The innovation secrets of steve jobs 2001

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BEING APPLE: STEVE JOBS

* Note: This case study is an amalgamation of articles and case studies written on Steve Job as well as information provided in a documentary on his life and career

(https://www.youtube.com/playlist?list=PLF30EE98FB0F9108D). Original sources are listed at the end.

Steve Jobs’ business feats were legendary long before he died in October 2011. Known as the wonderkid of the Silicon Valley, Jobs gave the world its first PC and reinvented the PC years later by creating the Macintosh which resulted in the creation of the windows interface and the mouse technology – developments later to become standards in the industry. Jobs was seen as the source of Apple’s innovation and the creative genius behind some products that revolutionised the technology industry such as the Macintosh (1984), the iPod (2001), the iPhone (2007), and the iPad (2010). He was a hero – not only to the people who worked for him but also for all the people who lives were changes by the products he and the companies he led created. He was classified by several trade and business magazines as the Thomas Edison and Henry Ford of his time – a mean who turned upside down the face of the modern world and changed the course of a diverse set of industries, including computing, movies, music and mobile telephony. Under Jobs’ leadership, Apple’s market value grew from about US$ 5 billion in 2000 to US$ 351 billion in 2011. “He taught all of us how to transform technology into magic”, said John Sculley, former CEO of Apple.

But while the consumer adoption rates of the revolutionary products created under his leadership are worth trying to emulate, many argue that his character is not. He was committed, confident to take risky leaps, and charismatic enough to enlist legions of employees and customers in the relentless pursuit of his aspirations. But he was also interpersonally immature: impatient, demanding, stubborn, and hypercritical, tyrannical and cruel at times. Jobs may have been “the greatest business executive of our era” and most business leaders would be thrilled to achieve Jobs’ level of market success, but should they aspire to lead like him?

A Force of Nature

Baby ‘John Doe’ was born on February 24, 1955 in San Francisco and adopted by Paul and Clara Jobs, who named him Steven Paul Jobs. As he grew up, Jobs proved to be a handful, with a penchant for mischief and wilfulness. He was highly intelligent but ‘solitary, self-absorbed, and isolated’. He dropped out of college because he felt it was a waste of time. A close friend, Dan Kottke, said of Jobs:

“I think it’s clear that Steve always had a kind of chip on his shoulder. At some deep level there was an insecurity that Steve had to go out and prove himself. I think being an orphan drove Steve in ways that most of us can never understand.”

Able to do grade level work with ease, Jobs refused to do assignments he felt were wasting his time, leading to disciplinary action and eventually expulsion from his first elementary school. At a new school, Jobs connected with a teacher who made learning seem worthwhile. Jobs recalled:

“She would say, ‘I really want you to finish this workbook. I’ll pay you five bucks if you finish it.’ That really kindled a passion in me for learning things.”

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That passion manifested itself in Jobs’ interest in learning about electronics and computers in his spare time. He began attending lectures conducted by the Hewlett Packard Company (HP). This further fuelled his appetite for the field and eventually he found summer employment at HP. It was here that he met future co-founder and co-adventurer Steve Wozniak.

In 1972, Jobs graduated from high school and attended Reed College in Portland, Oregon. Though he dropped out after concluding his parents were wasting money supporting his education. He got permission to stay on campus and attend lectures that interested him. After eighteen months at Reed, Jobs moved home and started looking for work. Given the tech boom, opportunities were plentiful. After responding to an ad that said “Have fun, make money”, Jobs became one of the first 50 employees at Atari, where he was paid $5/hour. Al Alcorn, chief engineer, recalled the personnel director asking if he would see this ‘weird guy’ who refused to leave until Atari hired him:

“I don’t know why I hired him, except that he was determined to have the job and there was some spark. I really saw the spark in that man, some inner energy, an attitude that he was going to get it done. And he had a vision, too. You know, the definition of a visionary is ‘someone with an inner vision not supported by external facts’. He had those great ideas without much to back them up, except that he believed in them.”

Even in the relatively free-wheeling Atari, Jobs was an outlier. Indeed, he was viewed by his fellow workers as arrogant and this caused problems with several employees. As a result, he was scheduled to work the night shift when there were fewer people. In 1973, Jobs quit Atari and went to India for seven months to seek enlightenment. He recounted his feeling when he returned home:

“Coming back to America was much more of a cultural shock than going to India. The people in the Indian countryside don’t use their intellect like we do, they use their intuition instead. Intuition is very powerful; more powerful than intellect. That’s had a big impact on my work.”

Cool Entrepreneurship

After his return to U.S., Jobs started to attend meetings of Wozniak’s Homebrew Computer Club, a club where members created electronic gadgets. Jobs, however, had his eye on the marketability of these gadgets. He persuaded Wozniak to join him to build a PC – a novel concept that would go on to revolutionise the way computers would be used by common people.

In 1976, the first computer, Apple I, was marketed at a price of $666. Apple was marketed to computer hobbyists like members of the Homebrew Computer Club. The product was well received by the market and brought in revenues of $774,000. Buoyed by this success, Jobs and Wozniak developed the Apple II, a general purpose computer with several enhancements over its predecessor. Jobs also invited independent programmers to write applications for the system resulting to a library of 16,000 software applications that could be run on its system.

Within three years of its launch, Apple II brought in earnings of $139,000,000 and posted a remarkable growth of 700%. To market new computers, Jobs recruited John Sculley of PepsiCo in 1983 as the new President and CEO. It was a crazy idea to try to get the head of one of the country’s most successful companies to come lead a small computer company, and there was no reason for Sculley to join a

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bunch of young computer nerds, but Jobs went after what he wanted. Sculley later remembered how Jobs finished his pitch:

“And then he looked up at me and just stared at me with the stare that only Steve Jobs has and he said, ‘Do you want to sell sugar water for the rest of your life or do you want to come with me and change the world?’ And I just gulped, because I knew I would wonder for the rest of my life what I would have missed.”

This question made Sculley to think differently about his life and career. He joined Apple.

In 1983, Apple introduced Lisa. Lisa was expected to take the computer hardware industry by storm. However, it did not fare well. Jobs realised that the fact that all the three Apple computers ran on different operating systems limited their market potential. To overcome this problem, he began working on the Macintosh computer and OS.

While developing Macintosh, he tried to reestablish the values and entrepreneurial spirit that characterised Apple in its garage days. Calling the Macintosh development team ‘pirates’, Jobs instilled a renegade and rebellion spirit in them, often shouting the battle cry, “It’s better to be a pirate than join the Navy.” Macintosh team accepted Jobs as its leader, as well as his frenetic work schedule of 48- hours of straight programming and breaks with a favourite Jobs snack, pineapple-topped pizza. Jobs focussed on integrating the Macintosh team and invited the team to company sponsored retreats with free food, entertainment and lodging. At one of those occasions, he put on a pirate sweatshirt and gave every other member of his team a sweatshirt with the same logo. Ida Cole, a contributor to Team Macİntosh, spoke fondly of her years at Apple:

“I loved the work environment then. It was very hard work, but there was also a sense of fun. It was a crazy place – a lunatic yet joyful place. Ohh, and it was so rewarding. We thought that we were out to change the world. All companies take their work culture from the top and Steve Jobs was very flamboyant. He is the most charismatic person I have ever known.”

However, this happy family did not seem to extend to the other parts of the company. An ultra- competitive three-sided battle soon emerged at Apple between staff who worked on the Apple II upgrade, the Lisa, and the Macintosh. Jobs seemed to kindle this separation by ridiculing the employees who were not part of the Macintosh team. After the launch of Lisa project Jobs said “I only see B and C players here. All the A players are with me on the Mac team” in front of the whole development team. This, predictably, caused major drift between those employees and Jobs.

The Macintosh computer and OS were launched in 1984. Initial period of Macintosh was a grand success but later the fame began to dwindle. The machine was very slow, not user friendly and was incompatible with many software programs. When Macintosh failed to perform as expected (20,000 units sold as against the projected 80,000), Apple insiders began viewing Jobs’ actions more critically.

Unhappy with internecine power battles and competitive tensions, Jobs reportedly was planning to ask Sculley to leave the company. When Sculley was informed that Jobs intended to remove him insidiously from the company, he initiated measures to oust Jobs from the company. In a board meeting, he argued that Jobs was hurting the company’s image and added that Jobs’ intense involvement with Macintosh was having a demoralising effect on other divisions of the company. The

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board decided that Jobs was a threat to the company, accused of trying to control areas which he had no jurisdiction and of obsessing with pompous innovation that doomed the company to irrelevance. Jobs’ refusal to see a different road for Apple other than the one he was intent on resulted in his dismissal as CEO in 1985. However, he did not allow himself to sink into oblivion. Jobs recalled:

“You have probably had somebody punch you in the stomach and it knocks the wind out of you and you cannot breathe. The harder you try to breathe, the more you cannot breathe. And you know that the only thing you can do is just relax so you can start breathing again. Don’t lose faith. And you’ve got to find what you love, what you find worth breathing for. I’m convinced the only thing that kept me going was that I loved what I did.”

Shortly after leaving Apple, he formed NeXT to come out with the next generation of PCs to address the needs of the higher education. However, in spite of the powerful technology used, NeXT’s first computer was not successful as it was priced high and was not compatible with other computers. The computer was proposed to be priced at $3,000 and was targeted at academia. But it was introduced in the market for $7,000, and targeted at both academic institutions and corporates. Critics pointed out that Jobs had constantly ignored the actual needs of the market and advice from his experts who asked him to “Keep in touch with the intended customers and avoid the pitfall of isolation; do not assume that the customers will pay any price to secure the latest computer technology”.

Jobs was self-confident, self-focused, driven about his own ambitions for the company. While these qualities allowed him to aim high these qualities also made him prone to potentially toxic behaviours: ignoring alternatives, dismissing challenges to his ambitions, distorting reality to accommodate his vision to the imperfections of the world and becoming egocentric. As INSEAD Professor Quy Huy states, narcissistic leaders like Jobs, can easily get blinded by their own passion and vison and can fail to embrace divergent thinking by seeking advice from people with a different perspective and cooperating with them. This, arguably, limited Jobs’ potential to achieve something even higher and better with NeXT computers.

CEO of Apple

Meanwhile, Apple was in a death spiral. Despite going through a string of CEOs, sales kept sinking. In 1995, Microsoft appeared to hammer the final nail in Apple’s coffin with the release of Windows 95.

In 1996 Jobs, returned to Apple as strategy consultant and in September 1997 he agreed to take over as interim CEO. Considering that the company’s board itself had ousted Jobs in 1983, this development was watched with interest by media and industry observers. Jobs’ comeback was seen as Apple’s desperate attempt to survive one of its worst phases: losses for 1997 amounted to $1.6 billion. When Michael Dell was asked what he would do in Jobs’ position, he replied: “I’d shut it down and give the money back to the shareholders.” But Jobs was ready and eager to shake things up. To his first meeting with the top executives on his return to Apple, Jobs went in shorts, sneakers and a few days of beard. Sat on a swivel chair and listened all top executives’ explanations as to why Apple was performing as he spun slowly and then he infamously roared: “The products SUCK! There’s no SEX in them anymore!”

Jobs felt that Apple’s problems stemmed from launching a plethora of products without a clearly defined purpose. He single-handedly began restructuring Apple’s product line by dropping 15 of the 19 products, and withdrawing Apple’s involvement in printers, scanners, PDAs, and other peripherals.

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As well as an incoherent product strategy, Jobs found a divisive culture where staff at all levels of the organisation had ‘made a fine art of the press leak’. Jobs hung a World War II poster in his office that stated, “Loose lips might sink ships” (Exhibit 1), through which Jobs made the employees realise that if they let out any news about Apple, they would be fired immediately. No Apple employee was allowed talk to the press without a PR handler in the room (or be fired).

Exhibit 1. Jobs’ Warning Board to Employees

Jobs created and fostered a culture of secrecy at Apple. He created a mystique surrounding the company and its products. He did not share information about product innovations and new launches with employees unless they were involved in the making of the product. A former employee described:

“There was a project we were working on where we put in special locks on one of the floors and put up a couple of extra doors to hide away a team that was working on stuff.”

The whole organisation was thus comprised of smaller pieces of a bigger puzzle, which was in turn only known to the highest levels. This secretive approach was compared by analysts to terrorist organisations’ cellular structure, which protects the organisation from potential vulnerability if its individual members or groups are compromised. This obsession with secrecy also made Forbes list of dangerous lessons to be learned from Jobs. Tim Bajarin, President of Creative Strategies, which had tracked Apple since the early 1980s, said:

“Inherently Jobs is paranoid. From the early days he was afraid of competitors getting information about products and copying it. However, the real reason is that he loves to be at the centre of attention and does not want anyone to steal his thunder.”

The product development teams were chaotic as well. Developers were described as ‘young Turks trying to prove their brilliance’ and sharing a ‘we know better than you’ unwillingness to co-operate with senior management, which translated into developers disregarding management decisions. Jobs set about a major change refusing to tolerate opposition within the company. He restored decision- making rights to senior managers where he, personally, exerted his control over every aspect of the business in quest for perfection. Employees were given clear cut directives and were closely supervised. He gave the final approval on all software that ran on the machines and provided much

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input from personally checking the fine prints of the company’s press releases to how television ads were presented. An article published in Fortune magazine reported that Jobs' control even extended as far as the design of the company bus and the food served at the cafeteria.

Apple Vice President, Bud Tripple, observes that Jobs was not as controlling and as surveillant but rather managed to create an environment in which employees would normalise his standards and self- discipline themselves:

“Steve created an expectation of unremitting quality that was assimilated by the engineers. Most of the time Steve left them alone. 99% of the time he wouldn’t be looking over their shoulders. But that other one percent he would just come down like a hammer! Engineers would be so disturbed by this probability that the rest of the time they would feel as though Steve were looking over their shoulders with his uncompromising eye, even though he wasn’t. Steve was the corporate superego.”

Jobs’ attention to detail and controlling personality led to a propensity to dictate decisions and manipulate people which was noticed by other executives of the company. Ex-board member Arthur Rock reflected on Jobs’ behaviour:

“[Steve] was uncontrollable. He got ideas in his head and the hell with what anybody else wanted to do. Being a founder of the company, he went off and did them regardless of whether it ended up being good for the company.”

Jobs described how when engineers came up with 38 reasons why the iMac couldn’t be produced, he had simply replied: “No, no we’re doing this… Because I’m the CEO and I think it can be done.” As Jobs saw it, those that engaged in the vision [Steve Jobs vision] were the great followers that the great leader, Jobs, needed to deliver his strategy. Those that left of their own volition were the great followers that another great leader was surely looking for in order to deliver their strategy.

As venture capitalist and former Apple executive, Jean-Louis Gasse, observes: “Democracies don’t make great products. You need a competent tyrant.” Indeed, in 2001, as the world headed into recession and global markets fell, Jobs launched new products such as the iTunes music software (January), the Mac OS X (March), the Apple retail stores (May), and the iPod (October) that disrupted several industries and resulted in a multi-billion-dollar war chest for Apple in a decade.

The Steve Jobs Way

What is about Jobs’ leadership style that commands such attention? Jobs’ leadership style was complex. He valued pure creativity very highly, but in the thousands of words written about him, adjectives such as ‘tolerant’ or ‘easygoing’ do not feature very often. The words ‘passionate, charming, inspirational, abrasive’ are much more representative, with many expressing much stronger views such as ‘stubborn, demanding, mercurial, cruel, tyrannical’. He wasn't known for his consultative or consensus building approach and all too often he was the antithesis of the ‘servant leader’ model popularised in the 1990s (the giving, caring, mentoring leader). The New York Times author, David Streitfeld, adds to this image:

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“The first time Steve Jobs ever bullied anyone was in the third grade. He and some pals “basically destroyed” the teacher, he once said. For the next half-century, Mr. Jobs never let up. He chewed out subordinates and partners who failed to deliver, trashed competitors who did not measure up and told know-it-all pundits to take a hike. He had a vision of greatness that he wielded to reshape the computer, telephone and entertainment industries, and he would brook no compromise.”

Jobs set himself very high standards and then demanded the same of everyone around him. He demanded excellence from his staff and was known for harsh treatment of those who are seen as having let him and the company down. For example, when working on the iPad’s ad campaign Jobs didn’t like the first round of promotional videos and he called up James Vincent, the ad agency’s co- founder and told him: “Your commercials SUCK...The iPad is revolutionizing the world, and we need something big. You’ve given me small SHIT.”

At most companies, the red-faced, tyrannical boss is an outdated archetype, a caricature from the life of Dagwood. Not at Apple. Whereas the rest of the tech companies may motivate employees with carrots, Jobs was known as an inveterate stick man. Jobs was likened to an ‘organisational terrorist’, capable of doling out praise and public humiliation and belittlement. Even the most favoured employee could find themselves on the receiving end of his vindictive temper. According to Guy Kawasaki, former chief evangelist at Apple:

“Working for Steve was terrifying and addictive experience. He would tell you that your work, your ideas, and your existence were worthless right to your face, right in front of everyone. Watching him crucify someone scared you into working incredibly long hours. Working for Steve was also ecstasy. Once in a while he would tell you that you were great and that made it all worth it.”

This ‘seduce and abandon’ technique made people around him desirous of his acceptance and approval that when he suddenly withheld it, they put in extra effort at work to win it back. Louise Kehoe, a Financial Times reporter who had covered Jobs for a long period, said:

“He does make you ‘love’ him and then he turns around and slaps you in the face.”

Not everyone was given the chance to make up for their mistakes, though. On many instances, Jobs’ ruthlessness and temper led to the firing of employees who were unable to meet his standards. A case in point was when Apple’s subscription based online services MobileMe was launched in the summer 2008, it was plagued with problems and failed to deliver the expected quality of service. Jobs gathered the MobileMe team in Apple's auditorium and asked: "Can anyone tell me what MobileMe is supposed to do?" When the team gave their answers, Jobs replied, "Then why the FUCK doesn't it do that?" and fired the team leader on the spot.

Employees referred to him as a ‘hero-shithead roller-coaster’ capable of quickly morphing from an a charismatic, heroic, inspirational leader into an arrogant ego-maniac and an uncompromising and unempathetic tyrant with a ‘wicked tongue’. A manager described:

“You didn’t want to be called in front of him to do a product presentation because he might decide to lop off the product, and you with it. You didn’t want to encounter him in the hallway

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because he might not like an answer you gave and would say something so demeaning that it could undermine your confidence for weeks.”

He bewildered employees by changing his mind frequently and unpredictably:

“It’s weird. He can say, ‘I love white; white is the best.’ And then three months later say, ‘Black is the best; white is not the best.’ Jobs would rationalise it all by simply explaining ‘We’re doing what’s right today.’”

Jobs discarded finished concepts at the very last minute. For instance, Jobs made the iPhone team to work day and night to redesign the product just before the launch. Jobs recalled:

“We had a different enclosure design for this iPhone until way too close to the launch. And it came one Monday morning and I said: I just don’t love it. And we pushed the reset button. That happens more than you think because it is not just engineering. There is art too.”

Many thought he could be ‘Good Steve’ or ‘Bad Steve’, depending on the circumstances. When acting as ‘Bad Steve’, he would not care about the damage he was doing to the egos of those he hurt, as long as he pushed them to work better. According to Pat Crecine, a former director of NeXT:

“Steve might be capable of reducing someone to tears. But it’s not because he’s mean-spirited; it’s because he’s absolutely single minded, almost manic, in his pursuit of quality and excellence. He possessed an innate sense of knowing exactly how to extract the best from people.”

He had an artist’s temperament that could morph back and forth between charming engagement and mercurial rants. His intense passionate perfectionism made him a difficult person to work for; yet he was nevertheless admired and even loved by people who deeply believed that to be a part of Apple was to be a part of something special. Jobs provided an insight into his mentality in an interview:

“I always considered part of my job was to keep the quality level of people in the organisations I work with very high. That’s what I consider one of the few things I actually can contribute individually to the organisation: the goal of only having ‘A’ players. I have found it really pays to go after the best people in the world. It’s painful when you have some people who are not the best people in the world and you have to get rid of them; but I found that my job has exactly been that: to get rid of some people who didn’t measure up. It’s never fun but, nonetheless, it has to be done.”

Some people thrived on this, rising to become top performers who were highly motivated by the pride they derived from striving to meet the challenge. But many others were needlessly frustrated. The price a leader pays for such behaviour is the loss of people who need more encouragement along the way. Such an approach undermines the emotional commitment and the potential contribution of B players – of many people who were not yet (and perhaps never would be) so-called A players.

Responding to critiques about his disregard for people and their feelings Jobs said:

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“My job is not to be easy on people. My job is to take great people and make them even better. How? By coming up with more aggressive visions of how it could be that would push people.”

As nicely captured in a Forbes article by David Coursey, “Jobs was busy changing the world and minor annoyances like people’s feelings didn’t fit into his plan”.

‘Dream Bigger’

Despite observations about Jobs’ arrogant style, abrasive personality and unapologetic brutality, he had at least three qualities: a clear vision, a passion for the company and its people, and an ability to inspire trust. In fact, Jobs not only had a vision, he made sure that everyone in the company bought into that vision. Of course, his passion for the company and its products is legendary. And employees trusted Jobs – not because he founded the company but because he showed time and again his competence in many areas, especially product design and marketing.

Jobs was able to get his employees so motivated that they worked maniacally to achieve goals or to build technology far beyond what they thought was possible. A natural born public speaker, his speeches made his employees, fans and even buyers spell bound to follow him. Journalist Alan Deutschman appropriately said that, “what really gets you is the way he talks – there's something about the rhythm of his speech and the incredible enthusiasm he conveys for whatever it is he's talking about that is just infectious.” The Reality Distortion Field, a term coined by Apple’s engineer Burrell Smith, described Jobs’ ability to convince people of just about anything which allowed him to push people to achieve feats on an extraordinary level.

Trip Hawkins, who worked on the Lisa computer project at Apple, commented: