[Music] so Ron thank you so much for coming we've been very excited to have you here Y and I thought um before I go into the format for today's talk I wanted to just tell everyone how you and I first met sure so it was last spring I was an NBA 1 and I had just joined the view from the top team and I was standing in Town Square and I looked to my right and I saw a man that I thought I recognized
and he was talking on the phone and I was thinking to myself he looks so familiar and I had been CEO recruiting before coming to Stamford and then it hit me that is Ron Johnson from Apple now at JC Penney and I was Star Struck because CEOs are like my celebrities so I was really excited to see you and decided to awkwardly wait around until you were done with your phone call which
was kind of strange but um I then approached you and and asked if you would be willing to come back to school at some point and be a guest for you from the top and you were very gracious and said absolutely and that is why we were sitting here today so I remember that day but in her defense I do say yes to anything Stanford so it wasn't Amanda it was just Stanford no I'm
kidding um I'm we're just lucky you're here and um so yeah before we get started I just wanted to give a lay of the land for everyone we're going to go somewhat chronologically and start with your background um your schooling then go to your time at your Innovative time at Target and apple then move on to your somewhat difficult tenure at JC Penney and the lessons learned from
there then kind of go more broadly into retail and the changing landscape of retail and your thoughts there and finally end with some more personal questions good we'll do that in about 30 minutes 30 minutes nothing really easy it's going to take no time at all that's great all right so just start off um Ron what did you like to do as a kid well I like many kids I just live to play
sports and so I grew up throwing balls kicking balls doing everything I was Captain of my high school baseball and soccer teams I actually played soccer here at Stanford which was really fun and so I was kind of one of those athlete guys yeah not a great student uh but love sports you weren't a great student but you got into Stanford how' that happen it was a lot
easier um I remember when I was I came out here and I had a bunch of good friends in high school and I think the year before I applied there were nine applicants for my high school to Stanford and cuz I wanted to go I told all my friends to apply not thinking it's competitive 25 people applied the next year to Stanford and uh but nine of us got in and uh so I had a good cohort
coming from a little Public School outside of Minneapolis which was great great so I understand your father was an executive at General Mills I was just curious if that had any impact on you and your career interest or just things you thought about growing up yeah it really did my dad was uh the Strategic plan General Mills and I think for all you business school students companies
go through different Cycles back in the 60s a lot of the consumer packaged companies would take their large multiples and acquire other companies in the 60s General Mills owned 60 different brands it on things like lacost from France it on toy companies like Parker Brothers and so my dad was kind of the one who would do a lot of the in investig should they acquire the company
and then how do you operate them and so just I think anyone who's around their parents if you have a close relationship you're going to pick up interests and passions related to your parents right and my first time to Stanford was when my dad was coming out here I was a sophomore in high school to interview business school students to go work at General Wells and I you know got to know
the campus from there and so my dad had a profound impact on me it's really great so you came to Stanford and as the dean mentioned you were an econ major did you have any idea what you wanted to do after college was that informing some kind of no I just I was I think a lot of us when you're young your goal is to open doors you're not sure what you want
to do but you want to have as many degrees of freedom and that's one of the advantages of going to school like Stanford uh going to school like Stanford Business School Harvard Business School it really opens doors and so I kind of believe that I was probably going to pursue a business career and therefore the more experiences I could gain and the more things that would give me freedom to
choose what I ultimately wanted to do would be a good thing to do um but then you'll see at some point you got to make a commitment that now here's what I want my life to be about right um and I kind of decided that during Harvard Business School yeah let's talk about that sure why' you go to Harvard I mean yeah we all all well truth is I was weight listed I didn't get into Stanford
Business School I applied and I was weight listed uh out of my undergraduate experence I reapplied I was weight listed again and so I went to it actually turned out great because I think living on the East Coast was a wonderful life experience and it's kind of nice to have the chance to live in different places so it worked out really well agreed agreed so you I'm curious to
know if business school what kind of impact business school had on you as you've gone throughout your career are there any lessons that you've kind of taken with you from HBS and the the number one lesson I learned at HBS because h BS is complete as you know case study and I think over your two-year experience you go through 900 cases and in each one your class has 80
or 90 people and we'd all read the same case but everyone would have a different opinion and that led me to recognize in part that there is no one right answer to most business problems but it'll be informed by your own experience and ultimately your own intuition right and so being in a classroom with all these different opinions it led me to believe as I pursued my career that don't just
fall into the expected obvious easy path don't just rely on numbers because if you rely on data and the data is going to drive the evidence which drives the decision well most companies would come up with the same approach and ultimately when you have an approach that's like a commodity it doesn't do very well right and most of the great uh businesses had a spark of innovation and I think I
really picked that up at business school you know seeing classes and hearing that Oddball kind of thought or approach right kind of out of right field and I think that was a big lesson and you realize there are just tons of smart people in the world um but it's all about execution teamwork but sometimes picking the unexpected path great so you you said I remember hearing in an
interview before that you said the retail cases and the retail CEOs and Founders that came in to HBS where really fascinating to you and you kind of decided that you'd like to pursue a career in retail and your thought was to get into this kind creative and interesting field you thought it was best to work in the field so you started at mvin and you know on the floor but
your first T you know couple months you said you weren't even allowed to meet with customers you were in the back the back room until you eventually made your way to the cash register so I want to ask how were you able to be so patient right and how were you able to prove yourself you know get noticed and eventually get the promotions that led you on a path to a very successful
career sure uh well that was a lot of people thought I was crazy but when I was at I interned at Solomon Brothers and Investment Banking in New York between first and second year business school I had offers like many to go to a lot of the investment Banks there were a lot of jobs that were in the short run very rewarding financially yeah with offers multiples of what I
accepted but I kind of Hit the point where I said I'm 25 or six years old the question is what you do next it's what you do for a lifetime and sitting through the Harvard Business School cases where the founders of comp almost all cases the people who led companies had grown up with their company or with that industry it was rare there was a consultant leading a company all that
happens it was typically people that had really who were smart and well trained but had an intuitive expertise and so when I looked at where my passion was was I loved all the retailing cases I liked walking through stores and as I thought about retailing I said well it's it's fast moving it's people intensive you get sales or feedback every day it's not unlike playing a sport which I loved and the
interesting thing very few Harvard Business School students or mbas would go into retailing so I figured if I put my head down and worked hard you know it might be an easier place to succeed than going to to a place where a lot of people like me went and so and at that time you got to put things in context too retailing when I graduate from business school was very different than
retail today the Venture Capital firms were funding retailers not technology companies when I joined came out of business school that's when Mickey Drexler first went to the Gap from a department store that's when Les wner of limited Fame in Victoria Secret invented the modern specialy store that that's when us Ventures was funding Staples and Toys R Us as
startups because that's when Big Box retailing started so retailing was in a very transition because I'm an old guy this was 30 plus years ago so I was picking kind of a startup field where a lot of young people were leading these so it was on Mickey was 34 I think when he went to the Gap wow so in retailing because it's a meritocracy you can see the results that a person a buyer bought
this and it performed you run this store at performed I figured if I go to a place that's aligned with my passions that's a meritocracy if I trust if I put my head down and do good work I will have a chance to have impact I just did it and I figured your education doesn't really stop when you're done with business school that's when it starts but you're moving from broad principles to detailed
understanding and that led me when they asked me at mvin do you want to come to headqu I said no I'd like to start in a store and what job I said what's the lowest job and they said the receiving people I said that'll be my start cuz I just wanted to learn from the ground up and I unloaded trucks for 3 months and I got really fast it was great exercise we
could do a big trailer in 45 minutes but the art was what you were learning was how do merchandise get packaged how's it organized on a trailer how do you stock it efficiently how do you make sure Goods get to the floor so the way to learn in almost anything is by doing and you know I found in my career un fortunate I'd get promoted after about six months or a year in every position
when I really wasn't quite ready to leave yet yeah and so the tradeoff I think when you start at the bottom you have a lot of chances to make a lot of little moves but it gave me lifetime knowledge which I value to today so I can walk through the store and I see things probably that I wouldn't see if I hadn't done that right it's fascinating so after mvin you moved to Target I
believe mvin was acquired by Target is that correct well actually there was a department store company called Dayton Huds okay there used to be 60 department stores in the US now there are three or four Dayton Hudson started Target the same year Walmart and Kmart started 1961 they acquired mvin from MV Morris who lives here in Atherton probably been at the school at times uh and I joined
mvin because that was their gross strategy when I joined hit tough times Target became the gross strategy and I joined Target in 1990 great so your tenure there as the dean was was alluding to was prais especially for its innovative approaches to Partnerships in merchandising and you collaborated with designer and architect Michael Graves and brought a whole line of products
especially the the famous tea kettle with the bird whistle on top I was curious how did this idea for the democratization of design come to you how did you know that an affordable retailer was going to have the consumer's interest in this kind of loftier um design personality you know it was just one of those intuitive instinctual moments so I was I think I'd
been at Target 4 five years I'd just taken over all the home areas and I was starting to travel to Europe and i' had also bought my own first home and I was struck by all the beautiful objects of art I think I love things that are beautiful that you'd find in these really high-end boutiques that were expensive but there was nothing like that available in a store like Target
right and as a merchant what we used to do is we you know buy something from someone else copy it six months later at a low price and that's how we created value it was really a strategy of copying others at a better price and it hit me why why do the small expensive Brands create when the big brands with all the resources copy right it didn't make sense and why are beautiful object
objects not available to Everyday People but they're available to the wellt Todo and it seemed like a disc a disconnect and Michael Graves had designed a tea kettle in 1984 this is now 10 years later that was still the bestselling tea kettle in the world alessie made it it sells a million tea kettles a year of this one thing and in the 80s and if you lived in Manhattan and didn't have one
of these on your stove you weren't with it and so I thought well if we're going to do design which I want to try design I thought design would be much more interesting than fashion because fashion lasts a season right a great design lasts a lifetime if Target could do great design and stake out a position you need to partner with a great designer so I saw Michael and I asked him I said Michael
would you like to design for Target and it turns out he was the dean of architecture at Princeton and his biggest frustration is not a single student could afford his teac Kettle so Michael and I connected and you know we then launched the Michael Grace collection and it was really hard to do because no one at Target thought it would work right because you said that
like even though it's got this trendy exterior and trendy marketing that Target was a pretty traditional company on the inside right well it led to my biggest Discovery probably a Target you know you work 15 years for one discovery that you carry with you and that was what truly is innovation Innovation you hear in every class probably everyone thinks they innovate but most most of the time it's
just Improvement because Innovation is the eye is in the eye of the innovator and a lot of people without really big thinking will see Improvement as Innovation right but almost all Innovation stems from your imagination it's something that hadn't been thought of before when I worked at Apple Steve was the best at this but anytime you imagine something you're going to be
stuck battling reality filters you know kind of assumptions about the business that are embedded in the company you're so when I was a Target I mean when I said I want to do this partnership with Michael Graves it was not well received who's Michael Graves why do you think our customer like design how do you present a beautiful object on a steel Gondola you know how do you sell a tea
kettle for three times the price of your highest priced tea kettle today you the whole idea was not we can deliver Great Value to Middle America or middle upper America it was here's why it wouldn't work but to to win in business you've got to let the imagination win if you really want to innovate and so we launched the graves collection they the CEO said Ron
why don't you try three skus well I snuck in a few more we did 140 items just and we had items for you know kitchen and decorative and we took over the main endcaps and then we even got so excited about it that we decided to launch the graves collection in New York we took over the Whitney Museum wow on Madison Avenue and filled it with these objects of Art and invited all of the
press to see what design could be for everyday people and somehow connected with people and and that led to a series of things uh that helped Target differentiate itself really become preferred right and that's why today there's really Target and Walmart are the only two Discounters in 1995 there were 11 discount stores you know regionally located and end up being two and in
every business there's usually a differentiator and there's a low cost player and Target one with differentiation and I think the grav thing was one of the parts of it but the lesson of graves is you don't have to be the senior person in the company to impact the company I was kind of a middle you know Rising Middle Market kind of person at Target at least I
looked at myself that way and we just did what we believe was right and it turned out to impact the company so you can't sit around in business waiting for someone to do great things you know I think it's up to everyone in business to do great work and that leads to one of my beliefs is leadership is always at its best situational it's not positional it's not about who's got a title right
it's the leader is the leader in the moment who's got accountability that's where the best leadership comes sorry to go too long I'm no this is no this is fascinating everyone just loves hearing the stories okay so to go on to Apple you joined in 2000 from Target and you've said and I quote as a mer merch you can Source things but you don't know how to create so how did you learn to
create when it came to designing what turned out to be the Revolutionary Apple Store that's a good question well I I also subscribe to the belief that everyone is a Creator and everyone is creative right all you have to do is go to a playground and see kids right go to a preschool class everyone wants to create somehow through life schools and stereotypes you know breing people into
buckets of you're analytical or you're creative you're right brain left brain I think we're all creators and we just have to figure out how to do that and so when I joined Apple I had had a a great career at Target but at Target I wasn't given the chance to kind of learn the entire retail industry and Steve was looking to launch stores and he said Ron you get to do it all you get to do the
real estate the store design the people on and on and on and I thought a chance to work with really perhaps one of the best creators in the world directly would be just a a lifetime opportunity I love the Apple brand even though it was you know 3% market share company losing money I'm leaving tar to go to this loser all my friends in The Valleys why would you go
to Apple there are 2,000 all these internet startups and you're going to open a store you know usual what are you thinking um but it turned out to be probably the best career decision I ever made yeah and working with Steve was a real blessing yeah so so the question was how did I learn to create yeah well I went back to what what made Michael Graves work at Target is I trusted my
imagination so when we had to launch the Apple Stores I was the only retailer at Apple and I was by myself and I'd go to the executive team meeting on Monday and I'd sit around and think and so I started to imagine if you were to design a great experience for a customer what would you do and I made a list and everything I made the list was kind of counterintuitive like typically if
something's going to be bought every three years retailers or people would locate in inexpensive places like an auto dealership some remote parking lot because you don't want to pay for traffic the customer will come to you right but I thought well if Apple's 10 miles away from a customer will'll never get a chance to suit up we got to be 10et out of their way so we got to go to
the shopping malls and the high streets like Fifth Avenue to put an Apple Store and you know everything we did you know people you know we're have face-to-face support but at that time everything was going to the internet and telephone support where it's efficient but I just believe technolog is hard and you want to be able to talk to someone face to face if you want to learn right oh yeah
and if you're going to buy something you know we ought have commission salespeople no no one likes commission salespeople you want somebody's looks in your heart not your pocketbook well we made a list of about eight or 10 things that we said now that that would be a great experience and the good news Steve trusts imagination Instinct even more than I do and so we made this listen
Steve said let's go build that and so we designed and created the Apple Stores but it was a Pure Play There was really no compromise on any of the intuition it's amazing and I think that's how the Apple storees connected and and even today you walk by an Apple Store people feel like they belong some they go just to go you know they don't go to buy they
there's so many reasons to come you can get help you can bring the kids and play at the kids tables you can learn right you can try you can surf the Internet check your email check your email yeah but you know back in this how fast the world changes when we launched the Apple stores do you know who the number one guess what percent of people had Broadband or high-speed internet in the
US anyone want to guess 3% 90 7% of America was on dialup internet so no one had ever seen a high-speed internet and I said Steve this is going to make Apple computer seem really good because they're going to come in and try the internet and they'll think they're fast and uh but we created a place that people this is before the smartphone so no one could
surf the Internet on a phone so if you're in a mall waiting for someone you you had to wait you couldn't do anything and so we created a place for communities to form where people could just check their email and experience the map back and it was just part of that Community thing but you know fortunately it worked it's amazing but it was trust in your imagination so Steve clearly trusted in your
imagination I'm sure everyone's dying to know a little bit more about what it was like to work with Steve um and so I'm wondering to ask a specific question what's the one conversation that you really remember or a moment with Steve that you kind of carry with you um to this day that's that's a really good question question Steve uh really wanted to be best friends with
a handful of people I think because he was so success aged 24 you know founded the mac and overnight he became this very public figure and he's a pretty private person and I don't think he ever liked being in the public and so he tended to have a handful of you know 10 20 people that he was close to and when I started working with him he said Ron he say I just if you mind I really want
to not be an employee I want to be a friend and I want to talk to you I want to get to know you well and the reason I want to do that is because once you know how I think I can just let you go and you only have to talk to me when you want to do something you don't know how I think you know so he had this intense way of developing these close relationships and the first time we met
in an interview we talked for two three hours just like you and I are talking about a lot of subjects and I found myself very comfortable with him and so Through The Years Steve and I would talk you know most days on the phone anytime i' call can you come to the house you know he'd love to be face to face you know and so you Steve was one of these guys you actually developed a very
intimate relationship with and it led to I think the most misunderstood thing about Steve is he's the best delegator I've ever met and yeah because he has that image of being a control freak image control freak but he was such a good delegator because he was so clear on what he believed in what he liked because he had such Clarity of purpose when you worked with Steve you could
actually operate without a lot of with a lot of freedom in a strange way um so the question was what's the best thing I think the thing I remembered from Steve is you have to be willing to start again we were launching the stores and uh one one day Steve and I were talking we came with this idea of the digital Hub which was going to be Apple's business philosophy because the to move beyond
the Mac the Mac had to connect all these devices which became a music play or a phone whatever but the Mac was the center of your digital life so the next week we were going to our weekly store meeting we were designing the store and I met Steve be I'd go to his office because he liked to ride in the car over about two miles to this place we're building the store
I said Steve I've been thinking I think the store is organized all wrong we've organized it like a retail store around products but if Apple's going to organize around activities like music and movies well the store should be organized around music and movies and things you do and he looked at me he said do you know how big a change that is I don't have the time to redesign the
store you might be right but I don't want you to say a word about this to anybody cuz I don't know if I want to do that so we got in the car two- mile ride not a word we walk into this meeting which has you know Architects and people on my team about 20 people and Steve walks in and the first thing he looks at the group he says Well Ron thinks our store is all
wrong they you under the bu this is 10 minutes later hasn't talked and he said and he's right so I'm going to leave now and Ron you work with the team and design the store wow and we started stretch he called me later that day and he said Ron you you reminded me of something I learned with every movie I did at Pixar almost every movie at some point frequently when we're about to release
we realize the script could be better the ending is not quite right this character isn't exactly how this character should be and at Pixar we always had the willingness to not worry about the movie release date MH but to get the movie right you only get one chance to create a movie you only get one chance to launch a store yeah so it's not about how fast
you do it it's about doing your absolute best and that lesson carried through to so many things I've done it's not about speed to Market it's really about doing your level best and you got to be willing if you rethink things to have the courage to start again and I think that would be the memory I remember from Steve you know one of them thank you so I want to take the time now to go to J C
Penney which do we have to yeah I think every I think everyone's a little curious yeah um it's a little I thought I'd start with a quote and I'll read it to you so you don't have to Sure kind of strain sure you said I didn't come here to improve I came here to transform every single leader in America who works to improve their business year after year can create gradual results but the
only question is how fast did you improve compared to someone else you don't fundamentally change your position in the marketplace so to turn that into a question Ron at Target and apple it seems that you approach new ideas with an iterative incremental approach so they might have been big ideas but you at Target for example you gradually built new lines at Apple you increasingly made the stores more
elaborate like you didn't have the Fifth Avenue store right right away with the big glass cube Etc so at Jason Penney when you did Away With Coupons pretty early on you added smaller branded stores within a store you had mobile POS like very big changes for a pretty old-fashioned department store why do you think you moved more quickly and less incrementally when you got to JC
Penney that's a great question and and the truth is it's probably arrogance you know and I I don't think of myself as an arrogant person I think of myself as confident you know if I believe in something I'll pursue it but I think what people didn't realize is I grew up at mvin and I am a student of the department store of the retail industry yeah it was like going home and I
remember what it was like in the good days and I looked at what it's like today and I had a the reason I went to JC Penney is I just kind of thought it'd be really fun to take a 109 year-old company and try to see if we couldn't find a way for it to succeed for the next 100 years and when you looked at JC Penney the stock price was below when I joined what it was in 1992 30 years
later and almost every other retail store that was there 30 years ago wasn't in existence and the customer aging if you're going to have a chance to succeed you've got to change the model to get at a younger customer base and a more profitable customer base and so I concluded which on hindsight was an error that the best way to make a move was to jump start the change be willing
to go through a very difficult period of down sales but over the course of time we would get to our place faster right when I was at Apple in 2002 people forget this apple sales were down 38% to 2001 Apple had to make major transitions to build its new business model and it leveraged its cash position to do that so I felt the same thing here if you do when you join a large bureaucracy like
JC Penney if you don't have a vision for change the organization will never it was my belief right um so we developed this Vision you know collectively the group and we got very excited about it and you know I'm kind of one of these go forward guys so we decide to go but on hindsight the biggest mistake we went way too fast way too fast for our board
way too fast for customers way too fast for employees way too fast for shareholders and it it would have been if someone had just said Ron love your vision take a year reduce your expenses build your team and then start to roll it out we would have probably been much more successful but I think it was kind of arrogance I just had such I'd had such success you know most of the things I
done at Apple and Target worked and so you kind of think well this will work too and uh the reality is you know we' move too quickly so you after 17 months you were let go at JC Penney and I'm I'm curious to know what was going through your head when you first received the news like what do you do when you but that's another thing you'll learn about you really can't believe what you
read and that was my big lesson from JC Penny because I resigned three times uh in February I offered to resign in March I offered to resign and finally uh in April the board chair said Ron we're going to accept your resignation okay now companies have a need to position things for you know the board wants to be in charge you know so all he said was Well Ron we're just going to write
you're no longer with the company they never said you're let go but I made the choice because it was very painful it was painful for the board for employees and I said look word to point it's been one year of transformation if you want to go back to the old business model the sooner you do that the better and that's a choice that you can make as a boort if you want to do that you ought
to find someone who can really help that model work if you want to go forward I'm all in and we will make this work but I know it's painful yeah and I remember telling the board it's going to get worse because all the focus was on me as the CEO after a while they're going to say why is the board sticking behind this guy when the business is tough and
I said I want you to think that through now because I don't want it to be three months or six months when we're going ahead and then you decide you can't handle the change and you know they finally said we'll accept your resignation it doesn't get published that way you know and that's okay so it wasn't a surprise to me got it and in some ways it was a relief it was
disappointing because I really believed we would make it work but it was a relief because the lesson I learned is I was a terrible fit for JC Penny you know I'm a creative person this is a company that isn't Uber creative right yeah I believe in change this comp company is much more comfortable like many people are with the status quo right and so it's really important when you pick a
job or a company to really focus on the fit yeah um Jim cter tpg business school you know Jim said to me Ron he goes number one issue is fit it wasn't a good fit for your passions and your style and your skills I think he's right on that and so it's kind of a relief to get away from that quite frankly because it was hard and it wasn't you know as fulfilling as you'd hope um so
and I I'm curious to know it was your first CEO role um what makes the CEO role different than your other executive positions were there any you know you can think of the obvious reasons why it's different but any like surprises things that you didn't realize would be part of the job well I think the biggest surprise to me was it people don't tell you what they believe be I think because of positional
Authority it's very hard to understand what people really think interesting no matter how you ask now tell me what you think what do you think about this they're going to tell you what they believe you want to hear because they're interested in survival right you know most people want to continue and their they want to say they're on board and I didn't really recognize the power of
positional Authority being a CEO and remember I'd been a two companies Target for and I started you know in the stock room so I earned my relationships my credibility through a lot of years at Apple I was the first retail employee when I left we had 50,000 but everyone knew me just from working together for years and years when I went to penni somehow I kind of assumed that a lot of
the trust I developed as a leader the that Social Capital would transfer but the reality as a leader you've got to earn that you know you can't take that for granted and you earn it through relationship you earn it through experience and I think that's the other thing why you have to go slow when you take over a new company is you got to build trust and I moved way too quickly assuming I
had the trust of the team does that make sense and I think you have to earn it and in many ways I think there's a theory the older the company the slower the change IBM as an example if you talk to Jenny who'd be great to come talk to the group Jenny would say they're still in transformation since 1994 they're in the 20th 30th year of a transformation wow right yeah old
company a company like apple relatively young can move quicker the startups here pivot all the time there's not a lot of institutional memory and I think length of time has a big big impact on speed um but ultimately as a leader you need to have the teams earn the team's trust and you earn trust you aren't granted trust that's my sense thank you Ron so to move
to the retail industry in general and trends that you believe in or kind of foresee or Trends you don't believe in do you agree we had Mark Andre here as part of you from the top this year and he's written an article that basically hypothesizes that bricks and mortar stores will cease to exist what do you what do you think about that opinion well when Mark first wrote that I wrote
him back I I said I think you're crazy you know and Reed Hoffman wanted me to write a counter article on LinkedIn as one of these view from the top things to but I decided not to do that that uh but I think Mark is more right than wrong it surprises me now we live in a high touch World we're all social animals and we'd love to engage and I think there'll be a physical component to retail
forever but the internet is changing Commerce in increasingly profound and Rapid ways as we speak and so I now see I mean all you have to do is walk through the mall and you see dramatic change you got a Stanford Shopping Center you can see the world change before your eyes the mall Will Survive but it's restaurants and it's Soul cycle and it's a variey of engaging activities
and fewer stores right and most of the startups today in retail start online and then when they add a store they add a store but it's a very different kind of store it might be a showroom think of warie Parker think of bonabo you know people like that and so the world is changing there will always be stores I believe but the share that is done online or in different ways I
think will continue to grow dramatically for a long time that's a really interesting way to look at it there'll be places where people gather but it's more experience driven and it'll be it's like the Apple the Apple Store is a place to be only one out of the hundred who visit the store every day buy anything think about that you go to Whole Foods 75% bu the ones who don't are the kids in the
shopping cart right a store like Whole Foods everyone buys a store like an apparel store 25 to 30% buy at the Apple Store one buys but it's the busiest store in the mall so what's going on there's a connection right there's a connection there's a place there's something and that's what malls will be it doesn't mean malls won't be busy and there won't be activity but you might find it's not
as convenient to buy there right because if I bought online other things will happen as part of the experience that'll be much better than going to the store I think we're going to look at stores pretty soon and say God it was like they were just public warehouses if you think about a big department store it's just lots of stuff that we go pick out of but
it's not tailored it's not personal there's nothing uh special about it you know the world's going to get intensely personal yeah you know customized High-Tech high touch have to go together and you know it's interesting it when I grew up you know if we wanted to call a friend we'd have to take the phone and we only one phone in the family and no one else could use it right but my kids are much more
connected to their friends through technology so technology creates much more intimacy than the old thing does and so you just got to figure out how do you create more intimacy and more relationship and more experience through stores but it doesn't mean that's where you have to buy and I think the Apple Store in many ways a precursor of where things might go yeah um and there will
be a lot more coming great I'm excited for that so I wanted to end with a few more personal questions sure and I wanted to ask have you ever applied your insights into creating wonderful experiences for customers to creating wonderful experiences for your family that's interesting yeah um well I do I I love I love to travel okay and so uh I have two kids a a freshman in
college and a sophomore in high school and we've taken some fascinating trips and I love to plan little excursions and trips for the family but the biggest thing probably I finally had a I had a dream to build a home in France and I took a lot of years found a great property and designed a home you know for our family for a lifetime and I think it turned out pretty good that's
awesome and it was really just one of these lovely things to get to do and it's very unique it's very is it high-tech it's it's no it's actually I'd say it's uh it's unmistakably modern but decidedly French so it's got uh sounds good that that's kind of the a thousand songs in your pocket tagline but it it's totally connected to the land and the gardens and this and it's but it's only
got three materials it's got French Limestone it's got bronze and it's got glass wow well I guess in Wood you know floors but some but it's a very mod thing but it feels like the most comfortable place you've ever been at least to a lot of people so I I I did that and that was kind of like to me designing an Apple Store yeah now every Apple Store that's great has a sense of
place it's like Steve used to say uh if you really think something through hard enough you'll get to the inevitable answer and the store that I think we got to that on was the Fifth Avenue glass cube you know that's like the fifth most popular tourist attraction in Manhattan MH and it's because it's the this stunning little glass box that's literally 900 square
feet most people that that make an impact on the skyline of Manhattan do that at 56 or 60 stories well Apple did it 32 feet 6 in because we got the context right and we thought it through and it just the right design for that place and it shows the power of thinking something through which Steve was by far the best at and we push you until you got to that and I think for me building
the home was kind of like building a great Apple Store it's got to have a sense of place a sense of connection it's got to create a place you love to be so it moves Beyond being a home it becomes a huge part of your life thanks so so going forward I wanted to know you what's next and maybe a little side question to that is do you think you're more reserved about taking risks now
after you took the risk of trying to turn around JC Penney good questions uh what's next so I am 55 I think don't look it so you don't know you're supposed to know the details um so I I view myself I one of the things about life is we're all living longer now right and one of the issues that faces America is people retire on these old traditional things but then they're
going to live longer and they're going to be healthier and more active and you got to live your life as if you'll live forever knowing that you probably won't and you know take advantage of every day and so I do think there's you know a couple other things I can do in my life but I took a year to kind of think it through and so after the pennies thing which was really hard I made the
decision not to say yes to any board seats CEO jobs volunteer jobs but just to make myself available to people who wanted advice and it could be an individual it could be a company it could be a venture capital firm well I was getting 10 requests every five minutes last April to meet you or 10 10 requests every hour so about every five minutes and so I finally narrowed down to just do three
meetings a day for different groups and I did that through the fall and in the process discovered kind of where my passions are and as you can tell it's creating things new things and building teams and so what I'm going to spend the rest of the next few years is creating new things and building teams and I'm doing that in a couple of ways one is I
have a established a new fund called Johnson Partners which aligns uh two to four of the leading Venture Capital private Equity firms with their startups or companies with people I've met throughout the world who are going to put money into a fund and we will I will exclusively help those firms wow um and so we'll be co-investing and Advising a handful of firms and their companies uh
and then uh working on uh uh some other things that I can't talk about yet but well we're going to be excited to see what those are yeah so um I think I've taken my fair share of time here so I wanted to make sure to open it up to questions Ron thank you so much again sure thank [Applause] you so I believe we're going to start with a question from Twitter is that correcta sitting right here on Twitter
um she says we've heard about mistakes you made at JC Penney uh what did you do there that you think will have a lasting positive impact that you know it's really hard to have impact you a short period I think I think the thing that we did do that has kind of been mistaken is we lost a billion dollar in a year which is hard to do but we invested a billion dollars in
the physical plant of the stores and our cash actually went up you know so we actually gener more cash and we started uh major investments in the stores and even today when you talk to the pennies team the stores look better than they have and so I think that whole belief that the physical environment has to be upgraded uh is something you see when you walk in the stores and that will
last um my biggest failing though was the pricing because I I I really believe that everyone deserves truth in their relationship with companies there's got to be a foundation in truth and so when you don't have integrity on the price ticket that's to me a big deal and most places we shop today there's Integrity on the price you go to Starbucks you pay for the coffee right
uh you go to Costco you know what the price is the department store industry has evolved in this thing where the artificial price is about 70% above what people pay and I feel badly that something that was so near and dear to my values we failed on the execution that we couldn't fix because I think the world would be a lot better if people could shop whenever they wanted and get
what they want at the right price versus having to shop on the terms of the retailer which is if you want this item 8:00 Saturday morning you know give up all your family come get it else I'm not going to give you at a good price and I think that's really fundamentally wrong and so I just am sad that the Integrity didn't come through but I do think we help the store environment yeah thank
you so we have mics we going to be passing looks like we have some questions up here please state your name and your affiliation to the GSB and stand up please okay hey I'm Henry I'm an MBA student uh thanks for stopping by um so most MBA graduates don't reach the heights that you have I'm wondering what makes you different and perhaps what you think held back some of your MBA peers who
didn't reach as high as you did well I I don't know if Heights the I never think it's funny you I don't know I never feel like I achieved a height I just feel like I got to do a lot of jobs that had increasing respon but I don't think of it in that way so I think the the difference is I never tried to be successful I just tried to do my best and I think like even in throughout
my career when we're promoting people the people you want to promote are the people that really do great work and they do it because they love the work and they're doing it for the customer and you'll see so many people it's obvious they're doing it to try to advance their own interests I think that's what trips people up because once you try to advance your own interest you
generally are not being a genuine you're not being authentic and it shows up in a lot of interesting ways and so I think the reason I was able to succeed is because I just focused not on getting promoted on doing the level best I could and it turns out I was in Industry I cared about and for whatever reasons got promoted um but I think the big reason is because I didn't try to and it just
sort of happened looks like we have time for one more okay so another Twitter question from uh Sam dubo this is a good one um he said how did you approach the decision to stand by Ellen as a brand ambassador was it was it really a business decision or an Ethics decision is your friend familiar with it so uh context we selected Ellen to be our spokesperson at JC Penney and it
turns out there were a lot of people in the country or there appeared to be a pretty big movement that wasn't happy with a company like uh JC Penney you know picking a lesbian to be their spokesperson and so there was a pretty big Firestorm after was announced but it was a totally easy thing because Ellen represents in everything she does the values of America the values of JC
Penney and so standing behind her wasn't a business decision it was a human decision and that's how all decisions ought to be um so it's was very easy to make that it really wasn't a decision it was obvious we would support Ellen and that's what we did and and it turned out that that probably wasn't super popular with a lot of the Penny's customers you know not a lot but 10 to
20% a lot of small town older people might not have been comfortable with that um but I think was the right thing to do and i' do it again if given the chance well I think we should give another warm Round of Applause to Ron Johnson thank you so much thank you very very much really appreciate so much fun and this is for you a little token of our appreciation but thanks again [Music]