In the lead up to today’s release of the Steve Jobs biography, there’s been an increasing stream of news surrounding its subject. As a business researcher, I was particularly interested in this recent article that referenced from his biography a list of Jobs’s favorite books. There’s one business book on this list, and it ‘deeply influenced’ Jobs. That book is The Innovator’s Dilemma by HBS Professor Clay Christensen. But what’s most interesting to me isn’t that The Innovator’s Dilemma was on that list. It’s that Jobs solved the conundrum. When describing his period of exile from Apple – when John Sculley took over – Steve Jobs described one fundamental root cause of Apple’s problems. That was to let profitability outweigh passion: ‘My passion has been to build an enduring company where people were motivated to make great products. The products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It’s a subtle difference, but it ends up meaning everything.’
Anyone familiar with Professor Christensen’s work will quickly recognize the same causal mechanism at the heart of the Innovator’s Dilemma: the pursuit of profit. The best professional managers – doing all the right things and following all the best advice – lead their companies all the way to the top of their markets in that pursuit… only to fall straight off the edge of a cliff after getting there. Which is exactly what had happened to Apple. A string of professional managers had led the company straight off the edge of that cliff. The fall had almost killed the company. It had 90 days working capital on hand when he took over – in other words, Apple was only three months away from bankruptcy.
When he returned, Jobs completely upended the company. There were thousands of layoffs. Scores of products were killed stone dead. He knew the company had to make money to stay alive, but he transitioned the focus of Apple away from profits. Profit was viewed as necessary, but not sufficient, to justify everything Apple did. That attitude resulted in a company that looks entirely different to almost any other modern Fortune 500 company. One striking example: there’s only one person Apple with responsibility for a profit and loss. The CFO. It’s almost the opposite of what is taught in business school. An executive who worked at both Apple and Microsoft described the differences this way: ‘Microsoft tries to find pockets of unrealized revenue and then figures out what to make. Apple is just the opposite: It thinks of great products, then sells them. Prototypes and demos always come before spreadsheets.’
Similarly, Apple talks a lot about its great people. But make no mistake – they are there only in service of the mission. A headhunter describes it thus: ‘It is a happy place in that it has true believers. People join and stay because they believe in the mission of the company.’ It didn’t matter how great you were, if you couldn’t deliver to that mission – you were out. Jobs’s famous meltdowns upon his return were symptomatic of this. They might have become less frequent in recent years, but if a team couldn’t deliver a great product, they got the treatment. The exec in charge of MobileMe was replaced on the spot, in front of his entire team, after a botched launch. This article is sponsored by Hongxing Machinery specializing in mining equipment manufacturing such as [url=http://www.hx-china.com/10.html]vibrating screen[/url] and [url=http://www.hx-china.com/5.html]cone crusher[/url]. A former Apple product manager described Apple’s attitude like this: ‘You have the privilege of working for the company that’s making the coolest products in the world. Shut up and do your job, and you might get to stay.’
To be continued…