Retail Chief Draws Connections: Apple & Public Issues

November 23, 2010

China is becoming the most significant player in the world, according to Sr. V-P Retail Ron Johnson during a recent Minneapolis (Minn.) civic meeting, perhaps an encouraging lesson to government leaders in the United States who are facing employment and financial crises. Johnson spoke in September to the city’s Civic Caucus while in the Business Briefing Center of Apple’s new Uptown store. As part of the group’s on-going speaker series, he explained his approach to retail, and how the concepts might apply to the government sector. The Caucus was formed in 1950 as a way to bring together citizens to analyze and recommend solutions to critical public issues, and has hosted government leaders, politicians, education officials and economic experts. Johnson grew up in nearby Edina (Minn.), and said he’s followed the Caucus’ work over the years. He began his talk by cautioning that his main life focus is family and Apple. “I don’t devote many cycles to solving public problems, so please keep my experience in perspective,” he said, according to a transcript released by the Caucus.

Johnson recalled 2000 when he joined Apple, which at the time was very small and losing money. “The only way we could grow (was) if we innovated,” he said. “With innovation and the right values, a company or a state can turn around rapidly,” he said.

But change does require sufficient time, he noted, which voters infrequently don’t allow their public leaders. “Every time the desire for change comes up,” he said, “you’ve got to be thinking ‘opportunity,’ and you need to be willing to pursue innovation.”

He noted the changes in China over the 20 years that he’s been visiting the country—”It’s truly incredible.” He said 80 percent of the Apple store employees in China have college degrees. “They have spirit. They’re happy. It’s not about money,” he said. “If a country can change that dramatically in 20 years, why can’t the state of Minnesota change dramatically in 10 years?”

5-Part Retail Model

Johnson then talked about Apple’s retail stores, explaining, “We don’t just have great products, but we also have the experience and the culture that the stores cultivate and represent.” He noted the well-trained staff, the ability to try before you buy, the personal service at the Genius Bar and one-to-one training.

Johnson said Apple has created a five-part model for retailing, including strong leadership, passionate employees, mission, innovation and significance.

Steve Jobs sets the vision for Apple, Johnson said, but added that, “Leaders want to be told what needs to be accomplished, but then be let loose to achieve it. Steve has been by far the best and most inspiring person with whom I have worked.”

As for passion, Johnson told how back in his college days, his Stanford roommate camped out overnight at Apple’s headquarters after hearing the company was hiring. “Passion is key to enduring success,” he told the group. “Our employees are passionate, and live the passion,” Johnson said—they literally run into work. Yet most of the chain’s employees are paid much less than other professionals such as teachers, hospital workers, and public service employees, those that society commonly assumes can’t succeed because they aren’t paid well enough.

He said each employee has a “credo card” from Apple with notes about the values of the company. “It’s about meeting the passions of people, serving the passions of people.”

Johnson said he’s never attended an executive meeting at Apple that talked about making money. Instead, Apple’s mission is to make technology easy for people to use. “Profit is our reward for serving people well.”

Apple doesn’t do “improvement,” Johnson said, but rather it focuses on innovation. “When we said we were going to open stores in malls, people thought we were crazy,” Johnson recalled. “But we wanted to be part of people’s lives, and to do that, we needed to be within ten feet of where they spent their lives rather than ten miles.”

Lastly, he said “significance” is a big word, but with a simple definition. “People search for meaning in their lives,” Johnson explained. “A company must find out how they can provide their customers and employees with a sense of meaning, and this ultimately will achieve significance.”

Retail Philosophy

“In our Apple stores we imagine the future without limits,” Johnson said. “Limits are artificial barriers that are in our minds.”

Insightfully, Johnson explained, “If you can tailor a store uniquely to its setting, it creates a community.” Retail locations are important to their city, and the architecture must blend in. When considering a new store, the Apple retail teams spends time out in the street, “feeling what the locals feel.” As a result, the stores look differently, depending on location.

As with product development, there are no barriers to imagination in designing the spaces, Johnson said. The store in Shanghai, for example, is located underground, features a 40-foot glass above-ground cylinder, and is constructed of the largest panes of curved glass in the world. “We’ve learned over time there’s something great about the history of the spaces,” he said, “so we’ve respected that.” He said Apple’s architects and construction team went to great lengths to restore the Louvre (Paris) store to show respect for history.

But the stores are deeper than cosmetics, more than flash, and more than seeking the favor of local communities that appreciate the marvelous structures, Johnson said. The entire retail experience—from the stores, to the packaging, and the personalized training—help users to recognize that Apple’s products and services can help them find their passion.

Apple is pursuing something grander than the electronics themselves, Johnson concluded. “When done right, people understand these stores can be transformational to their lives.”

Download (pdf) the Civic Caucus summary of Johnson’s talk.

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