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Strategic Leadership and Innovation at Apple Inc.1

“Stop and look at Apple for a second, since it’s an odd company . . . While most high-tech firms focus on one or two sectors, Apple does all of them at once . . . Apple is essen- tially operating its own closed miniature techno-economy . . . If you follow conventional wisdom, Apple is doing it all wrong. And yet . . . this is the company that gave us three of the signature technological innovations of the past 30 years: the Apple II, the Macintosh and the iPod.” (Grossman, 2005)

APPLE’S FALL AND RISE

Voted as the most innovative company for three consecutive years during 2006–2008 and as America’s number 1 most Admired Company (McGregor, 2008), Apple seemed to have it all: innovative products that have redefined their markets (such as the iMac and the iPod), a consumer base as loyal as a fan club, and a business model characterized by vertical integration and synergies that no competitor could easily imitate. The Apple brand had transcended the barriers of the computer industry to traverse the consumer electronics, record, movie, and the video and music production industries (see Figure 1 for an outline of Apple’s product and service portfolio). In 2008 the Apple brand was listed as the 24th most valuable global brand (up from 33rd place the previous year), valued at $13.7 billion (Interbrand, 2008).

After a lackluster period during 1989–1997 when Apple was nearly written off, its dynamic comeback was impressive. Between 2003 and 2008 Apple’s sales tripled to $24 billion and profits increased to $3.5 billion, up from a mere $24 million (See Table 1 for an outline of Apple’s financial performance during 2006–8). Apple topped Fortune 500 companies for total return to shareholders both over 2003–2008 (94% return) as well as over 1998–2008 (51% return) (Morris, 2008: 68), a remarkable achievement.

But things haven’t always been that rosy for the company once known as the underdog of the computer industry. During the time when Steve Jobs was not part of the organization (1985–1997) Apple progressively degenerated to the point of struggling for survival. Apple charged premium prices and operated through a closed proprietary system, at a time when more economical, IBM-compatible PCs gained mass appeal. Its cost base was high compared with its major competitors. This combination of factors led to shrinking market share and lower profitability. Apple lost momentum in the PC industry, despite the effort of three dif- ferent CEOs to reverse the downfall (see Table 2 for a timeline of Apple’s CEO tenures).

John Sculley attempted to gain market share (at the time around 7%) by introducing lower-priced products that still had a technological edge, forged alliances with IBM to work on a joint operating system and multimedia applications, and outsourced much of manu- facturing to subcontractors to cut costs. A joint alliance was also formed with Novell and Intel to reconfigure Apple’s OS to run on Intel chips. By the end of Sculley’s tenure in 1993 however, market share was at around 8%, and Apple’s gross profits reduced from around 50% to 34% (Yoffie & Slind, 2008).

During Spindler’s tenure, the alliances with Intel and Novell, as well as with IBM, were exited, and a decision was taken to license Apple’s OS to companies that would make Mac clones (a decision reversed by Jobs in 1997). There was focus on international growth, and more cost-cutting efforts. With performance remaining flat, Spindler was replaced by Gil Amelio. In 1996, under Amelio, Apple went through three successive restructurings and further cost cutting. At the same time, Amelio aimed to return Apple to its premium price, differentiation strategy (Yoffie & Slind, 2008). The biggest chal- lenge at the time was the release of Apple’s new generation operating system in response to the release of Microsoft’s Windows 95, which had received great attention upon its release one year earlier. Apple’s OS system named Copland, on the other hand, was so behind schedule that the company decided to turn to external help. Ironically, Apple turned to NeXT, a software company founded by Steve Jobs after his departure from Apple in 1985. Meanwhile, Apple’s market share fell to 3% and Amelio was forced out by the board of directors.

After NeXT’s help with the new version of Apple’s operating system, Apple’s executive board resolved to buy the company. A year later, in July 1997, Jobs was offered the title of Apple’s CEO, after spending a few months as a consultant at Apple. This was a crucial time in the company’s history. Apple’s stock had sunk to $3.30 and the company reported a net loss of $708 million in its second quarter that year, flirting with bankruptcy. At the same time competitors like Dell and Microsoft were thriving, following the tech boom of the late 1990’s. Jobs took on the role of Interim CEO in 1997 and then became CEO during 2000.

THE COMPETITIVE LANDSCAPE The Giants: IBM and Microsoft

By 2009, the computer technology industry had undergone some profound changes that shaped the competitive context within which Apple operated. IBM, the once undisputed leader in PC manufacturing, has moved away from its traditional territory of computer hardware and with a focus on computer technology, research and service consulting became a very different company from what it used to be in the 1990s. In 2009 IBM was the world’s second largest software company after Microsoft, and its acquisition of PwC Consulting in 2002 marked IBM’s serious entry to the business services sector (Doz & Kosonen, 2008: 38). After selling its PC and laptop business to Chinese company Lenovo in 2005 (a seg- ment it had itself created) to allow more strategic focus on services, and higher-end servers, IBM’s strategy also moved to encompass open business approaches. IBM was a significant contributor to open source movements such as Linux by investing in the program’s develop- ment, growth and distribution (Linux is supported on all modern IBM Systems) and in 2005 the company gave away approximately 500 software patents (valued over $10 million) so as to enhance global innovation and profit from newly created business opportunities. Through these actions, IBM aimed to enlarge the global market for IT products and services and to benefit by responding to this demand. IBM made over 50 acquisitions during 2002–2007, building a portfolio around “networked, modularized and embedded technologies, includ- ing service-oriented architecture (SOA), information on demand, virtualization and open, modular systems for businesses of all sizes” (IBM Annual Report, 2007: 2). With IBM exiting the PC manufacturing industry the competitive environment in this front included HP, Dell, Acer and Lenovo, which together accounted for more than 50% of worldwide PC shipments in 2007 (Yoffie & Slind, 2008).

Following the launch of the IBM PC, Microsoft dominated the PC operating system market mostly because it offered an open standard that multiple PC makers could incor- porate into their products. Windows OS became the standard operating system in the industry with more than 85% of all PCs in the world running on some Windows version (Yoffie & Slind, 2008). Microsoft’s revenue reached $60.4 billion in fiscal year 2008, an increase of 18 percent over the previous year (Microsoft Annual Report, 2008). By 2009 Microsoft faced increased competition in the software front from Apple, HP, IBM and Microsystems, as well as Linux OS derived from UNIX. Microsoft’s portfolio also included the online search and advertising business (MSN portals, Live Search, etc.) in which the company sought to invest further. This was indicated by Microsoft’s interest in acquiring Yahoo, a deal which by the end of 2008 had not reached agreement. The failing of initial talks led to calls for the resignation of Yahoo’s CEO, who indicated that he would resign as soon as a successor was found. In late 2008 Microsoft’s interest in Yahoo was rekindled, but only in its search business. Microsoft’s position in the entertainment industry was holding strong with the Xbox 360 console selling more than 19 million units and Xbox Live having more than 12 million members (Microsoft Annual Report, 2008).

The Computer Vendors: Hewlett-Packard and Dell

After the acquisition of Compaq in 2002 that brought significant scale in its desktop and laptop product lines, HP became the world’s largest PC vendor, surpassing rival Dell in 2007 with a 3.9% market share lead. In 2007 the company’s reported revenue was $104 billion, making it the first IT company in history to exceed revenues of $100 billion, and the world’s largest technology company in terms of sales after IBM. HP’s portfolio included personal computing, imaging and printing-related products and services, and enterprise information technology infrastructure, including enterprise storage and servers, technology support and maintenance, consulting and integration and outsourcing services (HP Annual Report, 2007).

Dell Inc. offered a range of product categories including desktop personal computers, servers and networking products, storage, mobility products, software and peripher- als, and services. It was the first computer company to sell customized PCs directly to consumers without using intermediaries. Once the leading PC vendor in terms of both profitability and market share, Dell faced increased competition in the desktop and note- book business that made it difficult to sustain its earlier growth and profitability rates. Although Dell had based its success in its distinctive business model of direct sales and built to order manufacturing, in 2007 the company initiated a strategic change program that included investment in the design and release of consumer friendly products through retail distribution.

Gaining scale from significant acquisitions, Acer became the 3rd largest PC vendor in the world. Acer focused on the consumer market and in particular in the production of note- book PCs. Lastly, China–based Lenovo became the 4th biggest PC vendor after acquiring IBM’s PC business for $1.75 billion. Lenovo had a strong position in the Chinese market where it held 35% market share.

Microprocessors: Intel

In the microprocessors front Intel was the undisputed leader accounting for more than 80% share in the market of PC Central Processing Units. AMD was Intel’s closest com- petitor in terms of market share. Intel’s portfolio additionally included wired and wireless Internet connectivity products and communications infrastructure products. The company was effective in guiding the co-evolution of its offerings with those of its customers, and had relentlessly driven the evolution of computing power down a predictable trajectory of semiconductor density increase, cost reduction and performance improvement (Doz & Kosonen, 2008). As a result the 2007 fiscal year ended with an 8% revenue increase, at $38.3 billion, with net income of $7 billion, up by 38% over 2006. By 2007 Intel was investing in new product areas such as mobile internet devices and ultra-mobile PCs that leveraged on its microprocessor architecture and manufacturing technology (Intel Annual Report, 2007).

APPLE 1997–2009: TURNAROUND AND REBUILDING AN

INNOVATIVE ORGANIZATION Jobs’ Turnaround

The return of Steve Jobs to Apple in 1997 marked the beginning of a new era for the com- pany. Jobs worked for a salary of $1 per year for 30 months, leading Apple’s successful turnaround. His priority was to revitalize Apple’s innovation capability. “Apple had forgot- ten who Apple was,” as he noted in an interview (Burrows, 2004), stressing that it was time for Apple to return to its core values and build on them. At the time, Michael Dell was asked at an investor conference what Jobs should do with Apple. He replied “I’d shut it down and give the money back to the shareholders” (Burrows & Grover, 2006).

According to a former Apple executive who participated in Jobs’ first meeting with the top brass on his return to Apple, Jobs went in with shorts, sneakers, and a few days’ of beard, sat on a swivel chair, spun slowly, and asked them what was wrong with Apple. Jobs then exclaimed that it was the products, and that there was no sex in them anymore (Burrows & Grover, 2006). Upon taking charge, Jobs announced that Microsoft would invest $150 million in Apple, reaffirming its commitment to producing Microsoft Office and other products for the Mac, and soon scrapped the Mac OS licensing program, that he believed was cannibalizing Mac sales (Yoffie & Slind, 2008). He axed 70% of new products in development, kept 30% that he believed were “gems,” and added some new projects that could offer breakthrough potential. He also revamped the marketing message to take advantage of the maverick, creative Apple brand, and repriced stock options to retain talent (and pushed for the resignation of board members who did not agree with the repricing) (Booth, 1997).

In January 2000, when Apple became profitable with a healthy share price, Apple announced that it would buy Jobs a Gulfstream V jet, at a cost of $88 million, fulfilling Jobs’ request for an aeroplane so he could take his family on vacation to Hawaii and fly to the East coast. Larry Ellison, Oracle CEO and a board member at Apple, said at the time, “with what he’s done, we ought to give him five airplanes!” (Elkind, 2008).

Innovation at Apple

Long before it was voted as the world’s most innovative company, Apple had placed its trademark on a long list of technological breakthroughs including the mouse, the graphical user interface, color graphics, built-in sound, networking and wireless LAN, FireWire and many more. Apple’s approach over the years had been to make use of a personal computer as easy and intuitive as possible through developing a highly responsive operating system, establishing standard specifications to which all applications software packages were expected to conform, strict control of outside developers, and delivering computers that did what they promised (Cruikshank, 2006).

Apple’s innovations enhanced the consistency across applications, which translated to ease of use, an attribute that helped to explain to some extent Apple’s loyal consumer base. Another significant characteristic of Apple’s approach to innovation was the diffusion of innovation across the value chain (Cruikshank, 2006) with both high-end and low-end products that appealed to a much wider audience ranging from amateurs to professionals (see Figure 2 for an outline of Apple’s key product innovations). According to Jobs, “Apple’s DNA has always been to try to democratize technology. If you make something great then everybody will want to use it” (quoted in Morris, 2008: 69).

Many of the disruptive innovations Apple has introduced are based on what employees call “deep collaboration,” “cross pollination” or “concurrent engineering.” This refers to products not developed in discrete stages but by “all departments at once—design, hardware, software—in endless rounds of interdisciplinary design reviews” (Grossman, 2005). In an interview about how innovation is fostered in the company, Jobs noted that the system for innovation is that there is no system: “The reason a lot of us are at Apple is to make the best computers in the world and make the best software in the world. We know that we’ve got some stuff that (is) the best right now. But it can be so much better . . . That’s what’s driving us . . . And we’ll sleep well when we do that” (quoted in Cruikshank, 2006: 25.)

Although Apple has been envied for its ability to catch the wave in new technology fronts earlier than competitors (such as in the case of iTunes and the iPhone) Jobs describes it as a rather slow process: “Things happen fairly slowly, you know. They do. These waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you are going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely, it actually unfolds fairly slowly” (Jobs, quoted in Morris, 2008: 70)

Redefining the PC Industry

Loyal to the value of user friendliness, Steve Jobs led the launch of the first iMac in 1998, his first project after his return to the company. The iMac, or “the computer for the rest of us,” its slogan when it was launched, revolutionized desktop computing by combining technological advancements and unique design. The combination of a CPU, a CD ROM drive and a modem all packed in a translucent case, that could support all “plug and play” peripherals that were designed for Windows–based machines, for the compelling price of $1,299, marked Apple’s dynamic comeback.

Even though the iMac was the fastest selling Macintosh model ever, Apple refused to rest on its laurels, continually updating its hardware and operating system, and launching updated models and software almost every 4 months. Most importantly the iMac was the first Apple product with wide consumer acceptance, since 70% of sales where adding to the Macs already in use, helping Apple double its worldwide market share to 6% by the end of 1998 (Linzmayer, 2004).

In parallel Steve Jobs proceeded to simplify Apple’s product mix in terms of four lines of desktop and portable computers designed for both the professional and consumer markets. Following the iMac’s success, the iBook was launched in 1999. This consumer portable computer featured an optional AirPort wireless networking hub that allowed up to ten Macs to share an Internet connection. Just six weeks after the iBook’s unveiling, Apple had received more than 140,000 advance orders, making it a success equal to the iMac (Linzmayer, 2004).

After the introduction of the iMac and the iBook, Apple’s f igures looked a lot healthier. In October 1999 Apple announced its eighth consecutive profitable quarter and closed that fiscal year with revenues of $6.1 billion and net earnings of $601 million. Whereas most of Apple’s innovations led to an even more closed Apple archipelagos (software and hardware integration), at the same time Jobs decided to loosen control in other areas, for example the use of standard interfaces, such as the USB port. This change made the Mac a more open system since users of a Mac Mini for example could use a non-Mac keyboard (Yoffie & Slind, 2008). In the years to follow, a variety of innovative propri- etary applications, developed in-house, supported the Macintosh product lines. These include programs such as those in the iLife package (iDVD, iMovie, iPhoto,) that offered editing and creative opportunities to users as well as Apple’s own Web browser, Safari, developed in 2003. Breakthrough Innovation in Consumer Electronics and

Entertainment Industries 24 In 2001 Apple introduced its first iPod, launching a new era for the company as it entered

the consumer electronics industry. Capitalizing on the emerging trend of MP3 music, Apple introduced a breakthrough product that soon became synonymous with the MP3 music player category. With impeccable design and easy to use menu, the iPod could load 1000 songs in just 10 minutes and play music for 10 hours. The integration with the iTunes 2.0 software also made synchronizing music libraries a matter of a few seconds. A year later, in 2002 Apple released more capacious iPods that could also work with Windows, a move that helped to skyrocket iPod sales. By the end of 2003 more than one million iPods were sold marking the first substantial stream of revenues apart from the Macintosh. Since then the iPod product range has been renewed every 3 to 5 months and the company announced in 2007 that it sold the 100 millionth iPod. These numbers made the iPod the fastest selling music player in history (Apple, 2007).

25 Arguably, one the most important innovations for Apple has been the launch of the iTunes Music store in 2003, a revolutionary service through which consumers could access and purchase online music for only $0.99 per song. The iTunes Music Store was compatible with all iPods (running both in Macs as well as Windows–based computers) and served as Apple’s Trojan horse to what Jobs has envisioned as the digital hub where digital content and Apple devices would be seamlessly interconnected. The downloaded songs had royalty protection and could only be played by iPods, bringing the interoperability between Apple’s hardware, software and content to a new level and creating higher barriers to entry in this ecosystem.

26 Apple’s next big innovation was the iPhone, a device combining a phone, a music player and a personal computer that was expected to redefine the mobile phone industry in the same way iPod and iTunes revolutionized the music industry. According to Jobs, “It was a great challenge: Let’s make a great phone that we fall in love with. Nobody had thought about putting operating systems as sophisticated as an OS X inside a phone, so that was a real question” (quoted in Morris, 2008: 69). iPhone’s success is attributed not only to its technological capacity but also to its design: “We had a different enclosure design for this iPhone until way too close to the introduction to ever change it. 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 and science. There is art too.” (Jobs quoted in Morris, 2008: 70). According to Burrows & Grover (2006), “Jobs’ true secret weapon is his ability to meld technical vision with a gut feel of what regular consumers want and then market it in ways that make regular consumers want to be part of tech’s cool club.”

PLAYING BY DIFFERENT RULES: STICKING WITH A PROPRIETARY ECOSYSTEM

Apple’s innovations have redefined existing product categories such as music players, and helped the company successfully enter hotly contested new markets such as the entertain- ment industry. Key to these achievements have been the focus on design, the consumer experience, and the seamless integration of hardware and software (such as in the case of the iPod and iTunes).

The tight integration of its own operating system, hardware and applications, has been a strategy followed diligently by Apple. As Steve Jobs says: “One of our biggest insights years ago] was that we didn’t want to get into any business we didn’t own or control the primary technology, because you’ll get your head handed to you. We realized that for almost all future consumer electronics, the primary technology was going to be software. And we were pretty good at software.” (Morris, 2008: 70)

Apple is nearly unique among contemporary technology companies in doing all of its own design in-house, at its Cupertino campus. Other companies have outsourced most or all of their product design function, relying on outsourced design manufacturers (ODMs) to develop the products that with minor adaptations will fit into their product lines. Apple however believes that having all the experts in one place—the mechanical, electrical, software, and industrial engineers, as well as the product designers, leads to a more holis- tic perspective on product development; and that a critical mass of talent makes existing products better and opens the door to entirely new products. According to Jobs, “. . . you can’t do what you can do at Apple anywhere else. The engineering is long gone in the PC companies. In the consumer electronics companies they don’t understand the software parts of it. There’s no other company that could make a MacBook Air and the reason is that not only do we control the hardware, but we control the operating system. And it is the intimate interaction between the operating system and the hardware that allows us to do that. There is no intimate interaction between Windows and a Dell computer” (quoted in Morris, 2008).

The company’s tightly knit proprietary system has been frequently seen as the reason for Apple’s loss of initial momentum in the PC industry and increasing isolation until the mid 90’s. According to Kahney, “When Jobs returned to Apple in 1997, he ignored everyone’s advice and tied his company’s proprietary software to its proprietary hardware” (Kahney, 2008: 142). He has persisted in following this strategy over the years even when all other Silicon Valley firms turned towards openness and interoperability. Tony Fadell, Vice Presi- dent of engineering in the iPod division, notes that Apple aims to develop a self-reinforcing, synergistic system of products rather than a series of individual products: “The product now is the iTunes Music Store and iTunes and the iPod and the software that goes on the iPod. A lot of companies don’t really have control, or they can’t really work in a collaborative way to truly make a system. We’re really about a system” (quoted in Grossman, 2005).

Over the years, there have been some notable exceptions to this proprietary approach. In order to reach a broader consumer base, in late 2003 Apple offered a Windows compatible version of iTunes allowing not only Windows users to use the iPod but more importantly to familiarize them with Apple products. Another milestone came with the company’s switch from PowerPC processors made by IBM to Intel chips, a decision announced in mid-2005. This decision allowed Macs to run Windows software, implied lower switching costs for new Mac consumers and also allowed software developers to adapt more easily their pro- grams for Apple. A previous alliance with Microsoft occurred in 1997 when Microsoft agreed to invest $150 million in Apple, reaffirming its commitment to develop core prod- ucts such as Microsoft Office for the Mac.

Apple has developed a series of strategic alliances in the course of its efforts to become the center of the digital hub, where digital content would be easily created and transferred to any Apple device. Development of the iPod, iTunes and iPhone have necessitated these alliances, since entry in the entertainment and consumer electronics markets would not have been possible without some key strategic partners (for example the big record labels for iTunes such as EMI, Sony BMG, Universal and Warner Brothers, or YouTube for the iPhone). In this process of building systems, Apple has been very selective about its part- ners. Rather than aiming for the most partners, Apple focuses on engaging with the best companies for a specific purpose (for example Apple has partnered with Google, in devel- oping mapping and video applications for the iPhone).

At the same time Apple has proceeded with a number of acquisitions intended to strengthen its core competencies. For example, in 2002 Apple acquired the German special- ist in music software, Emagic, as well as Prismo Graphics, Silicon Grail and Nothing Real, three small companies involved in professional-level video creation and production. In April 2008 Apple also announced the acquisition of the boutique microprocessor company PA Semi, known for its highly sophisticated and low-priced chips. With that acquisition Apple is said to be moving towards bringing its chip design in-house, building an ever more tightly knit ecosystem that helps to prevent copycat designs from rivals and to design chips for supporting specific new products or applications. According to COO Tim Cook: “One traditional management philosophy that’s taught in many business schools is diversifica- tion. Well, that’s not us. We are the antibusiness school” (Burrows, 2007).

In 2001, Apple created a retail division to enable it to sell its products directly to the public. By mid-2008 there were 215 retail stores, most of them in the US, accounting for almost 20% of total revenues. In 2006 Apple entered into an alliance with Best Buy, and by the end of 2007 Apple products could be purchased in over 270 Best Buy stores (Yoffie & Slind, 2008).

CORPORATE CULTURE AND HUMAN CAPITAL

According to Apple’s COO Tim Cook, Apple “is not for the faint of heart” (Morris, 2008: 69). Apple’s culture is all about intense work and perfectionism but in a casual environment. Jobs stimulates thinking out of the box and encourages his employees to experiment and share with others “the coolest new thing” they have thought of. It may not be accidental that Apple’s emblem of corporate culture is a pirate flag with an Apple rainbow colored eye patch, designed after a famous Jobs quote: “It’s better to be a pirate than join the navy.” This flag was hanging over the Macintosh building as Apple’s team was working on the first iMac, to act as a reminder of their mission. “Processes lead according to Jobs to efficiency, not innovation nor new ideas. These come from people meeting up in the hallways, calling each other in the middle of the night to share a new idea or the solution to a long thought as unsolved problem” (Grossman, 2005).

Along with the rebel spirit that Jobs wants to maintain, Apple has a tradition of long working hours and relentless pursuit of perfection. Each manufacturing and software detail is worked and reworked until a product is considered perfect, thus providing a seamless inte- gration of software and hardware. Apple’s engineers spend so much time on each and every product that they are able to foresee and respond to any possible difficulties a consumer might encounter when using it. “It’s because when you buy our products, and three months later you get stuck on something, you quickly figure out [how to get past it]. And you think, “Wow, someone over there at Apple actually thought of this!” And then six months later it happens again. There’s almost no product in the world that you have that experience with, but you have it with a Mac. And you have it with an iPod ” (Jobs, quoted in Burrows, 2004).

Apple’s employees are not paid astronomically. They are not pampered, nor do they enjoy unique privileges beyond what most large companies offer. They are talented people with passion for excellence, proud to be part of the Apple community. Moreover they want to be part of a company that believes that the best way to predict the future is to invent it. This pride stems from a corporate culture that fosters innovation and a sense of Apple’s supe- riority against competitors. Apple recruits talent of the highest caliber, and Jobs is known for approaching people who are known as the best in what they do and recruiting them to Apple. According to Gus Mueller, founder of a software development firm that develops software for Apple, “Apple only hires top-notch folks. I know a number of people there, and they are all super smart and creative. I don’t know a single person who shouldn’t be there” (Guardian, 2008). As Steve Jobs said: “We may not be the richest guy in the graveyard at the end of the day, but we’re the best at what we do. And Apple is doing the best work in its history” (quoted in Burrows, 2004).

STEVE JOBS’ LEADERSHIP

When Jobs returned to Apple in 1997 after an absence of 12 years, he arrived with much historical baggage. He was Apple’s co-founder at the age of 21, and was worth $200 million by the age of 25. He was then forced to resign by the age of 30, in 1985, after a battle over control with CEO John Sculley which ended in Jobs losing all operational responsibilities. Jobs (who had been executive VP and General Manager of the Macintosh division) was con- sidered a threat to the company, accused of trying to “play manager” and control areas over which he had no jurisdiction. He was considered “a temperamental micromanager whose insistence on total control and stylish innovation had doomed his company to irrelevance” (Burrows & Grover, 2006).

Twenty-two years later however Jobs was voted as one of the greatest entrepreneurs of all time by BusinessWeek (Tozzi, 2007). His personality left a mark on Apple in a way that only a few leaders had achieved, making his name synonymous with the company and its remarkable turnaround. Described by his colleagues as brilliant, powerful and charismatic, he could also be a demanding and impulsive perfectionist. As Jobs puts it: “My job is not to be easy on people. My job is to take these great people we have and to push them and make them even better. How? Just by coming up with more aggressive visions of how it could be” (quoted in Morris, 2008: 70).

Many believe that Jobs’ achievement of being regarded as one of the greatest technology entrepreneurs is not based so much on his knowledge of technology (he is not an engineer or a programmer, neither does he have an MBA or college degree) but on his innate instinct for design, the ability to choose the most talented team and “the willingness to be a pain in the neck for what matters for him most” (Grossman, 2005).

With regard to the iMac, for example, a product concept he and Jonathan Ive, head of design had envisioned, the engineers were initially sceptical: “Sure enough, when we took it to the engineers, they said, ‘Oh.’ And they came up with 38 reasons. And I said, ‘No, no, we’re doing this.’And they said, ‘Well, why?’And I said, ‘Because I’m the CEO, and I think it can be done.’ And so they kind of begrudgingly did it. But then it was a big hit ” (Gross- man, 2005). Jobs has cited himself as “co-inventor” on 103 separate Apple patents (Elkind, 2008).

Jobs could be both inspirational but also experienced as scary. According to Guy Kawasaki, former head of developers, “Working for Steve was a terrifying and addic- tive experience. He would tell you that your work, your ideas, and sometimes 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” (Cruikshank, 2006: 147). Apart from displaying such behaviors as parking his car in handicapped places and publicly losing his temper, Jobs often made his employees burst into tears through direct and personal criticism. Robert Sutton, management profes- sor at Stanford, discussed Steve Jobs in his book “The no asshole rule” in the chapter on the virtues of assholes (Sutton, 2007). Sutton then reflected further on his discussion of Steve Jobs in his blog, suggesting that Jobs may be mellowing as he gets older (Sutton, 2008). Yet, according to Palo Alto venture capitalist Jean-Louis Gasse, a former Apple

Strategic Leadership and Innovation at Apple Inc.

23-2 Apple Inc. Product and Service Portfolio

Hardware Products

Peripherals

Music Products & Services

Apple Inc

Internet Software & Service

• Personal computing products (desktops/ laptops)

• Server & storage products

• Related devices & peripherals

• 3rd party hardware

• Software programs (including Mac OS X)

• iPhoto/iDVD

Source: Authors

• Apple branded & 3rd party Mac compatible peripheral products

• Airport Extreme (wireless networking technology)

• iPod & related accessories • iTunes Store: Online service to distribute 3rd party music/audio books/music videos/short films/tv shows/ movies/podcasts/iPod games

Software Products & Computer Technologies

Wireless Connectivity & Networking

Web browser (Safari3) Quick Time