Reinventing Retail with Ron Johnson, Co-Creator of Apple's Retail Experience

On this week's episode of Inside Outside Innovation, we sit down with the legendary co-creator of the Apple retail experience, Ron Johnson. He's the author of the new upcoming book called Shop Different: How Retail Revealed Apple's Genius. Let's get started.

Podcast Interview with Brian Ardinger and Ron Johnson

Ron Johnson’s Journey from Target to Apple

[00:00:00] Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger, and as always, we have another amazing guest. Today, we have Ron Johnson. Ron was the visionary co-creator of the Apple Store with Steve Jobs. He's former CEO of JCPenney, worked at Target, and he's author of a new upcoming book called Shop Different: How Retail Revealed Apple's Genius. Welcome to the show, Ron. 

[00:00:36] Ron Johnson: It's great to be here, Brian. Thank you for having me on. 

[00:00:39] Brian Ardinger: Hey, Ron. I am super excited to have you on the show. I've been a big fan of Apple and the whole retail experience. We were talking before I hit record about how my kids often joke that anytime we go anywhere in the world, we have to stop at the Apple Store.

So I'm lucky enough to have been to a lot of them everywhere from Paris to Hong Kong to London, et cetera. So, love your work. Maybe to get started, for people who may be unfamiliar with your background and your work as being one of the retail leaders out there as far as innovation talk a little bit about your career in retail.

How did you get started in it, and how did you get to the place where you created one of the biggest retail empires in Apple and then further from there? 

[00:01:17] Ron Johnson: Yeah. I'll just go quick. I grew up in the Midwest, like you, outside of Minneapolis. And coincidentally, I grew up two miles from the first enclosed shopping mall in the world that was invented, innovated, and opened the year before I was born.

And I grew up loving stores. And I went to Stanford for undergrad as a soccer player. Went to Harvard Business School, got my degree, was going to go onto Wall Street, and I said, Ron, what do you want to do for a lifetime?" And I thought about all the people I admired. They were doing something they loved, whether it was an athlete, an artist, a musician, or a business leader.

And I just decided that retail was something I was going to put my head down and learn how to do. And I went from Harvard Business School to unloading trucks in a store, and I worked my way up through a lot of things. Eventually, I got back to Minneapolis to Target and helped really Target during a a big decade.

How Target’s Design Strategy Caught Steve Jobs’ Attention

The '90s was when Target and Walmart were the big battle, and that was a big retail battle, and Target emerged the winner at that time. Stock went up 12 times. But I had done this big design initiative where we brought design to the masses with a partnership with a guy named Michael Graves. 

[00:02:32] Brian Ardinger: Yes. 

[00:02:33] Ron Johnson: That led Steve, who I learned, you were there. Steve had just returned to Apple, had launched the iMac. I know you were at the keynote at that time. Yeah. It was a huge moment that got a lot of attention, but it sold to the Mac faithful. It didn't really accomplish the goal of getting out to the PC owner to switch or a new person to get on the computer.

And Steve believed that if he was going to win, he had to control the customer experience. And so, he called me to come out and meet him to talk about leading an effort to create the Apple Store. So that's enough on my background, but it gives you a flavor. I love retail, and I've been doing it my whole career.

[00:03:12] Brian Ardinger: I got a chance to read a preview copy of the book that's coming out here in September and loved it. Quite frankly, the, the stories and the insights that you provide are well worth people picking up a copy.

But one of the things that stood out is you spent two chapters, I think talking about how love is a strategy. The- book devotes, two chapters to that concept of love is a strategy. Can you break down what you mean by that, and how does that manifest itself?

[00:03:34] Ron Johnson: Yeah. I had been at Harvard Business School, and they taught me to manage, and that's where you kind of, you set a goal, you hold people accountable, you have very disciplined processes, checkpoints, and things you do to make sure the business is on track. And that's how most businesses are run.

I'm on boards, and it feels that way. But leadership's a very different thing. And when I got to, Target, I realized that I was not a great manager. But I was a great leader. I knew how to inspire people. I knew how to identify a North Star. I knew how to encourage people. And I read a book by Marianne Williamson called Return to Love, and it gave me this vision for how to lead with love.

Why Love Became a Leadership Strategy

And that's how I grew up in my personal life, my family, my neighbors, my friends. I wake up every day thinking, "How do I secure their good?" And I thought, "What if I brought that to work?" And so, I did that at Target, and it seemed to work quite well. And people always wanted to work on my teams.

And when I went to Steve, he asked me a question. We had met for three hours, and he said, "What tell me what our customer service philosophy will be." And I said it's very simple. We're going to love our customers." And he said, "We're going to love our customers?" He said... I said, "Exactly what you do, Steve."

He said, "No, I don't. I design great products." I said, "But that's an act of love. When you make something easy to use, that's an act of love. That secures the good of the customer. When you allow mere mortals to create a movie." At that time, they had a app called iMovie where you could take a camcorder and then edit and share.

I said, "You're allowing people to do something that's gonna change their life. Those are acts of love, and that's what we're going to do in the store. We're going to close the gap between people's interest in technology, that fear, and being able to do great things, and we're going to do that through loving them."

And he said we're the most secular ZIP code in the world. Find another word." So, we ended up saying we're going to enrich lives, which worked great. But it is. And so, the book talks a lot about it because I'm a believer, and I learned this from Marianne. There's two ways to manage, essentially out of love and out of fear.

Leading Through Love Instead of Fear

Out of love, you help people soar with your strengths. As a manager, you're asking questions all the time like how can I help today? Is there anything I can- you want to share with me that I can, help you with? What do you need? What kind of research do you need to be successful?"

Managers say, "Okay, how's this project going? Are you on plan?" Et cetera, et cetera. And the one promotes a little bit of a culture of fear. You're being held accountable. The other is a much more creative culture, one of love, and they go hand-in-hand. And Steve agreed with it. In the book we talk about Steve said, "Ron, the highest form of kindness is telling the truth."

And Steve did that. And he wore his opinions on his sleeve. But I know Steve loved me and I loved him, but he... I understood how he liked to work. So a lot of people feared Steve, but he just had high standards, and if you couldn't meet those standards, I can see where you might be fearful of him.

But for me, it was a, a lovely relationship, and the book... I think the book, it's really interesting how it details a lot of Steve as a leader and what it was like to work with him and how he thought about things. And I think that was one of the surprises of the book when we got done wow, if someone wants to learn more about Steve, this is a good place to 

[00:07:17] Brian Ardinger: That, that's what one of the things that definitely resonated with me about the book is the relationship you had with him and the relationship he had with his customers... and what he was building. And so maybe it's hard to remember, it's been a while, but, when you first started there, the idea of a computer store, it was CompUSA or Best Buy it wasn't what Apple developed. So, talk to me about the innovations that came about- at the early stages of what you were trying to build and how you actually managed to make that a reality.

Designing the First Apple Store for Everyone

[00:07:46] Ron Johnson: Yeah. So, I joined Apple in 2000. First decision, we're going to make a store for everybody. We're not going for the creative pro, which Steve thought would be the easy market. Half of America didn't own a computer yet. We were at the beginning of the digital revolution. Music players, digital cameras, digital camcorders. And that was going to make the computer essential because you could do things with software that you couldn't do in an analog world where you just basically had film.

Pictures. You could make a scrapbook. Now you could do a digital scrapbook. And so we were at the beginning of a new phase for technology. At that time, Apple wasn't sold at Best Buy or Circuit City. The Mac had too low a market share and low margins. They didn't want to carry it. So, we were sold at CompUSA, for example, at Sears.

Yeah. But we didn't have very good distribution. But we wanted to reach out to everybody who hadn't yet bought a computer, and so we decided to locate in malls. But then we decided to make every product available to use. You could try them. You could get on the internet. And this had never been done in retail before because it's really hard.

This was right before Wi-Fi came out. Believe it or not. And then Wi-Fi came out a year later. But the stores became this place that you would meet great people who were knowledgeable about the Mac, but more important, they loved to serve customers. And they were there just to help you with whatever you came to the store for.

Turning Apple Stores into Places to Learn and Explore

If you just wanted to get on the internet, go surf. If you want to write a book, there's a woman in Soho whose computer broke, her PC broke, and she came. She goes, "I got to figure it out. I got to finish my book." We said, "Just put up a stool, sit here as long as you want, and write your book." And this woman came back for 30 days and just wrote a book in the Soho store.

But we just tried to do things that were good for customers, knowing that eventually when it came time to buy a computer, we're the store they'd turn to. All those are acts of love. But we had to imagine something that really hadn't been done before with a store, and we put in all these services.

Half the store is devoted to owners, even though we didn't have many, with places like a Genius Bar where we'd dispense advice, and theaters where you go to classes, and tables you could have one-on-one training. All of that was meant to just provide an experience that you'd never seen before, and that's what the Apple Store became.

[00:10:11] Brian Ardinger: And, other innovations as technology moved along and, the iPhone was introduced, the iPad. et cetera. I believe you went to a completely all mobile experience where you didn't have cash registers, so to speak- ... where people checked out at. How did those innovations, like who came up with them?

Or how did you say, "Okay, this is an idea. How are we going to implement it and actually then" Yeah ... "scale that?" Because, again, Apple Stores are everywhere and so... how do you take something that is untried and untested and then make it a scalable initiative with impact? 

[00:10:39] Ron Johnson: Number one is most of the ideas came from interactions between customers and employees- or visits to the stores. And I would go to the stores, and as the stores got busy, like when iPod came out and went to Windows, the stores were just jammed with people. And we had lines, and I hate lines. I don't mind a line outside of the store before a launch. That's a great experience. People like to be a part of a launch.

How Apple Eliminated Checkout Lines

But when they come to buy, the worst thing in the world is to have to wait in line. And the other one is to be handed off to another person to check you out. And Apple had, had the iPod, and we had the iPod Touch, and there were some people starting to use these kind of devices for checkout. I'd go rent a car at the airport and they had a handheld device over Wi-Fi that they could check you out.

And I always wondered if we couldn't do that in the store. And so we found out we could turn an iPod Touch into a cash wrap, and eventually, pretty quickly, we rolled those out to everybody, and every employee carried an iPod Touch. And so, I remember when we launched, it was the iPad in 2010, we were fully rolled out.

And this is eight, 10 years ahead of when Apple Pay became, mobile checkout became a thing- Yeah in the 2020. We launched a product. At Fifth Avenue, we were selling 300 iPads a minute, without a line. Because every employee in the store could check you out, so we took the biggest problem to retail, like on a launch day, which was the constraint of, lines and stuff, and eliminated, but more importantly, became a great everyday thing because you could just walk in the store and meet an employee and they'd help you and say let's just check you out right here. Let's walk over and get the next accessory." They'd scan it. And then we even went and let the customer, through the Apple Store app, just check themself out.

[00:12:38] Brian Ardinger: Did you roll that out, again, store by store? Did you test it? How did you go about taking the nugget of idea and then- taking that idea and make it reality, yeah ...

Testing and Scaling Mobile Checkout

[00:12:46] Ron Johnson: we took a store, Los Gatos store, right here in the Bay Area, and we got rid of the cash wrap and we put in our first mobile checkout. And at first, it was not very good. Customers- ... were confused. We had to learn a lot of things. Where do you put... Where does a woman set a purse? Where do you put the product? I've got multiple things to buy, it was a little more complicated, and we had to work through some of those kinks.

And that took six months or so, but then we went everywhere and we started by giving every store three, and certain employees did it. And then pretty soon everyone wanted to have one, because they saw the benefit of it. 

[00:13:24] Brian Ardinger: That makes sense. 

[00:13:25] Ron Johnson: And then we just started to create more and it became part of everyone's... you wouldn't work on the floor without having that iPad. And now it's just the iPhone. When I go to the i- the Apple Store and they take the iPhone, they actually It's really cool. I met with Vanessa, who leads the retail stores. We had lunch last week, and she was telling me how they now take your phone, they take a QR code on their phone, you put it in.

That immediately transfers all your, the important data you need that Apple has on you. They can look at all the prior products you own. They can make recommendations. I was getting a MacBook. She goes, "Oh, by the way, do you know you have AppleCare on this?" I said, "I wasn't even aware." And I was able to get the thing fixed through AppleCare.

So it's evolved a long way, but it all started with that idea, we gotta eliminate the line. And I talk in the book how that went back to when I was at Mervyn's in the '80s. I did a project on checkout, and since that day I wanted to get rid of the cash wrap. It just took 20 years for me to be able to do that.

The Difference Between Improvement and Innovation

[00:14:27] Brian Ardinger: Is there anything, any lessons that you learned from Steve Jobs or in your process that is transferable to a company that doesn't have a Steve Jobs or unlimited capital or- Yeah, 

[00:14:35] Ron Johnson: No, I think... I think the number one lesson I learned in my career, and some from Steve, is there's a difference between improvement and innovation. They're both really good. Improvement is when you see something someone else is doing, could be a competitor, and you say, "We've gotta do that as well." And you figure out how to roll it out, and that's pretty easy to do because your employees will be on board.

They know it's important. They've seen it somewhere else. It's about time we now got competitive. Innovation is when you do something that's never been done before. That was like mobile checkout at the Apple Store. That was a lot of things that we did at Apple. But now in Apple's culture, people work there because they want to do the next great thing.

They want to do things that have never been done before. Apple reinvented the phone with the iPhone. It put 1,000 songs in your pocket with the iPod. These were true innovations. Our stores innovated. Apple's a good culture for that. And when you innovate, Steve always said, "Don't worry about when it comes out.

Make it great. But just imagine what you would want to have as a customer yourself, and let's deliver that for people." And if you have the right people doing that imagining together, you're going to come up with a great product. And that's what we did at Apple, and it worked really well. But, like, when I went to Penney's- 

[00:15:59] Brian Ardinger: I was going to say, that's a good point

What Went Wrong at JCPenney

[00:16:00] Ron Johnson: yeah, it was a difference because I went there and I just failed because I had 25 years working at Target and Apple, had been very successful, cultures that embraced winning through innovation. Penney's didn't. Penney's had a culture that was rooted in the past. They didn't feel a need to change. And I went there to transform the department store, and I went way too fast.

I, I was like a round peg in a square hole, a fish out of water. So, I think you got to be really careful when you implement change based on the company. In many ways, the age of the company, the older the company, likely the harder it is to innovate because companies build up ways of doing things and cultures.

So you got to be really smart, not about what the... sometimes easy to identify the innovation you want to do. Implementation is really important, too, and that's where I failed at Penney's and, we could talk for hours on that. 

[00:16:56] Brian Ardinger: And that's a good transition to culture side of, I almost see when we talk about corporate innovation, we often say the reason why it's so hard, for corporates to innovate is their job is to execute on a model that they know. Yeah. And to make it optimized and accessible, et cetera, versus explore something new.

And generally, those two worlds are totally different. Apple seems to be one of those companies that can do both because it comes from the culture of exploration- versus just an execution culture, although it executes at, the highest standards out there.

Were there signs when you went to Penney's or what kind of, insights could you provide for folks who are maybe living in a culture in a corporation that isn't as innovative right now, but they still want to have an impact and make innovative choices and move the company forward in an innovative way? Are there things that they can do or things they can watch out for in that particular process?

Why Innovation Is Harder in Older Companies

[00:17:46] Ron Johnson: Yeah, I think it's much more complicated. It's interesting you talk about Apple. All the companies here in the Valley, if you live in the Valley you're immersed in innovation. Your status is, what have you created now? What are you working on? Just recently Google announced their earnings. $112 billion in a quarter. That's $4 billion a day. And they talked about every one of their business units is flying as they use AI.

Their advertising, YouTube, and their AI strategy where people are using Google Cloud and all this stuff. So, companies here, even mature companies like Google that's been around for 25 years, 30 years, innovates at a pace that's unimaginable. But as you go to the Midwest, as you go to older companies, as you go to Europe and different places, the pace of innovation is so different because they really don't innovate often at all.

So they're good at operating the business model they know. They rarely do something truly unique. And so then they fall back, unfortunately, in the strategy, we're going to test something new. Unfortunately, tests rarely work. 

[00:19:07] Brian Ardinger: Yeah.

Why Launching and Learning Beats Testing

[00:19:07] Ron Johnson: Because by definition you're saying, "I don't know if this is a good idea. Let's test it." Now, in the Valley, you say, "If this is really critical to our long-term future, we have got to make it work." So you might say, "We're going to launch and learn." But you're going to be on the team to launch this new innovation, and you might launch it small and you'll learn, but you're gonna make it successful.

Once you call it a test, from my experience, half the people get on board, half the people don't. "I don't think it's a very good idea, but we got to do it 'cause our boss wants me to do this." And you can feel that in the culture. You can see that in people's eyes. And when I went to, Penney’s, it's a long story we talk about in the book.

I had to delay going there for about six months 'cause Steve asked me to stay. He knew he had about six months to live and he asked me to stay till he had passed, which I did. But during that time, I went out and visited the Penney's team for a week a month. I took a trip to Europe with them.

I went to New York with them. I went to Dallas. And at the end of it, I said, "I can't do this." I called up the board and I said, "I can't do this. The team does not want to change. I see it. I feel it. They're... Everything they're saying is no, we're really good. We're the best at this. And it's our customer that's resistant to change, it's not us.'"

And I knew I was walking into a very difficult situation. But the board said no, they want to change. You're misreading them." And I said, "All right, I'm all... I told you I'm coming, I'll come." And then I went too fast. But you see the clues, right? Yeah. And so as a champion of innovation, you've got to navigate that very carefully, and you need to set north stars.

You've got to encourage teams. You got to get the right people on it. But most importantly, you got to believe. Because if you treat it like it's just a test, the odds are it's going to fail.

The Future of Retail in an AI-Driven World

[00:21:04] Brian Ardinger: That's interesting. So, let's look to the future a little bit. Yeah. How do you see technology evolving the retail experience for tomorrow? Obviously, everything's now moved online. The whole retail experience has changed. Retailers in general are having a tough time. 

[00:21:16] Ron Johnson: you see, that... Can I just stop you? That's just not true. 

[00:21:19] Brian Ardinger: You see these glimmers of hope of,

[00:21:20] Ron Johnson: No, it's more... no. Retail's never been more successful. Let's not kid ourselves. 

[00:21:24] Brian Ardinger: All right. Let's talk about- 

[00:21:24] Ron Johnson: 70, 70% of all shopping is done in physical stores today. On line’s been trying to beat the retail store for 30 years. They've got a point of market share every year. But of that 30% that's online, half of it is the physical store's online arm, where people buy online and pick up at the store, or they buy online and ship to your home from the store.

So six out of seven dollars are done through bricks-and-mortar retailers and their omni-channel strategies. Okay? So, AI's coming now, and everyone says, "Oh, AI's going to kill the store." No, AI's going to improve online shopping dramatically, as you have agentic commerce online, but it's going to improve the in-store experience as well in a variety of ways. So, AI will change shopping. It won't change where we shop

Why Physical Stores Still Matter

[00:22:18] Brian Ardinger: That's interesting. There seems to be almost a pushback on some of the AI and non-physical world that we're living in.

[00:22:25] Ron Johnson: Yeah ... 

[00:22:26] Brian Ardinger: and people seem to be craving that experience again or that- Yeah face-to-face so- Especially 

[00:22:31] Ron Johnson: The Gen Z, the young kids- Exactly are the ones who are now going back to malls and want in-store experiences. And the reality is AI allows you to do traditional work so much more efficiently, it creates time. And the question is what do you do with that time? And hopefully people will convene more. We'll go to stores, we'll talk more, we'll have more conversations. And I personally think that's the way we're headed. 

[00:22:57] Brian Ardinger: So, if you were to make some advice to a person who's in the retail space today to try to again, either innovate or navigate the new world of technology and such, what are some things that you would point to?

[00:23:08] Ron Johnson: I would say embrace technological change. When the internet came out, the physical retailers were slow to embrace online. They didn't believe in it. Target didn't. Target had Amazon run its online store until 2008, and then it opened its own. Eventually, when they understood omni-channel, it became a powerful business strategy.

Most stores could reduce their footprint a little bit, not because the internet was taking the sales. The only way they could grow before that was through opening stores. And so the US has been massively over-stored for decades, and that's really the outcome of what happened in the '80s and '90s before online shopping.

How Retailers Can Adapt Faster to Technology

And so shopping's become more efficient. But once they embraced it, they've never been better. The perfect example is Walmart. Walmart's market cap today is 8X was it was in 2000 when Amazon really got going with online shopping. And Walmart and Amazon are like the competitors. They both are the place we go for a broad assortment of low-price merchandise.

That's their strength. But Walmart is at an all-time high in its stock price, right? So, if Walmart can live in a world with Amazon, the only thing they should have done is figured out how to do that earlier. They just launched their online marketplace in the last decade. That's in the third decade of online shopping.

So now we got to move faster. So as AI comes in, embrace it. The good news is retailers tend to be pretty quick at embracing change, 'cause customers are coming in the store every day. They're giving their feedback. You can see what everyone's doing. Just visit a store. Take the best ideas, create your own.

But I really do not believe retail is dead. Look at every format. Macy's is having a ... They're up 40% this year. They call it the new chapter, the bold new chapter. They're making progress. That's a big department store. The Gap is back. The Gap had been put for pasture for a long time.

New leadership, new partnerships, better design. The Gap is back, right? The store has evolved, but retail hasn't gone away. Now, you're in the Midwest. Small towns have been hurt a little bit more by online, but you go to a place like the Bay Area, Stanford Shopping Center's the hardest parking place in town.

The Lasting Legacy of the Apple Store

[00:25:32] Brian Ardinger: So last question. So, when you walk into an Apple store or JCPenney store today, what do you notice? What resonates, and what do you think back on and look forward to? 

[00:25:40] Ron Johnson: The thing I love I go to Apple stores all the time. Whenever I see one, like you and your kids, it's a thrill for me to walk in. And the beauty is I see what we imagined 25 years ago, still alive. It's the best store in the world to try a product. The people are amazing. They're incredibly helpful.

Half the customers are in the back getting help, or the second floor taking classes, going to the genius bars, getting help. I just see a lot of engagement, and I'm really proud that Apple has continued to do an amazing job with their retail stores.

And they keep improving the stores, because tired stores never work. But when I go to the Apple store, I'm just, proud to have been a part of it, and I'm thrilled to see the same values of how to treat a customer are alive today as they were when we imagined the store in that warehouse.

[00:26:39] Brian Ardinger: Ron, thank you for being part of it, and thank you for being part of Inside Outside Innovation and sharing some of these stories. I encourage everybody to pick up the book. If people want to find out more about yourself or the book, what's the best way to do that? 

[00:26:48] Ron Johnson: Yeah. I would just go to ronjohnsonshopsdifferent.com. It's a website that's, dedicated to the book, but it'll include a lot of content, that I've been involved with. And you can learn about the book. You can actually pre-order the book on the website. You can actually read the prologue if you want to get a head start on the book. 

[00:27:14] Brian Ardinger: Excellent. Ron, again, thanks for being on the show. Really appreciate your time and loved hearing all those stories. Thanks very much. 

[00:27:20] Ron Johnson: Thank you

[00:27:21] Brian Ardinger: That's it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out insideoutside.io or follow us on Twitter at theIOPodcast or at Ardinger. Until next time, go out and innovate. 

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On this week's episode of Inside Outside Innovation, we sit down with the legendary co-creator of the Apple retail experience, Ron Johnson. He's the author of the new upcoming book called Shop Different: How Retail Revealed Apple's Genius. Let's get started.

Podcast Interview with Brian Ardinger and Ron Johnson

Ron Johnson’s Journey from Target to Apple

[00:00:00] Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger, and as always, we have another amazing guest. Today, we have Ron Johnson. Ron was the visionary co-creator of the Apple Store with Steve Jobs. He's former CEO of JCPenney, worked at Target, and he's author of a new upcoming book called Shop Different: How Retail Revealed Apple's Genius. Welcome to the show, Ron.

[00:00:36] Ron Johnson: It's great to be here, Brian. Thank you for having me on.

[00:00:39] Brian Ardinger: Hey, Ron. I am super excited to have you on the show. I've been a big fan of Apple and the whole retail experience. We were talking before I hit record about how my kids often joke that anytime we go anywhere in the world, we have to stop at the Apple Store.

So I'm lucky enough to have been to a lot of them everywhere from Paris to Hong Kong to London, et cetera. So, love your work. Maybe to get started, for people who may be unfamiliar with your background and your work as being one of the retail leaders out there as far as innovation talk a little bit about your career in retail.

How did you get started in it, and how did you get to the place where you created one of the biggest retail empires in Apple and then further from there?

[00:01:17] Ron Johnson: Yeah. I'll just go quick. I grew up in the Midwest, like you, outside of Minneapolis. And coincidentally, I grew up two miles from the first enclosed shopping mall in the world that was invented, innovated, and opened the year before I was born.

And I grew up loving stores. And I went to Stanford for undergrad as a soccer player. Went to Harvard Business School, got my degree, was going to go onto Wall Street, and I said, Ron, what do you want to do for a lifetime?" And I thought about all the people I admired. They were doing something they loved, whether it was an athlete, an artist, a musician, or a business leader.

And I just decided that retail was something I was going to put my head down and learn how to do. And I went from Harvard Business School to unloading trucks in a store, and I worked my way up through a lot of things. Eventually, I got back to Minneapolis to Target and helped really Target during a a big decade.

How Target’s Design Strategy Caught Steve Jobs’ Attention

The '90s was when Target and Walmart were the big battle, and that was a big retail battle, and Target emerged the winner at that time. Stock went up 12 times. But I had done this big design initiative where we brought design to the masses with a partnership with a guy named Michael Graves.

[00:02:32] Brian Ardinger: Yes.

[00:02:33] Ron Johnson: That led Steve, who I learned, you were there. Steve had just returned to Apple, had launched the iMac. I know you were at the keynote at that time. Yeah. It was a huge moment that got a lot of attention, but it sold to the Mac faithful. It didn't really accomplish the goal of getting out to the PC owner to switch or a new person to get on the computer.

And Steve believed that if he was going to win, he had to control the customer experience. And so, he called me to come out and meet him to talk about leading an effort to create the Apple Store. So that's enough on my background, but it gives you a flavor. I love retail, and I've been doing it my whole career.

[00:03:12] Brian Ardinger: I got a chance to read a preview copy of the book that's coming out here in September and loved it. Quite frankly, the, the stories and the insights that you provide are well worth people picking up a copy.

But one of the things that stood out is you spent two chapters, I think talking about how love is a strategy. The- book devotes, two chapters to that concept of love is a strategy. Can you break down what you mean by that, and how does that manifest itself?

[00:03:34] Ron Johnson: Yeah. I had been at Harvard Business School, and they taught me to manage, and that's where you kind of, you set a goal, you hold people accountable, you have very disciplined processes, checkpoints, and things you do to make sure the business is on track. And that's how most businesses are run.

I'm on boards, and it feels that way. But leadership's a very different thing. And when I got to, Target, I realized that I was not a great manager. But I was a great leader. I knew how to inspire people. I knew how to identify a North Star. I knew how to encourage people. And I read a book by Marianne Williamson called Return to Love, and it gave me this vision for how to lead with love.

Why Love Became a Leadership Strategy

And that's how I grew up in my personal life, my family, my neighbors, my friends. I wake up every day thinking, "How do I secure their good?" And I thought, "What if I brought that to work?" And so, I did that at Target, and it seemed to work quite well. And people always wanted to work on my teams.

And when I went to Steve, he asked me a question. We had met for three hours, and he said, "What tell me what our customer service philosophy will be." And I said it's very simple. We're going to love our customers." And he said, "We're going to love our customers?" He said... I said, "Exactly what you do, Steve."

He said, "No, I don't. I design great products." I said, "But that's an act of love. When you make something easy to use, that's an act of love. That secures the good of the customer. When you allow mere mortals to create a movie." At that time, they had a app called iMovie where you could take a camcorder and then edit and share.

I said, "You're allowing people to do something that's gonna change their life. Those are acts of love, and that's what we're going to do in the store. We're going to close the gap between people's interest in technology, that fear, and being able to do great things, and we're going to do that through loving them."

And he said we're the most secular ZIP code in the world. Find another word." So, we ended up saying we're going to enrich lives, which worked great. But it is. And so, the book talks a lot about it because I'm a believer, and I learned this from Marianne. There's two ways to manage, essentially out of love and out of fear.

Leading Through Love Instead of Fear

Out of love, you help people soar with your strengths. As a manager, you're asking questions all the time like how can I help today? Is there anything I can- you want to share with me that I can, help you with? What do you need? What kind of research do you need to be successful?"

Managers say, "Okay, how's this project going? Are you on plan?" Et cetera, et cetera. And the one promotes a little bit of a culture of fear. You're being held accountable. The other is a much more creative culture, one of love, and they go hand-in-hand. And Steve agreed with it. In the book we talk about Steve said, "Ron, the highest form of kindness is telling the truth."

And Steve did that. And he wore his opinions on his sleeve. But I know Steve loved me and I loved him, but he... I understood how he liked to work. So a lot of people feared Steve, but he just had high standards, and if you couldn't meet those standards, I can see where you might be fearful of him.

But for me, it was a, a lovely relationship, and the book... I think the book, it's really interesting how it details a lot of Steve as a leader and what it was like to work with him and how he thought about things. And I think that was one of the surprises of the book when we got done wow, if someone wants to learn more about Steve, this is a good place to

[00:07:17] Brian Ardinger: That, that's what one of the things that definitely resonated with me about the book is the relationship you had with him and the relationship he had with his customers... and what he was building. And so maybe it's hard to remember, it's been a while, but, when you first started there, the idea of a computer store, it was CompUSA or Best Buy it wasn't what Apple developed. So, talk to me about the innovations that came about- at the early stages of what you were trying to build and how you actually managed to make that a reality.

Designing the First Apple Store for Everyone

[00:07:46] Ron Johnson: Yeah. So, I joined Apple in 2000. First decision, we're going to make a store for everybody. We're not going for the creative pro, which Steve thought would be the easy market. Half of America didn't own a computer yet. We were at the beginning of the digital revolution. Music players, digital cameras, digital camcorders. And that was going to make the computer essential because you could do things with software that you couldn't do in an analog world where you just basically had film.

Pictures. You could make a scrapbook. Now you could do a digital scrapbook. And so we were at the beginning of a new phase for technology. At that time, Apple wasn't sold at Best Buy or Circuit City. The Mac had too low a market share and low margins. They didn't want to carry it. So, we were sold at CompUSA, for example, at Sears.

Yeah. But we didn't have very good distribution. But we wanted to reach out to everybody who hadn't yet bought a computer, and so we decided to locate in malls. But then we decided to make every product available to use. You could try them. You could get on the internet. And this had never been done in retail before because it's really hard.

This was right before Wi-Fi came out. Believe it or not. And then Wi-Fi came out a year later. But the stores became this place that you would meet great people who were knowledgeable about the Mac, but more important, they loved to serve customers. And they were there just to help you with whatever you came to the store for.

Turning Apple Stores into Places to Learn and Explore

If you just wanted to get on the internet, go surf. If you want to write a book, there's a woman in Soho whose computer broke, her PC broke, and she came. She goes, "I got to figure it out. I got to finish my book." We said, "Just put up a stool, sit here as long as you want, and write your book." And this woman came back for 30 days and just wrote a book in the Soho store.

But we just tried to do things that were good for customers, knowing that eventually when it came time to buy a computer, we're the store they'd turn to. All those are acts of love. But we had to imagine something that really hadn't been done before with a store, and we put in all these services.

Half the store is devoted to owners, even though we didn't have many, with places like a Genius Bar where we'd dispense advice, and theaters where you go to classes, and tables you could have one-on-one training. All of that was meant to just provide an experience that you'd never seen before, and that's what the Apple Store became.

[00:10:11] Brian Ardinger: And, other innovations as technology moved along and, the iPhone was introduced, the iPad. et cetera. I believe you went to a completely all mobile experience where you didn't have cash registers, so to speak- ... where people checked out at. How did those innovations, like who came up with them?

Or how did you say, "Okay, this is an idea. How are we going to implement it and actually then" Yeah ... "scale that?" Because, again, Apple Stores are everywhere and so... how do you take something that is untried and untested and then make it a scalable initiative with impact?

[00:10:39] Ron Johnson: Number one is most of the ideas came from interactions between customers and employees- or visits to the stores. And I would go to the stores, and as the stores got busy, like when iPod came out and went to Windows, the stores were just jammed with people. And we had lines, and I hate lines. I don't mind a line outside of the store before a launch. That's a great experience. People like to be a part of a launch.

How Apple Eliminated Checkout Lines

But when they come to buy, the worst thing in the world is to have to wait in line. And the other one is to be handed off to another person to check you out. And Apple had, had the iPod, and we had the iPod Touch, and there were some people starting to use these kind of devices for checkout. I'd go rent a car at the airport and they had a handheld device over Wi-Fi that they could check you out.

And I always wondered if we couldn't do that in the store. And so we found out we could turn an iPod Touch into a cash wrap, and eventually, pretty quickly, we rolled those out to everybody, and every employee carried an iPod Touch. And so, I remember when we launched, it was the iPad in 2010, we were fully rolled out.

And this is eight, 10 years ahead of when Apple Pay became, mobile checkout became a thing- Yeah in the 2020. We launched a product. At Fifth Avenue, we were selling 300 iPads a minute, without a line. Because every employee in the store could check you out, so we took the biggest problem to retail, like on a launch day, which was the constraint of, lines and stuff, and eliminated, but more importantly, became a great everyday thing because you could just walk in the store and meet an employee and they'd help you and say let's just check you out right here. Let's walk over and get the next accessory." They'd scan it. And then we even went and let the customer, through the Apple Store app, just check themself out.

[00:12:38] Brian Ardinger: Did you roll that out, again, store by store? Did you test it? How did you go about taking the nugget of idea and then- taking that idea and make it reality, yeah ...

Testing and Scaling Mobile Checkout

[00:12:46] Ron Johnson: we took a store, Los Gatos store, right here in the Bay Area, and we got rid of the cash wrap and we put in our first mobile checkout. And at first, it was not very good. Customers- ... were confused. We had to learn a lot of things. Where do you put... Where does a woman set a purse? Where do you put the product? I've got multiple things to buy, it was a little more complicated, and we had to work through some of those kinks.

And that took six months or so, but then we went everywhere and we started by giving every store three, and certain employees did it. And then pretty soon everyone wanted to have one, because they saw the benefit of it.

[00:13:24] Brian Ardinger: That makes sense.

[00:13:25] Ron Johnson: And then we just started to create more and it became part of everyone's... you wouldn't work on the floor without having that iPad. And now it's just the iPhone. When I go to the i- the Apple Store and they take the iPhone, they actually It's really cool. I met with Vanessa, who leads the retail stores. We had lunch last week, and she was telling me how they now take your phone, they take a QR code on their phone, you put it in.

That immediately transfers all your, the important data you need that Apple has on you. They can look at all the prior products you own. They can make recommendations. I was getting a MacBook. She goes, "Oh, by the way, do you know you have AppleCare on this?" I said, "I wasn't even aware." And I was able to get the thing fixed through AppleCare.

So it's evolved a long way, but it all started with that idea, we gotta eliminate the line. And I talk in the book how that went back to when I was at Mervyn's in the '80s. I did a project on checkout, and since that day I wanted to get rid of the cash wrap. It just took 20 years for me to be able to do that.

The Difference Between Improvement and Innovation

[00:14:27] Brian Ardinger: Is there anything, any lessons that you learned from Steve Jobs or in your process that is transferable to a company that doesn't have a Steve Jobs or unlimited capital or- Yeah,

[00:14:35] Ron Johnson: No, I think... I think the number one lesson I learned in my career, and some from Steve, is there's a difference between improvement and innovation. They're both really good. Improvement is when you see something someone else is doing, could be a competitor, and you say, "We've gotta do that as well." And you figure out how to roll it out, and that's pretty easy to do because your employees will be on board.

They know it's important. They've seen it somewhere else. It's about time we now got competitive. Innovation is when you do something that's never been done before. That was like mobile checkout at the Apple Store. That was a lot of things that we did at Apple. But now in Apple's culture, people work there because they want to do the next great thing.

They want to do things that have never been done before. Apple reinvented the phone with the iPhone. It put 1,000 songs in your pocket with the iPod. These were true innovations. Our stores innovated. Apple's a good culture for that. And when you innovate, Steve always said, "Don't worry about when it comes out.

Make it great. But just imagine what you would want to have as a customer yourself, and let's deliver that for people." And if you have the right people doing that imagining together, you're going to come up with a great product. And that's what we did at Apple, and it worked really well. But, like, when I went to Penney's-

[00:15:59] Brian Ardinger: I was going to say, that's a good point

What Went Wrong at JCPenney

[00:16:00] Ron Johnson: yeah, it was a difference because I went there and I just failed because I had 25 years working at Target and Apple, had been very successful, cultures that embraced winning through innovation. Penney's didn't. Penney's had a culture that was rooted in the past. They didn't feel a need to change. And I went there to transform the department store, and I went way too fast.

I, I was like a round peg in a square hole, a fish out of water. So, I think you got to be really careful when you implement change based on the company. In many ways, the age of the company, the older the company, likely the harder it is to innovate because companies build up ways of doing things and cultures.

So you got to be really smart, not about what the... sometimes easy to identify the innovation you want to do. Implementation is really important, too, and that's where I failed at Penney's and, we could talk for hours on that.

[00:16:56] Brian Ardinger: And that's a good transition to culture side of, I almost see when we talk about corporate innovation, we often say the reason why it's so hard, for corporates to innovate is their job is to execute on a model that they know. Yeah. And to make it optimized and accessible, et cetera, versus explore something new.

And generally, those two worlds are totally different. Apple seems to be one of those companies that can do both because it comes from the culture of exploration- versus just an execution culture, although it executes at, the highest standards out there.

Were there signs when you went to Penney's or what kind of, insights could you provide for folks who are maybe living in a culture in a corporation that isn't as innovative right now, but they still want to have an impact and make innovative choices and move the company forward in an innovative way? Are there things that they can do or things they can watch out for in that particular process?

Why Innovation Is Harder in Older Companies

[00:17:46] Ron Johnson: Yeah, I think it's much more complicated. It's interesting you talk about Apple. All the companies here in the Valley, if you live in the Valley you're immersed in innovation. Your status is, what have you created now? What are you working on? Just recently Google announced their earnings. $112 billion in a quarter. That's $4 billion a day. And they talked about every one of their business units is flying as they use AI.

Their advertising, YouTube, and their AI strategy where people are using Google Cloud and all this stuff. So, companies here, even mature companies like Google that's been around for 25 years, 30 years, innovates at a pace that's unimaginable. But as you go to the Midwest, as you go to older companies, as you go to Europe and different places, the pace of innovation is so different because they really don't innovate often at all.

So they're good at operating the business model they know. They rarely do something truly unique. And so then they fall back, unfortunately, in the strategy, we're going to test something new. Unfortunately, tests rarely work.

[00:19:07] Brian Ardinger: Yeah.

Why Launching and Learning Beats Testing

[00:19:07] Ron Johnson: Because by definition you're saying, "I don't know if this is a good idea. Let's test it." Now, in the Valley, you say, "If this is really critical to our long-term future, we have got to make it work." So you might say, "We're going to launch and learn." But you're going to be on the team to launch this new innovation, and you might launch it small and you'll learn, but you're gonna make it successful.

Once you call it a test, from my experience, half the people get on board, half the people don't. "I don't think it's a very good idea, but we got to do it 'cause our boss wants me to do this." And you can feel that in the culture. You can see that in people's eyes. And when I went to, Penney’s, it's a long story we talk about in the book.

I had to delay going there for about six months 'cause Steve asked me to stay. He knew he had about six months to live and he asked me to stay till he had passed, which I did. But during that time, I went out and visited the Penney's team for a week a month. I took a trip to Europe with them.

I went to New York with them. I went to Dallas. And at the end of it, I said, "I can't do this." I called up the board and I said, "I can't do this. The team does not want to change. I see it. I feel it. They're... Everything they're saying is no, we're really good. We're the best at this. And it's our customer that's resistant to change, it's not us.'"

And I knew I was walking into a very difficult situation. But the board said no, they want to change. You're misreading them." And I said, "All right, I'm all... I told you I'm coming, I'll come." And then I went too fast. But you see the clues, right? Yeah. And so as a champion of innovation, you've got to navigate that very carefully, and you need to set north stars.

You've got to encourage teams. You got to get the right people on it. But most importantly, you got to believe. Because if you treat it like it's just a test, the odds are it's going to fail.

The Future of Retail in an AI-Driven World

[00:21:04] Brian Ardinger: That's interesting. So, let's look to the future a little bit. Yeah. How do you see technology evolving the retail experience for tomorrow? Obviously, everything's now moved online. The whole retail experience has changed. Retailers in general are having a tough time.

[00:21:16] Ron Johnson: you see, that... Can I just stop you? That's just not true.

[00:21:19] Brian Ardinger: You see these glimmers of hope of,

[00:21:20] Ron Johnson: No, it's more... no. Retail's never been more successful. Let's not kid ourselves.

[00:21:24] Brian Ardinger: All right. Let's talk about-

[00:21:24] Ron Johnson: 70, 70% of all shopping is done in physical stores today. On line’s been trying to beat the retail store for 30 years. They've got a point of market share every year. But of that 30% that's online, half of it is the physical store's online arm, where people buy online and pick up at the store, or they buy online and ship to your home from the store.

So six out of seven dollars are done through bricks-and-mortar retailers and their omni-channel strategies. Okay? So, AI's coming now, and everyone says, "Oh, AI's going to kill the store." No, AI's going to improve online shopping dramatically, as you have agentic commerce online, but it's going to improve the in-store experience as well in a variety of ways. So, AI will change shopping. It won't change where we shop

Why Physical Stores Still Matter

[00:22:18] Brian Ardinger: That's interesting. There seems to be almost a pushback on some of the AI and non-physical world that we're living in.

[00:22:25] Ron Johnson: Yeah ...

[00:22:26] Brian Ardinger: and people seem to be craving that experience again or that- Yeah face-to-face so- Especially

[00:22:31] Ron Johnson: The Gen Z, the young kids- Exactly are the ones who are now going back to malls and want in-store experiences. And the reality is AI allows you to do traditional work so much more efficiently, it creates time. And the question is what do you do with that time? And hopefully people will convene more. We'll go to stores, we'll talk more, we'll have more conversations. And I personally think that's the way we're headed.

[00:22:57] Brian Ardinger: So, if you were to make some advice to a person who's in the retail space today to try to again, either innovate or navigate the new world of technology and such, what are some things that you would point to?

[00:23:08] Ron Johnson: I would say embrace technological change. When the internet came out, the physical retailers were slow to embrace online. They didn't believe in it. Target didn't. Target had Amazon run its online store until 2008, and then it opened its own. Eventually, when they understood omni-channel, it became a powerful business strategy.

Most stores could reduce their footprint a little bit, not because the internet was taking the sales. The only way they could grow before that was through opening stores. And so the US has been massively over-stored for decades, and that's really the outcome of what happened in the '80s and '90s before online shopping.

How Retailers Can Adapt Faster to Technology

And so shopping's become more efficient. But once they embraced it, they've never been better. The perfect example is Walmart. Walmart's market cap today is 8X was it was in 2000 when Amazon really got going with online shopping. And Walmart and Amazon are like the competitors. They both are the place we go for a broad assortment of low-price merchandise.

That's their strength. But Walmart is at an all-time high in its stock price, right? So, if Walmart can live in a world with Amazon, the only thing they should have done is figured out how to do that earlier. They just launched their online marketplace in the last decade. That's in the third decade of online shopping.

So now we got to move faster. So as AI comes in, embrace it. The good news is retailers tend to be pretty quick at embracing change, 'cause customers are coming in the store every day. They're giving their feedback. You can see what everyone's doing. Just visit a store. Take the best ideas, create your own.

But I really do not believe retail is dead. Look at every format. Macy's is having a ... They're up 40% this year. They call it the new chapter, the bold new chapter. They're making progress. That's a big department store. The Gap is back. The Gap had been put for pasture for a long time.

New leadership, new partnerships, better design. The Gap is back, right? The store has evolved, but retail hasn't gone away. Now, you're in the Midwest. Small towns have been hurt a little bit more by online, but you go to a place like the Bay Area, Stanford Shopping Center's the hardest parking place in town.

The Lasting Legacy of the Apple Store

[00:25:32] Brian Ardinger: So last question. So, when you walk into an Apple store or JCPenney store today, what do you notice? What resonates, and what do you think back on and look forward to?

[00:25:40] Ron Johnson: The thing I love I go to Apple stores all the time. Whenever I see one, like you and your kids, it's a thrill for me to walk in. And the beauty is I see what we imagined 25 years ago, still alive. It's the best store in the world to try a product. The people are amazing. They're incredibly helpful.

Half the customers are in the back getting help, or the second floor taking classes, going to the genius bars, getting help. I just see a lot of engagement, and I'm really proud that Apple has continued to do an amazing job with their retail stores.

And they keep improving the stores, because tired stores never work. But when I go to the Apple store, I'm just, proud to have been a part of it, and I'm thrilled to see the same values of how to treat a customer are alive today as they were when we imagined the store in that warehouse.

[00:26:39] Brian Ardinger: Ron, thank you for being part of it, and thank you for being part of Inside Outside Innovation and sharing some of these stories. I encourage everybody to pick up the book. If people want to find out more about yourself or the book, what's the best way to do that?

[00:26:48] Ron Johnson: Yeah. I would just go to ronjohnsonshopsdifferent.com. It's a website that's, dedicated to the book, but it'll include a lot of content, that I've been involved with. And you can learn about the book. You can actually pre-order the book on the website. You can actually read the prologue if you want to get a head start on the book.

[00:27:14] Brian Ardinger: Excellent. Ron, again, thanks for being on the show. Really appreciate your time and loved hearing all those stories. Thanks very much.

[00:27:20] Ron Johnson: Thank you

[00:27:21] Brian Ardinger: That's it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out insideoutside.io or follow us on Twitter at theIOPodcast or at Ardinger. Until next time, go out and innovate.