Apple Polisher

Volume 4 Letter 11

Back in the early 1990’s, Apple’s founder Steve Jobs was fired from Apple and replaced by John Scully, an import from Pepsi. Under Scully’s tenure, Apple abandoned its strategy of being unique and pursued a “me too” strategy of making Apple/IBM type computers. Predictably, Apple’s cool machines that appealed to college kids, graphic designers and artists nosedived along with Apple’s stock.

After being fired Jobs decided to move on and started a new company called NeXT. While the hardware side of NeXT was eventually shelved, the software side continued to grow. If anyone has seen the movies Jurassic Park, Toy Story, Shrek and other Pixar movies, you’ve been watching Job’s software in action.

Wind the story out to 1997, and a few Apple CEO’s later and Apple Computer badly needed a new operating system. In their search for a new system and in an ironic twist of fate, they decided to purchase NeXT Computer. Apple not only got NeXT’s operating system, they also got Steve Jobs! Within a few months in a bizarre turn of events Jobs was back as CEO of Apple – but a very different Apple than the company he had left. Apple was a badly bruised company, market share was falling and the future was bleak.

When Steve Jobs returned as CEO, he shook up the entire product development process. He listened to the market and innovation once again became the rule at Apple. One can’t argue with his success. Since his return Apple has launched iMac, iBook, a series of transparent Swatch like computers and of course the fabulously popular iPod MP3 music players.

Interestingly many of the innovative ideas that Steve Jobs (as both CEO of Apple and NeXT) has brought to the market place over time have not necessarily come directly from him or one of his companies. The original mouse, made popular in the MAC computers, was developed by Xerox as was the first (and perhaps until recently the only) true windows operating system. “Not Invented Here” is not a syndrome at Apple. Apple has become a master at creating or capturing good ideas, selecting the best ones, investing in developing them and then commercializing them.

Jobs recognized early on in his career that it’s not managements’ responsibility to create all the good ideas. However, it is managements’ responsibility to capture all the good ideas. He also recognized early on in his experience (especially with the development of the Lisa computer) that innovation is a very free flowing and informal process. Some quirk of humanity seems to stifle creativity when formal rules are developed and creativity is regimented.

Jobs has mastered the process of innovation. On one hand he recognizes that innovators are like artists – they thrive in chaotic environments where ideas can flow freely, debates are lively and work can often appear unstructured and chaotic. Yet the Dr. Jekyll side of Jobs knows that innovation must be corralled and R&D managed. Managers must implement processes to evaluate and rank potential projects, bringing a disciplined approach to the new product development process. To the outsider this behavior may appear schizophrenic – a disciplined approach to select projects and set firm deadlines versus a free flowing environment where creativity and innovation can be nurtured, once projects have been selected.

For Apple, revenues were up over 36% in 2003 and are again exploding in 2004. Amazingly in this same time frame, the R&D spending at Apple has remained almost constant since Steve Jobs returned as CEO. Jobs has certainly nurtured innovation and polished the Apple.

Recent Posts