During a candid conversation with National Retail Federation president Matt Shay yesterday, Johnson discussed his initial struggles at Target as vice president of merchandising, why no-one first entered an Apple store and the myth of success.
You can’t hurry transformations
In 2011, Johnson was hired as CEO to turn around struggling department store JCPenney. Unfortunately, things did not go to plan and he failed. It was a tough journey.
“Most people would say that today, we had a pretty compelling vision. We were going to transform Penney’s into a series of store-in-store-like shops to break up that massive store into small parts,” Johnson reflected.
“We wanted to go with everyday value, because that’s where the world was going. We wanted to find a way to get a younger customer by bringing in new brands. Today, it’s really what Kohl’s is doing as they bring Sephora in-store. It’s what Target’s doing when they bring Apple Stores in. So I think most people would agree the strategy was right.”
However, Johnson realised that the team really needed more time to embrace the strategy. When he was offered the JCPenney role, he was still at Apple and when he informed Steve Jobs, Jobs said: “Well, Ron, that was exciting. You had a lot of good news. But would you mind staying at Apple for a little longer?… I’m probably not going to live much longer, I’d like you to stay here for the rest of my life.”
That was a period of about six months.
During that time, while still working at Apple, Johnson got to know the team at JCPenney and visited them once a month.
“It was very clear to me that they did not want to change. From the outside, I saw a company that needed to change. But they had felt like they survived. There had been 60 department stores, now there were three. And they were serving the lower income customer and doing it really well. I’m not a turner guy, I’m not going to change people, I’m going to try to persuade people. So I went in there and kept the entire team.”
After that, Johnson spoke with the board, advising them: “We can either go slow or go fast.” They replied: “What have we got to lose? Go fast.”
“But that was the biggest mistake because we should have taken our time. You know, we tried to transform Penney’s and the whole thing in four years, but it would take a decade to change a company like that. We were too fast for the customer. We changed the price immediately without thinking about how to better communicate it. We just moved too quickly. Sales went down. People don’t understand that sometimes you go backwards to go forward.”
Nothing goes as well as you think the first time
As Johnson reflected, when the Apple stores first launched, “nobody came in at the beginning”.
“We had to turn the stores into internet cafes. No one came into the Genius Bar. We had to put in refrigerators with Evian water, so people might stop in, have a drink and talk to a Genius. But you don’t give up, you have to believe and you’ve got to have that conviction,” he said.
“You think Apple has been great for so long, it’s just not true. The Apple stores were really awful to start, we built 6000sqft, then went to 4000 because we thought we’d built them too big. Years later, we’re big again. But the Apple stores took a long time to become successful.”
Community and culture: The magic behind Apple stores
Johnson led the successful rollout of Apple stores all around the world. The secret? Community and culture.
“I really believe that the world’s best companies have great cultures, and cultures have to be authentic. The work they do has to have a clear purpose. Someone has to have a clear purpose about why they go to work every day,” he said.
“Apple had a very clear purpose. Remember the iPod? A thousand songs in my pocket. Think different. At Apple retail, we said, ‘we’re going to enrich lives. We’re going to change people’s lives.’ When they bought an Apple product, it wasn’t to buy a product, it was to make their lives better.”
While he was at Apple, nobody ran a store without flying to Apple HQ in Cupertino, California, to spend half an hour or so with Johnson. Soon, Johnson knew the names of 400 store leaders.
“That connection is so powerful. If I can remember 400 store leaders by name, I can tell a store manager that I expect them to interview everyone before they start: ‘I want you to establish a relationship and connection so that before someone starts, they know you’re on the team’,” he said.
“And from that deep connection, all good things happen. Great companies have communities built up on all these connections.”
Success is fleeting
By Johnson’s admission, he has spent more years working hard to grow or transform a company, than actually enjoying its success.
“I’ve been in retail now for 30 years. How many years do you think the groups I led flourished, and were at the top of their game, producing great results? In my career it’s single digits. Most years, you’re building something, you’re starting something, you’re transforming something, you’re trying to get back on track. You don’t flourish that much, right?” he said.
Pre-Apple, Johnson was the merchant leader at Target stores, where he helped the 1700-store chain differentiate itself through design.
“When I was at Target, they were in this big battle with Walmart, and they were really having trouble. And every one of these retail discounters was getting hammered. But we said we were gonna win on design. That was really controversial. We partnered with designer Michael Graves to create products for Target – the very first design collaboration ever done between a retailer manufacturer design. I was the one that did that, and it was really fun. It was transformative and it worked. But it wasn’t easy. I had probably three great years with Target out of 15.
“We all want to be successful. The reality is success is hard, it takes time. It comes down to your standards. So that means I’ve learned more from the years when we weren’t successful than when I was successful.”
Don’t confuse improvement with innovation
According to Johnson, retail leaders don’t really understand what true innovation is, often mixing it up with improvement.
“Most people, when they innovate, they copy something someone’s done before and they execute it for their strategy. That’s improvement. There’s nothing wrong with improvement, but don’t call it innovation,” he said.
“Innovation starts with the imagination, and with innovation, you have to do something that’s never been done before. That’s the definition. Otherwise, you’re just improving. So if you want to innovate and really change the game, you’ve gotta get inside yourself and figure out something no-one’s ever done before, and figure out how to implement that.”