let both be better, you know?

Yeah.

The biggest change you'll see will be in online shopping, in my opinion. You know, I think the idea of having a website with all these little tiles that you have to navigate, you know, through men's, ladies', you know, what's new, what's on sale, it'd be a lot easier to have an agent just say, hey, I'm looking for something new and exciting. I'm a guy, I am willing to take fashion risk. And it comes back with, here are the items we have.

Mm-hmm.

You know, that's gonna happen. Agentic commerce will be a really big deal, and that's gonna help online. And it'll be a little bit more like when you walk in a store, 'cause in a store you can talk to an employee and say, you know, what do you think? What are the hot items? You know, I've got a party tonight, what should I wear? You know, so I think the online will compete in that way. Most of what the stores do will be things that you can't see as a customer, but that'll make it a lot better.

Like what?

Inventory management, you know, recommendations to the employees, you know, You know, employees will see, you know, what are the best-selling items in the store? And it'll come back with that. And it'll be also, 'cause a lot of customers walk in the store, you know they're there. You know, like at the Apple Store, you know pretty well, you can flash your thing, you know, your QR code with the employee, and they know everything you own. And it can recommend, oh, you know, I see a lot of photos. You know, we got this new camera, which is a great camera. You know, you're gonna have improvement everywhere.

Mm-hmm.

in retail, you know, from AI. I'm a real tech optimist and I'm a believer in AI. There's downsides, but every new technology we've launched, we've said there are downsides, but they've always been for good.

Well, this has been such an incredible interview. I end my show with 2 questions I ask all of my guests. The first one is, what is one actionable thing our young and profiters can do today to become more profitable tomorrow?

Ruthlessly eliminate hurry from your day. You know, so often we're just go, go, go, go. Too much on the plate. We're running behind, we're feeling anxious. We gotta slow down.

Mm.

You know, Steve Jobs did one thing at a time. You know, he would only let Pixar make one movie a year 'cause he said, you know, we can only do one great movie a year and we wanna do great movies. You know, we had the Mac, we had the iPod. 3 years later, we did a phone. 3 years later, we did an iPad. It wasn't like Sony that had so many products in its portfolio or Samsung. We did a few things. Steve was never in a hurry. He didn't even carry a cell phone until the iPhone came out. He didn't wanna be bothered, you know? Slow down.

It's crazy to hear that because you think of Steve Jobs as being so innovative and you would assume that he's just like, all about like deadlines and targets and next thing and new thing. And it, it's really interesting to hear that he was not into the—

He was all about quality.

And what would you say your secret to profiting in life is? And this can go beyond business and finance, however you wanna take it.

When I came outta Harvard Business School, I was going to pretty close to accepting a job with Goldman Sachs on the equity department. And that was one of the, the it jobs. You know, you get the status of working on Wall Street and, mergers and acquisitions. It'd be like now, you know, right now that segment of the business is really hot. And it was back in '84.

Yeah.

A guy who was a CFO at Dayton Hudson said to me, Ron, the net present value of a life has nothing to do with how much money you have. He said, you gotta pick the net present value of your life, not your career. And that was interesting to me. And that led me to Figure out I'm gonna pick an industry I can love for a lifetime. I'll start at the bottom. I unloaded trucks at a Mervyn store and I got started.

And that's a retail store?

Retail store. And at the time was very popular. And yeah, but even, you know, I told Steve, you know, I'll take the job, but you know, I'm a parent. I'm gonna coach all my kids' sports teams. And he said, I don't care, just get your job done. But I would leave Apple at 4 o'clock every day in the, spring to go coach my son's Little League baseball team, as an example.

Mm-hmm.

But the net present value of a life is your whole life. It's your work, it's your family, it's your friends, it's the hobbies you love. You know, it could be your faith. I think that's an important thing for most people, no matter what faith it is. You know, you gotta find a way to be fulfilled in All of those things, right? And that's what I think is the most important thing.

That's so beautiful. Another quote from the quote GOAT. Well, Ron, where can everybody learn more about you and everything that you do?

Well, I actually have a little website called Ron Johnson Shops Different. It's, the name of the book is Shop Different, coming out September 22nd. It's really about the Apple Store, but goes back into some of the things we talked about, like my time at Target. My Time at Penny's and more. But if you go to ronjohnsonshopsdifferent.com, you can have access to all the little interviews I do, podcasts I do like this one, uh, and that'd be where I go.

Awesome. Well, thank you so much.

Pleasure's mine.

It was so great to speak with Ron Johnson today and learn more about what it really takes to build a customer experience that people truly love. Here are some of my favorite lessons that he shared. First, best customer experiences are about belonging, not transactions. When Ron and Steve created the Apple Store, they asked a simple but brilliant question: what can a store do that the internet never could? That's why the Apple Store was not just built to sell computers. It had classes, training, face-to-face support, and the Genius Bar. Like he mentioned, the products only took up a small portion of the store, but they had huge stores for a reason. It gave people a place to learn, connect, and feel Next, real innovation takes imagination and courage. Ron made such a clear distinction between improvement and innovation. Improvement is taking what already exists and making it better. Innovation is imagining something that has never been done before. And that's what happened when the Apple Store team realized that the store should not just be organized around products, but around the digital life that people were starting to live. And I just loved the lesson Ron learned from this.

Learned from Steve Jobs. If you realize there's a better way, you need to have the courage to make a U-turn. Finally, bold leadership only works when people understand and believe the vision. Ron was very honest about JCPenney and how moving too fast without enough trust, buy-in, and communication created one of the hardest lessons of his career. That part of the conversation was so important because past success can make any of us think we already know the answer, but great leaders stay humble enough to bring people with them. For entrepreneurs, this episode is such a great lesson in how to think bigger about your customer, your team, and your own decision-making. Innovation is not just about having a bold idea, it's about creating something people truly need, communicating the vision clearly, and having the humility to keep learning along the way. If you listened, learned, and profited from this episode of Young and Profiting, share it with somebody who's building a business, leading a team, or trying to create a better experience for their customers. You can also check out Ron's new Shop Different for more of his lessons on Apple specifically. And if you enjoyed this show, please drop us a 5-star review on Apple, Spotify, or Castbox, wherever you listen to the show.

Nothing helps us reach more people than a good review from you. You can also find me on Instagram @YapWithHala. Our Instagram is on fire right now. You can also find me on LinkedIn, just search for Hala Taha. This is your host, Hala Taha, AKA the Podcast Princess, signing off.