Libor Kubín We brought you a week ago the first sample from the book The Steve Jobs Journey by Jay Elliot. The apple-picker brings you the second abbreviated example.
6. PRODUCT-ORIENTED ORGANIZATION
One of the most important aspects of any organization is to arrange its structure to meet the needs of the business. In Apple's early years, the company thrived on the success of the Apple II. Sales were large and increasing exponentially every month, Steve Jobs became the national face of high-end technology and a symbol of Apple products. Behind it all was Steve Wozniak, who was getting less credit than he deserved as a technical genius.
In the early 1980s, the picture began to change, but Apple's management did not see the emerging problems, which were additionally overshadowed by the company's financial success.
The best of times, the worst of times
It was a time when the whole country was suffering. Early 1983 was not a good time for big business in any industry. Ronald Reagan had replaced Jimmy Carter in the White House, and America was still reeling from a nasty recession—a peculiar recession in which rampant inflation, usually combined with too much demand, was coupled with suppressed economic activity. It was called "stagflation". To tame the inflation monster, Federal Reserve Chairman Paul Volckner drove interest rates to dizzying heights and suppressed consumer demand.
To be more specific, IBM landed like a ton of bricks in the small PC sandbox that Apple once had all to itself. IBM was a lone giant among midgets in the personal computer business. The position of "dwarfs" belonged to the companies General Electric, Honeywell and Hewlett-Packard. Apple could not even be called a dwarf. If they put him on IBM's bottom line, he'd be within a rounding error. So was Apple destined to be relegated to an insignificant footnote in economics textbooks?
Although the Apple II was a "cash cow" for the company, Steve correctly saw that its appeal would decline. Even worse was the first major setback the company had just faced: customers were returning $7800 each of the new Apple IIIs because of a problem with a defective cable costing less than thirty cents.
Then IBM attacked. It promoted its new PC with a dubious, affectively cute ad featuring a Charlie Chaplin character. By entering the market, "Big Blue" (IBM's nickname) affected the legitimization of personal computing far more than any hobbyist could have done. The company created a new vast market with the snap of its fingers. But the direct question for Apple was: How on earth could it compete with IBM's legendary market power?
Apple needed a great "second act" to survive, let alone thrive. Steve believed he would find the right solution in the small development group he managed: a product-focused organization. But he will have to face one of the most insurmountable obstacles of his career, a challenge of his own making.
A survey of leadership
The management situation at Apple was problematic. Steve was the chairman of the board and he took that position very seriously. Still, his main focus was on the Mac. Mike Scott had not yet proven to be the right choice for president, and Mike Markkula, the philanthropic investor who had put up the initial money to help the two Steves start the business, was still serving as CEO. However, he was looking for a way to pass his work to someone else.
Despite all the pressure Steve was under, he drove once a month to the nearby Stanford campus and I accompanied him there. On the many car trips Steve and I took, to Stanford and beyond, he was always a treat to ride with. Steve is a very good driver, very attentive to the traffic on the road and what other drivers are doing, but then he drove the same way he drove the Mac project: in a hurry, he wanted everything to happen as quickly as possible.
During these monthly visits to Stanford, Steve met with students in the business school—either in a small lecture hall of thirty or forty students, or in seminars around a conference table. Two of the first students Steve accepted into Mac's group after graduation. They were Debi Coleman and Mike Murray.
At one of Mac's weekly meetings with the team leaders, Steve made a few remarks about the need to find a new CEO. Debi and Mike immediately started praising PepsiCo President John Sculley. He used to lecture in their business school class. Sculley led the marketing campaign in the 1970s that eventually won PepsiCo market share from Coca-Cola. In the so-called Pepsi Challenge (with Coke as the challenger, of course), blindfolded customers tested two soft drinks and were asked to say which drink they liked better. Of course they always chose Pepsi in the ad.
Debi and Mike spoke highly of Sculley as a seasoned executive and marketing genius. I think everyone present said to themselves, "This is what we need."
I believe Steve started talking to John on the phone early on and spent a long weekend meeting with him after a few weeks. It was in the winter - I remember Steve telling me they were walking in snowy Central Park.
Although John of course knew absolutely nothing about computers, Steve was very impressed by his knowledge of marketing, which, among other things, led him to the head of a giant marketing company like PepsiCo. Steve thought that John Sculley could be a great asset to Apple. For John, however, Steve's offer had obvious flaws. Apple was a small company compared to PepsiCo. In addition, all of John's friends and business associates were based on the East Coast. In addition, he learned that he is one of three candidates for the position of chairman of the PepsiCo board of directors. His answer was a resounding no.
Steve has always had many of the qualities that mark a successful leader: decisiveness and determination. The statement he used to cajole Sculley has become a legend in the business. "Do you want to spend the rest of your life selling sugar water, or do you want a chance to change the world?" The question revealed less about Sculley's character than it did about Steve himself—he could clearly see that he on my own he is destined to change the world.
John recalled much later, "I just swallowed because I knew if I refused I'd spend the rest of my life thinking about what I'd missed."
Meetings with Sculley continued for several more months, but by the spring of 1983, Apple Computer finally had a new CEO. In doing so, Sculley traded the management of a traditional global business and one of the world's iconic brands for the management of a relatively small company in an industry he knew nothing about. Moreover, a company whose image was shaped by two computer enthusiasts working in a garage the day before yesterday and which was now taking on an industrial titan.
For the next few months, John and Steve got along great. The trade press nicknamed them "The Dynamic Duo". They held meetings together and were practically inseparable, at least on working days. In addition, they were also a consulting company for each other - John showing Steve how to run a large company, and Steve inducting John into the secrets of bits and flats. But from the very beginning, Steve Jobs' master project, the Mac, held a magical attraction for John Sculley. With Steve as a scout leader and tour guide, you wouldn't expect John's interest to turn elsewhere.
To help John with the difficult transition from soft drinks to technology, which may have seemed like a mysterious world to him, I placed one of my IT staff, Mike Homer, in an office close to Johny's workplace to act as his right-hand man and provide him with technological insights . After Mike, a young man named Joe Hutsko took over the task—all the more remarkable because Joe had no college degree and no formal technical training. Nevertheless, he was 100% suited for the job. I thought it was important for John and Apple to have a "daddy" on hand.
Steve agreed with these middlemen, but he wasn't too happy. Rather, he was John's only source of technological knowledge. However, it's clear that Steve had other things on his mind than being John's mentor.
John and Steve were so much on the same page that they would sometimes complete each other's sentences. (Truthfully, I never heard it, but the story became part of the John and Steve legend.) John gradually adopted Steve's view that Apple's entire future lay with the Macintosh.
Neither Steve nor John could have guessed the battle that awaited them. Even if a modern-day Nostradamus predicted a battle at Apple, we'd certainly think it would be fought over products: Macintosh versus Lisa, or Apple versus IBM.
We never thought that the battle would surprisingly be about the way society is organized.
Marketing chaos
One of Steve's big problems was the Lisa, Apple's proprietary computer, which the company churned out the same month Sculley was hired. Apple wanted to break down the stronghold of IBM customers with Lisa. An improved version of the Apple II, the Apple IIe, was also launched at the same time.
Steve still claimed that the Lisa was built with outdated technology, but there was an even bigger obstacle waiting for it in the market: the introductory price was a whopping ten thousand dollars. Lisa has been fighting for her strong position from the very beginning when she left the race gates. It did not have enough power, but it was even more overflowing with weight and a high price. It quickly became a failure and was not a significant factor in the coming crisis. Meanwhile, the Apple IIe, with new software, better graphics and easier controls, became a resounding success. No one expected this more or less routine upgrade to turn into a big hit.
The target of the Mac, on the other hand, was the consumer-beginner, the individual. Its price hovered around two thousand dollars, which made it considerably more attractive than the Lisa, but it was still much more expensive than its big competitor, the IMB PC. And there was also the Apple II, which, as it turned out, continued for several more years. Now, Apple was a story of two products, the Apple IIe and the Mac. John Sculley was brought in to solve the problems with them. But how could he solve them when his ears were full of Steve's stories about the Mac, its glory and excellence, and what it would bring to computer and Apple users?
Because of this organizational conflict, the company split into two groups, the Apple II versus the Mac. The same was true in stores selling Apple products. The Mac's biggest competitor was the Apple II. At the height of the conflict, the company had about 4000 employees, 3000 of whom supported the Apple II product line and 1000 of the Lisa and Mac.
Despite the three-to-one imbalance, most employees believed that John was neglecting the Apple II because he was so focused on the Mac. But from inside the company, it was difficult to see this "us versus them" as a real problem, as it was once again masked by the large sales profits and $1 billion in Apple's bank accounts.
The expanding product portfolio set the stage for spectacular fireworks and high drama.
The path to market was traditional for the Apple II in the field of consumer electronics - it was sold through distributors. Distributors sold computers to schools and retailers. As with other goods such as washing machines, soft drinks, automobiles, it was the retailers who actually sold the product to individual customers. So Apple's customers were not individual end users, but large distribution companies.
In retrospect, it's clear to us that this was the wrong sales channel for a technology-intensive consumer product like the Mac.
As the Mac team worked feverishly to complete the final formalities needed for the much-delayed launch, Steve took a sample model on a press tour. He visited about eight American cities to give media people a chance to view the computer. At one stop, the presentation went badly. There has been an error in the software.
Steve tried his best to hide it. As soon as the journalists left, he called Bruce Horn, who was in charge of the software, and described the problem to him.
"How long will the fix take?"
After a moment Bruce told him, “Two weeks.” Steve knew what that meant. It would have taken anyone else a month, but he knew Bruce as someone who would lock himself in his office and stay there until he had the problem completely solved.
However, Steve knew that such a delay would cripple the product launch plan. He said, "Two weeks is too much."
Bruce was explaining what the fix would entail.
Steve respected his subordinate and had no doubt that he was not exaggerating the work required. Still, he disagreed, "I understand what you're saying, but you have to sort it out first."
I never understood where Steve's ability to accurately assess what was possible and what wasn't came from, or how he arrived at it, because he lacked some technical knowledge.
There was a long pause as Bruce thought things through. He then replied, "Okay, I'll try to get it done within a week."
Steve told Bruce how pleased he was. You can hear the thrill of excitement in a delighted Steve's voice. There are moments like that very motivating.
Practically the same situation repeated itself when lunch time approached and a team of software engineers working on the development of an operating system encountered an unexpected obstacle. With one week left on the deadline for the code to duplicate the disks, Bud Tribble, head of the software team, informed Steve that they wouldn't be able to make it. The Mac will have to ship with "bugged", unstable software labeled "demo".
Instead of the expected outburst, Steve provided an ego massage. He praised the programming team as one of the best. Everyone at Apple relies on them. "You can do it," he said in a very persuasive tone of encouragement and assurance.
And then he ended the conversation before the programmers had a chance to object. They worked ninety hour weeks for months, often sleeping under their desks instead of going home.
But he inspired them. They finished the job at the last minute and there were literally only minutes left until the deadline.
First signs of conflict
But the first signs of a cooling relationship between John and Steve, signals that their friendship was cracking, came in the long run-up to the advertising campaign that would mark the launch of the Macintosh. It's the story of the famous 1984-second Macintosh TV ad broadcast during the XNUMX Super Bowl. It was directed by Ridley Scott, who became famous for his film Blade Runner became one of the most important directors in Hollywood.
For those not yet familiar with it, the Macintosh ad featured an auditorium filled with seemingly monotonous mumbling workers in prison uniforms staring intently at a large screen where a menacing figure was lecturing them. It was reminiscent of a scene from a classic George Orwell novel 1984 about the government controlling the minds of the citizens. Suddenly, an athletic looking young woman in a t-shirt and red shorts runs up and hurls an iron hammer at the screen, which shatters. Light enters the room, fresh air blows into it, and the convicts wake up from their trance. The voiceover announces, “On January 24, Apple Computer will introduce the Macintosh. And you will see why 1984 will not be like 1984. "
Steve loved the ad from the moment the agency produced it for him and John. But John was worried. He felt the ad was crazy. Still, he conceded that "it might work."
When board members viewed the ad, she didn't like herself them. They instructed the agency to partner with the TV company to sell the Super Bowl ad time that Apple bought and refund them.
The TV company appeared to have made an honest effort, but had no choice but to announce that it had failed to get a buyer for the ad time.
Steve Wozniak clearly remembers his own reaction. “Steve (Jobs) called me to show me the ad. When I looked at it, I said, 'That ad je ours.' I asked if we were going to show it at the Super Bowl, and Steve said the board voted against it."
When Woz asked why, the only part of the answer he could remember because he was focused on it was that it cost $800 to run the ad. Woz says, "I thought about it for a while and then I said I'll pay half if Steve pays the other."
Looking back, Woz says, “I realize now how naive I was. But I was very honest at the time.'
That turned out to be by no means necessary, as Apple's executive vice president of sales and marketing, Fred Kvamme, rather than see a mindless replacement for the Macintosh ad aired, made a crucial last-minute phone call that would go down in advertising history: "Broadcast it."
The audience was fascinated and shocked by the ad. They had never seen anything like it. That evening, news directors at television stations across the country decided that the promotional spot was so unique that it was worthy of a newspaper report, and they rebroadcast it as part of their nightly news programs. They thus provided Apple with additional advertising time worth millions of dollars free.
Steve was right again to stick to his instincts. The day after the broadcast, I drove him around a computer store in Palo Alto early in the morning, where there was a long line of people waiting for the store to open. It was the same in computer stores across the country. Today, many consider that TV spot to be the best commercial ever broadcast.
But inside Apple, advertising has done damage. It just fueled the envy that people in the Lisa and Apple II groups felt towards the new Macintosh. There are ways to dispel this kind of product envy and jealousy in society, but they need to be done early, not at the last minute. If Apple's management got the problem right, they could work to make everyone in the company feel proud of the Mac and want to see it succeed. No one understood what the tension was doing to the employees.
[button color=”eg. black, red, blue, orange, green, light" link="http://jablickar.cz/jay-elliot-cesta-steva-jobse/#formular" target=""]You can order the book at a discounted price of CZK 269 .[/button]
[button color=”eg. black, red, blue, orange, green, light" link="http://clkuk.tradedoubler.com/click?p=211219&a=2126478&url=http://itunes.apple.com/cz/book/cesta-steva -jobse/id510339894″ target=”“]You can buy the electronic version in iBoostore for €7,99.[/button]
thanks for the pointers, but I would like to have it on the ibookstore :)
We would also like that. But Apple is really messing around. Jobs's biography was approved within 24 hours, we have been waiting for Steve Jobs's Journey for more than a week.
We also think, unfortunately, Apple is now approving books for an unprecedentedly long time. More people have already complained. Unfortunately, we will not influence it, while Jobs's resume was approved by the next day.