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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{ 7 comments… read them below or add one }

former specialist November 23, 2010 at 2314

I love you RonJon, but you’re talking out of your ass here (which you basically admitted).

As a former Apple employee and a current public school teacher — jobs which I held simultaneously for nearly 4 years — I can tell you there’s plenty of passion in both. There are also much bigger problems, much higher stakes, and much, much heftier workload facing teachers. So don’t for a second try and compare the work that retail employees do to that of teachers or other public servants, nor the pay received for any of those jobs. Maybe you should be comparing the public service salaries with those of private-sector jobs with comparable education and experience. I guarantee you that nowhere near 80% of U.S. Apple Retail employees have a college degree. Most of my co-workers, very bright people that they were, were in the process of completing their bachelor degrees.

Apple actually pays decent wages for retail. But maybe Ron should consider paying retail employees more. Several times my store management tried to get me to come on full time, and I would have gladly made the jump. But I wouldn’t have made nearly enough there to cover my very, very modest teacher salary (not to mention the second income from my Apple job). It sounds preposterous, but they couldn’t afford me. More accurately, I couldn’t afford to solely pursue my passion for Apple and also support my family and pay my mortgage. Which is fine — no sour grapes there. I’m a grown-up, and grown-ups have to make tough decisions sometimes.

But maybe Ron shouldn’t assume that the answer to improving our education system is “more passion.” That’s not a grown-up solution.

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Homer November 24, 2010 at 0617

Seems like he’s saying that apple employees should be thrilled to go to work for apple and that compensates for the low pay. Sounds like he needs to spend less time in china and more time seeing how his US employees fair in the real world. Passion dies when it cant pay the bills.

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Joe Apple November 24, 2010 at 1901

That’s “fare”. Maybe you need to spend more time reading?

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Former Genius November 24, 2010 at 0909

I think like most upper level executives, Ron has a rather rosy view of what is actually going on in the stores. Ron mentioned that in the stores people are rewarded for helping people. From my tenure at Apple, that certainly started out that way, but after the iPhone was released that quickly changed. Gone were the days when we were actually concerned about solving the customer’s issue during an appointment, but it was more I can only give as much help as I can give in 10 minutes or less. (not as much help as the customer needs). This too can all be chalked up to innovation (how can we help as many people as fast as we can) but where is the fine line between helping as many people as possible and just churning through people without much thought at to their experience in the process? He mentions that Apple wants leaders and not managers, and as leaders they rarely talk about money or profitability. Apple just changed the titles of Store Managers to Store Leaders, however in all the time I ever talked with Store Leaders, all they talk about anymore are results whether that we money or metrics. Very rarely did we ever talk about such rosy issues like people, training, innovation or experience.

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John Dingler, artist November 24, 2010 at 1309

Ron feels similarly to the way the Medieval duke or margrave felt when he peered from his expensive hill top castle down to the duke’s serf farmers who are toiling on the duke’s land and bringing up to him the best produce and dance for him. The duke concluded that his serfs were a happy lot, lucky to be on the duke’s land, protected by him, and further rewarded by their passion and enthusiasm to serve the duke.

A similar analogy can also be made to the American slaver owner and his slaves. How long before Whites will be treated this way as the normal economy slips but the Wall Street economy makes the wealthy even richer?

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Current specialist November 26, 2010 at 0149

John is right. When i hear about Ron cashing out millions of dollars of stock options, it literally makes me sick to my stomach. Then i see him get up in a video at a store meeting, and talk all fluffy to us and how wonderful apple retail is. I think that it is the best retail can be, but the pay does not reflect that. Newly hired people go through 4-5 interviews, and we loose 10% of staff in 5 months. Mostly due to pay or being treated badly, or to fatigue from working so hard. If you work hard and show passion, you should be compensated for it. It is sad. In the credo card, the first thing that is written is that “our people are our soul.” I supposes that the people who make 6 figures and not the outer layer of people who work their asses off for nothing. We are just the chaffing skin that gets brushed off and replaced with a fresh layer.

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friendly neighborhood November 27, 2010 at 1816

Ron Johnson is the next genius after Steve Jobs at Apple. Ron Johnson is the same guy who proposed to run “Point of Sale” application on a virtual windows machine running on top of Power PC.

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