Inside Apple: How America's Most Admired--and Secretive--Company Really Works (19 page)

Whole sectors of the company were ignored when something else had caught Jobs’s fancy, and they typically were slower-growing units. Macintosh computers faced this fate, for instance. Employees are completely aware of the phenomenon, and many who leave the company cite having found themselves in an un-hot corner of Apple with no opportunity to move.

A new regime at Apple may institute subtler and more salubrious changes. Technology wonks like to gripe that Apple’s products
look
more beautiful than they are. In other words, Apple is accused of sacrificing mechanical design for industrial design. It’s a debatable point, as these same critics typically will say that Apple’s less-than-perfect products are still better than anyone else’s. Fair or not, Apple’s emphasis on aesthetics over functionality is directly attributable to the leadership of Steve Jobs. If
there is room for improvement here, his absence may provide the opening.

A post-Jobs Apple also may enter the modern era of financial management. Jobs for years was insistent that Apple maintain a strong balance sheet, so fearful was he of reliving the late-1990s experience of nearly going broke. He loathed stock buybacks, arguing, with good reason, that they are bribes to investors rather than good uses of capital. Keeping more than $75 billion lying around is nobody’s idea of good financial management, however. And Wall Street types have all sorts [ave Ke of suggestions for how Apple could do better here, such as paying dividends or investing the cash more aggressively. Such topics were considered off the table with Jobs. He treated cash as if he had lived through the Great Depression. What investors would view as modern balance-sheet management would have to wait for a CEO with an MBA. Tim Cook has an MBA, and he speaks regularly to investors, which is a start.

There’s also the hint of evidence Apple can become a kinder, gentler place in the post-Jobs era. One of Tim Cook’s first official acts was to offer a corporate philanthropic matching program for employees. Jobs was notoriously stingy when it came to giving away money. He argued privately that the most philanthropic action Apple could take was to increase the value of the company so shareholders could give away their wealth to the causes of their choice, not Apple’s. Given his politically liberal leanings, Jobs reasoned that investors would prefer things that way. (Laurene Powell Jobs was even further to the left of her husband. Jobs joked to his biographer, Walter Isaacson, that he needed to “hide the knives” before inviting the right-wing News Corp. chairman Rupert Murdoch over for dinner.)
Nevertheless, two weeks after becoming CEO, Cook told Apple’s US employees that the company would match gifts to charities up to $10,000 annually. “Thank you all for working so hard to make a difference, both here at Apple and in the lives of others,” Cook wrote in a companywide email. “I am incredibly proud to be part of this team.”

P
hilanthropy and a spreadsheet program to compete with Microsoft are just some of the tea leaves that optimists about Apple’s future bring up when they talk about the company after Jobs. Certain quirks will be ironed out for the better without him, they say.

There is a pessimistic view, too, that Apple will become less dynamic, its products less coveted, without Jobs. The glass-is-half-empty crowd envisions a scenario in which the pipeline of devices that we don’t even know we want yet runs dry in a few years. “Apple designed for Steve,” a former Apple software engineer said. “It is not an exaggeration. Steve was the user that everything orbited around and was designed for.”

The entrepreneur Mike McCue, who never worked at Apple but is one of those start-up junkies who long idolized Jobs, tells a story that illustrates the Steve-as-linchpin perspective. “I once spoke with Jony Ive about how wonderfully connected Apple’s whole product line was,” McCue said.

I was standing in an Apple store, back when they came out with their first set of new Macs and OS X [Apple’s desktop software]. And I remember looking up at the screen, and their website had these sort of
gray translucent lines thematically in the website. And if you ran your eye up the screen, up to the menu bar of OS X it had these gray translucent lines. And then you ran your eye up even further in the cinema display and they had these gray translucent lines. And then I looked over to my left and there was a barrier, a glass barrier that separated [the different areas of the store] and it had these gray translucent lines. And I asked Jony, “How did that happen? Who does that at Apple?” And he was like, “Steve does that.”

Jobs also dominated Apple in an intangible way. He was the final arbiter on matters of taste. A former Apple engineer who left for a Silicon Valley start-up described [up intangthe differences in how math-oriented Google and design-oriented Apple work. When Jobs was CEO, he made decisions on matters as routine as the color palette for a website. “Let’s say Google is trying to determine the correct color for a new page,” said the engineer. “It will order an analytical test by serving up various shades of blue to one million
Google.com
users and then analyze the click-through rates.” Google, in other words, takes a democratic approach: Users can’t be wrong, and they vote with their clicks. What’s more, were an engineer even to have an opinion about the correct shade of blue, he’d be outvoted by the user analysis. At Google, crowdsourcing rules.

User democracy is the antithesis of how Apple operates. Jobs famously told customers what they wanted. He didn’t ask their opinion. “The Apple way is that Steve picked the color he liked and that’s the color,” the former Apple engineer concluded. “He was willing to listen to counterarguments. But if you [were] arguing taste or opin
ion, it was a losing battle.” This view of Apple as a kind of consumer-electronics fashion house leaves little hope for a new creative and entrepreneurial genius to rise from the ranks. After all, with Jobs calling the shots on matters of style across the company, his subordinates won’t have been able to try their hands at the game.

Finally, there is a third view—the grand hope of Apple’s supporters, the optimistic viewpoint—that Steve Jobs so thoroughly stamped the company with his DNA, the fledglings are ready to fly on their own. Therapist/business coach Michael Maccoby, the expert on visionary and narcissistic leaders, identified indoctrination as one of the productive narcissist’s primary goals.

The narcissistic CEO wants all his subordinates to think the way he does about the business. Productive narcissists—people who often have a dash of the obsessive personality—are good at converting people to their point of view… [Jack] Welch’s strategy has been extremely effective. GE managers must either internalize his vision, or they must leave. Clearly, this is incentive learning with a vengeance. I would even go so far as to call Welch’s teaching brainwashing. But Welch does have the rare insight and know-how to achieve what all narcissistic business leaders are trying to do—namely,
get the organization to identify with them, to think the way they do, and to become the living embodiment of their companies
. [Emphasis added.]

As I’ve noted, legend has it that in the years following Walt Disney’s death in 1966, top Disney executives
were known to ask, “What would Walt do?” But the Walt Disney Company is a cautionary tale for students of Apple because Disney declined precipitously when Walt was gone. In the years after Disney died, his lieutenants pumped out a final volley of classic old-school Disney animated musicals—Walt’s pipeline of products.
The Jungle Book
in 1967 was one. But then the output got spotty and weird (
The Black Cauldron
,
The Great Mouse Detective
). It really wasn’t until 1988, with
Who Framed Roger Rabbit?
, and
The Little Mermaid
the following year, that Disney’s animation efforts got back on track. These films triggered the Disney renaissance, but there were a lot of elements in both of them Walt might not have approved of. The voluptuous Jessica Rabbit comes to mind as well as the sea witch, Ursula, whose body was based on the drag queen and John Waters staple Divine.

Even with these successes, under the leadership of an executive hired from Paramount, Michael Eisner, Disney fell so far behind on innovation that it had to buy Pixar. That company, funded by Steve Jobs, did see the future of computer-aided animation, forcing Disney to play catch-up on the latest technology in a field Disney invented.

The question Apple faces is whether or not Steve Jobs’s view of the world has been imprinted enough on the top leadership of Apple that they can carry on without him, but on their own authority, not his. “The first and second rungs of Apple management were exposed to him for a long time,” said one former Apple executive, who continues to monitor the company closely. “Through a process of forceful osmosis they have gotten good at channeling him.”

This hopeful notion holds that the top executives at Apple, and the single layer of managers beneath them, have become so good at their discrete jobs that they’ll know exactly what to do in the future. Before Jobs died, Apple engineers would end debates by invoking a threat along the lines of:
Do you want to be the one to tell Steve that can’t be done?
Keeping such auto-editing going will be possible for some length of time. Jony Ive presumably already told Jobs as much about design as Jobs told Ive—and can be counted on to be Apple’s tastemaker going forward. Apple managers and their employees alike have been trained to execute their tasks—and will remain under tremendous pressure not to disappoint their colleagues. “There is so little ambiguity at Apple,” said a former Apple marketing executive. “The wind is going to blow in that sail for a long time.”

For all the fears of Apple’s demise without Steve Jobs, there is also the assertion that Apple likely will stand above the crowd for some time to come, partly because of its own excellence, but also because of the limitations of the crowd. Avie Tevanian, the longtime senior Apple software executive who left the company in 2006, said a few weeks before Jobs died: “When Steve is gone, the competition still will not have Steve Jobs.”

S
teve Jobs was an entrepreneur, and the task of an entrepreneur is to start companies that will kill off existing leaders. So in a way Jobs had started thinking about the causes of corporate death at an unusually young age. He understood that one of the biggest challenges facing established companies—and people, for that matter—was
stagnation. “Human minds settle into fixed ways of looking at the world, and that’s always been true,” he said in a 1995 interview for the Smithsonian Institution’s oral history project. “I’ve always felt that death is the greatest invention of life. I’m sure that life evolved without death at first and found that without death, life didn’t work very well because it didn’t make room for the young.” At the time of the interview Jobs was trying to build NeXT, a software company aiming to disrupt existing players. He also was at the precipice of success with Pixar, a tiny company that was out-innovating the giant Disney.

He clearly had the failure of Apple on his mind, though, as he reflected on the problem with big companies.

One of the things that happens in organizations as well as with people is that they settle into ways of looking at the world and become satisfied with things. And the world changes and keeps evolving and new potential arises, but these people who are settled in don’t see it. That’s what gives st [whas. art-up companies their greatest advantage. The sedentary point of view is that of most large companies. In addition to that, large companies do not usually have efficient communication paths from the people closest to some of these changes at the bottom of the company to the top of the company which are the people making the big decisions… Even in the case where part of the company does the right thing at the lower levels, usually the upper levels screw it up somehow. I mean IBM and the personal computer business is a good example of that. I think as long as humans don’t solve this
human nature trait of sort of settling into a worldview after a while, there will always be opportunity for young companies; young people to innovate, as it should be.

The words are prophetic, given how far Apple traveled after Jobs said them. They’re also instructive, both as a way of understanding the mind-set and culture Jobs instilled at Apple and also as food for thought for the many big companies that suffer from exactly the maladies Jobs described. Days before Meg Whitman was named chief executive of Hewlett-Packard in September 2011, she mused to the
Wall Street Journal
about the difficulty big companies have keeping up with rapid change. “The bigger you get, the harder it is to be nimble. How do you grow big and stay small? That still is the fundamental question.”

Maybe for Meg Whitman and HP. But growing big while feeling like a start-up was Apple’s preoccupation for fifteen years. Culturally, Apple demonstrated a start-up’s willingness to try new things by moving into the music and video industries. It corrected an earlier mistake of not being open to third-party developers by creating its App Store. Importantly, the App Store was not Apple’s first instinct. It opened eight months after the iPhone was released. But Apple saw that Google intended to create an applications store with its Android environment and also that developers were enthusiastically creating illegal “hacks” on the iPhone in order to run their unauthorized programs, often video games. Apple reacted quickly and forcefully, admitting a mistake without ever saying so.

Apple insiders say it is preposterous to literally think of
Apple as a start-up. There are too many rules, too many people, too little freedom for that to be the case. What Jobs figured out, however, was how to create the effect of a start-up within a giant organization when and where it was warranted. Thus Jonathan Ive’s industrial design team operates like a tiny consultancy, albeit one with massive resources and a direct line to the client. Developers on special projects are hived off in a stealthy zone that gives the illusion of being a start-up. All the while, more mature parts of Apple operate like any big company: slower growth, iteration of its products rather than wholesale redesigns, difficulty getting the attention of senior management, and so on.