Return to the Little Kingdom (37 page)

Though the differences were most pronounced between the men from Hewlett-Packard and National, others also brought the practices they had become accustomed to. When Ann Bowers, who had spent some years working at Intel and was the wife of one of its founders, was placed in charge of Apple’s personnel matters, Sherry Livingston observed, “Everything had to be done the Intel way. She wouldn’t go to the left or the right.” Since Apple tapped companies like Hewlett-Packard, National, and Intel for particular strengths, and since some of the trailblazers were instrumental in luring others from their old stomping grounds, it was common for them to wind up working in small enclaves. This, combined with the ferocious pressure and the friction between young and old, tended to exaggerate the normal sorts of conflicts that spring up between departments of any company.

The engineers, for example, felt the manufacturing men were concerned only with eliminating bumps and swings to keep the line running smoothly and to meet production schedules. “The manufacturing people,” Rod Holt insisted, “by and large have taken Apple for a ride.” The feeling was mutual and certainly was not improved when the production people raided the engineering files and removed all the carefully plotted test procedures and descriptions of final assemblies. The production men tended to think that the engineers were treated too daintily and should have been disciplined with rigorous schedules and milestones. They cursed the aesthetes who wouldn’t make compromises over things that would have made their life far easier—like the color of cases.

There was also, during the early days, considerable tension between the manufacturing department and the men who monitored the flow of materials and supplies. Mollard recalled that the enmity ran so deep “there were people almost coming to blows in the parking lot.” The butt of the company, the publications department, couldn’t complete manuals until engineers and programmers had stopped tinkering with a device or piece of software and was also battered by pressure from the marketing side who wanted to ship products quickly. For a time, while Apple was still very young, the technical writers developed their own little world. They arranged noon-time madrigal sessions, installed beanbag chairs in their offices, erected walls of cardboard boxes, and armed themselves with Ping-Pong-ball guns to fend off intruders.

 

By September 1980, three and a half years after the introduction of the Apple II, 130,000 had been sold. Revenues had risen from $7.8 million for the fiscal year that ended on September 30, 1978, to $117.9 million, and profits had risen from $793,497 to $11.7 million. And that fall, thirty-one months after the thirtieth employee had joined the company, and just twelve months after the three-hundredth employee arrived, Apple’s payroll topped one thousand. The company occupied fifteen buildings in Silicon Valley, eleven of which were in Cupertino. There was some manufacturing in Cupertino and San Jose but large-scale manufacturing was conducted at a factory in Texas. Warehouses had been opened in different parts of the United States and in the Netherlands. Overseas there was a plant in Ireland (which was opened by an unemployed plumber, the mayor of Cork) and another was about to open in Singapore. The pyramidal structure was bulging and so Apple moved one step closer to convention and formed divisions.

There was nothing very surprising about the decision. It was one of those penalties of size that emphasized how fast the company had grown. The change in structure also reflected tacit admission that Michael Scott’s hopes of keeping the company small had been scuttled. His dream of limiting Apple to between fifteen hundred and two thousand employees, and of running an enterprise that made only its latest product (while subcontracting everything else), disappeared. Divisions were formed for all the usual reasons: attempts to keep affairs manageable, to pinpoint profit and loss areas, and to delegate authority.

Before the divisions were announced some of Apple’s managers went on inspection tours and tried to do their home-work. They asked senior members of Hewlett-Packard and Digital Equipment Corporation how decisions were made in their companies and then returned to Cupertino to draw up battle plans. One division was formed as an experiment. Its charter was to take care of disk drives. In the fall of 1980 five others were added: the Personal Computer Systems Division to look after the Apple II and Apple III, the Personal Office Systems Division to design and nurse the Lisa system, Manufacturing, Sales, and Service.

There wasn’t, of course, any particular time when the formation of divisions would have been comfortable. At Apple the formation of divisions occurred when there were plenty of other pressing distractions. The decision was made about the same time the directors decided that the company should make its first public stock offering and also during the weeks when a successor to the Apple II was being introduced.

Though most of Apple’s top managers had worked within a divisional structure, none had managed a company that had divisions. There were scarcely enough middle managers to go around and nowhere near enough people to fill all the empty cubicles. The computer systems weren’t installed and procedures weren’t drawn out. It was hard to escape the impression that the creation of divisions was scarcely a masterstroke of planning.

 

The grand change and dislocation helped push into the background some of the conflicts that had resulted from mismatched corporate blood types. A growing fund of common experience tended to do the same thing. The divisions presented an entirely new set of tensions. Their physical separation led to a technical isolation. They created fresh allegiances and new lines of reporting. As the divisions started to flex their muscles Apple came to be divided by the pull of fashion and the movable squabbles of fiefdoms. The divisions were allowed, for example, to hire their own technical writers and order their own printed circuit boards, and on occasion, they tried to exercise control over what others were doing. The Peripherals Division, to cite just one case, wanted to set the standard for what should be plugged into peripherals. It didn’t take a translation expert to understand that this amounted to an attempt to dictate corporate product planning.

More important the people working within the different divisions became aware of distinctions. The glamour of the hot divisions, where work proceeded on new computers, cast a pall across areas where the primary task was to support existing machines. The nature of the work appealed to different emotional and intellectual interests and attracted different sorts of people. Many of the engineers and programmers who had been caught up in the success of the Apple II preferred to work in the Personal Computer Systems Division (PCS). Others, who wanted a brighter future, respectability, and the opportunity to work with newer technologies, knocked on the door of the Personal Office Systems Division (POS), which was formed from a core of people developing the Lisa system.

The subtleties were subjected to microscopic inspection. Rick Auricchio was a programmer who worked in PCS. “We felt that the Lisa Division was full of prima donnas. They wanted a thirty-thousand-dollar laser printer and they got it. They went out and hired high-powered people. We didn’t. Their working cubicles were bigger. They had more plants. Even though we were paying all the bills and pumping cash across the street, we were dull and boring and not doing anything. There was a perception that they would be nine feet tall, scowl at you, and turn up their noses. Without the right color badge and an escort, you couldn’t get into the Lisa building. That was an insult. People started thinking that they didn’t want to be cretins for the rest of their lives so they left PCS and joined POS.” The people who worked in the Lisa Division returned the compliment. One said, “We took a look at the Apple III and didn’t take it very seriously. We just took a look and said, ‘They don’t know what they’re doing.’”

 

As the divisions solidified, a corporate bureaucracy began to emerge. Again, there wasn’t really any way to escape the stultifying drag of growth. Coping with several hundred people (let alone several thousand) requires some codes if only to free managers from having to explain exceptions all day long. Some of this was reflected in companywide memos. Occasional bulletins kept employees posted on budgets “which reflect efficiency and frugality” and registered alarm when the phone bill topped $100,000 a month. Others provided information on FICA taxes, profit-sharing plans, stock programs, official company holidays, a new Xerox reproduction center, and insurance schemes. Performance reviews (scheduled every six months) came complete with a “review information matrix.”

A memo from the legal department asked people not to abbreviate the name of the company to Apple Computer or Apple and stated: “The legal name of the corporation is Apple Computer, Inc. (note the comma) . . . . Please don’t hamstring our efforts by casually misusing the corporate symbols.” Other notices kept people abreast of schedules of shuttle buses that ran between the Apple buildings, urged them to use up stationery supplies, drop by a corporate engineering library, or sign up for television classrooms that were connected to the Stanford instructional television network. There were other announcements that sought to differentiate among some of interoffice memos and in-house publications. “‘Apple Bulletin,’” readers were told, “communicates information that has time value . . . . It is distributed by the mail room and telecommunications people to all Apple locations.”

Even some of Apple’s staunchest boosters, like marketing manager Phil Roybal, were forced to admit, after several years, a difference in tone. “The character has changed because the company has grown. There is more overhead, policies have been created, administrators have been hired, and there are rigidities. There is less whimsy. Now things happen pretty much as expected. It’s more like an organized company.” Others were less complimentary. Publications manager Jef Raskin, who eventually had a falling out with Jobs, said, “At first the company was run by a consensus, where a good idea had a chance of success. Afterward it was like standing beside a freight train and tugging it with a chain. It wouldn’t move off the tracks.” Some, like Roy Mollard, found that divisions, additional layers of management, and increased specialization meant that his influence was circumscribed. “My area of control was narrowed and the job became less interesting.”

For outsiders like Regis McKenna, who had played a crucial part in Apple’s formative stages, the arrival of a vice-president of communications meant that responsibility for public relations and marketing strategy was split. “You have to go through people to get to the very people you used to deal with one on one. You deal with corporate organization that wants to control everything.” And for the newcomers, the presence of men like McKenna with established ties to the founders did not make life any easier. The uneasy truce was made clear by the way in which Apple came to handle some of its public relations internally while the McKenna Agency dealt with the rest.

 

However, the emergence of a bureaucracy was not a dull blanket that brought equality. There was a distinct and pronounced pecking order that was camouflaged by appearances. The carefully cultivated suggestions of equality were, in many ways, a mirage. On the surface Apple didn’t bear much resemblance to pinstriped America. There were no reserved spaces in the parking lots. Jeans, open collars, and sneakers were an accepted form of dress. (In fact, they almost came to be a uniform.) There were no lavish office suites, just cubicles and shoulder-high partitions. The offices became a maze of Herman Miller open landscape furniture. Punching clocks was unheard of even on the assembly lines. Secretaries were called area associates and the head of personnel was known as the director of human resources. Business cards carried offbeat titles. For outsiders these unconventional appearances were deceptive. Insiders saw straight through them. Programmer Dick Huston echoed the sentiments of many of his colleagues when he remarked, “I have never thought of Apple as an egalitarian place to work.”

Many of the ways in which employees came to tell each other apart were entirely conventional and bore more similarities to traditional industries and the industrial crescent than Apple’s leaders were prepared to admit. Except at its Irish factory, Apple was not a unionized company. Jobs had all the ruffled pride of a founder who felt that the arrival of a union would mean that he had failed to care for his employees, and he also thought that unions were responsible for problems in some older industries. He promised to “quit the day we become unionized.” But even if walkouts and pickets weren’t part of the Apple vocabulary, there was still an enormous difference between the shop floor and the executive offices.

Don Bruener, who spent some time working in production, said, “People in production were afraid to deal with any people outside production. And the people outside production didn’t care about production. It was workers against executives.” After a time most of the executives took offices in one building and the senior officials were known as members of the executive staff. Once Apple started holding public stockholder meetings the same executives shared the front-row seats with the company’s directors. Apart from the younger faces in the audience, there wasn’t that much difference between early Apple annual meetings and ones held by Chrysler or Bank of America.

A young company like Apple also developed other signals of rank. The greatest distinction was based on wealth. For the disparities that existed at Apple, especially after it became a public company, were far larger than those that separate the chairman from the janitor in mature companies like General Motors and Exxon. The company also made loans to senior executives to help them buy stock or pay large income-tax bills, and profit-sharing was allocated according to rank.

There was never any mistaking who was the boss. The appearance of Scott or Markkula or Jobs could provoke a tightening in the muscles of underlings. A casual comment, a hint, an upturned eyebrow, a skeptical glance, a rise in the voice were all amplified and produced what one keen observer delightfully called “thunderbolt management.” He explained, “Everybody knows who calls the shots. Somebody says something in a hallway or makes a passing remark and suddenly twenty levels below, it becomes law.”