Jony Ive was interviewed at Vanity Fair's New Establishment Summit. Steve Kovach posted the discussion on Business Insider, and it's worth reading.
When Jony Ive was asked how he balances functionality and design, he answered (paraphrased):
A beautiful product that doesn't work is ugly. The best things we've done are harmonious. I think design is the whole thing.
Compare Ive's answer to this quote by Steve Jobs:
It's not just what it looks like and feels like. Design is how it works.
Vanity Fair posted this video from the interview: Jony Ive on the lessons he learned from Steve Jobs