The Epic Comeback
How Steve Jobs Revitalized Apple Through Product Management Mastery
Bruce PeckMar 06, 2023 · 9 min read
Apple Was In Dire Straits
In August 1997 when Steve Jobs took the stage at Mac World wearing a black vest and a white turtle neck the audience erupted in ecstatic applause almost as if the Beatles had just landed at Kennedy Airport.
It had been 12 years since he was kicked out of Apple, and they had watched the once revolutionary company they loved fall into a death spiral.
The situation was so dire that when the legendary founder of Dell computers, Micheal Dell, was asked what he’d do if he was in charge of Apple, he said, “I'd shut it down and give the money back to the shareholders.”
He had good reasons. Apple had been on the decline for years, their 20% share of the computer market had steadily shrunk to 8%.
Microsoft had first copied, then perfected the graphical user interface operating system and had become the dominant force in personal computers, and Apple had responded merely by producing one irrelevant product after another.
The company was hemorrhaging cash, and management spent its time flirting with the prospect of acquisition and begging banks to extend the loan deadlines.
The most recent CEO, Gil Amelio, who was known as a comeback king, having revived two other major technology firms, had failed.
He not only failed, but during his 500 days at Apple he had seen the company lose more than 1 billion dollars. Yet he, if anyone, should have been able to accomplish the job.
Now, due to an unlikely series of events including the acquisition of Job’s own floundering company NeXT, their hero was back and held the future of Apple in his hands.
But Jobs was anything but a sure bet.
He was a mercurial manager, known for both intense charisma and brutal tongue lashings.
He had presided over his own string of duds while he was in charge of Apple, and had not been able to turn a profit with NeXT.
Yet, Steve Jobs would go on not just to save Apple, but by the time of his death Apple was the most valuable company in the world.
In the 1990’s, two extraordinary executives faced incredible challenges and were given the opportunity to save one of the world's most important tech companies, one failed and one succeeded beyond anyone’s expectations.
They both staked their careers and reputations on the challenge. But only one did it successfully and he did it by ruthlessly focusing on the products.
Let’s look through their decisions one by one, and see how you choose to prioritize features and products makes a huge difference on a company’s outcome.
How Gil Amelio Lost 1 Billion Dollars in 500 Days
In 1994 Gil Amelio looked the part of a 90’s corporate executive to a T. He was middle aged, slightly overweight and never seen without a starchy button up shirt, suit coat and an awkwardly patterned tie.
He had just successfully led the turnaround of the multibillion dollar National Semiconductor when Apple called to make him a member of their board.
Amelio had a strategy and system to turn around companies, in fact he had even canonized it in his book, “Profit From Experience” and was determined to implement it at Apple.
His system consisted of achieving financial stability, creating a vision that defines success, learning what the customers value and delivering it, then to establish metrics that lead to excellence.
Which sounds good on paper, but he was about to learn that Apple was unlike anything he had experienced. He arrived early the first morning in Apple’s parking garage dressed in a suit, frustrated to not be able to find senior level parking.
When he arrived employees were put off by him being overly dressed and him insisting on being called Dr. Amelio.
One of his first moves was to bring together the top managers of every division. They huddled in a packed board room. He asked each of them to come prepared with a 5 minute presentation overviewing what their division did.
None of them were prepared and the meeting went on for hours. He was furious.
He then attempted to set the agenda for Apple and over the course of months it grew into a mammoth 45 page document, which much to his chagrin, people in the company read it lightly and essentially tossed it.
He took all these frustrating experiences and interpreted it as the culture of Apple, they were dysfunctional, unorganized and hard to lead towards a vision.
And ultimately when he was fired, he felt like they were simply being impatient on what he saw as a three year plan.
He was wrong. That was not reality at all. The real problem was that people didn’t have a clue where the company was headed or what they were supposed to do.
In a 1996 article the former head of sales described the problem, “The challenge is if you don’t have a feeling where you are headed, it tends to drain energy. It tires out people who are working hard, ” and an engineer elaborated, “Everyone is certainly willing to work around the clock for him, but we want to know on what.”
Despite, or perhaps because of his lengthy 40+ page edicts from on high they didn’t understand what to do.
Steve Jobs’s Approach
Now, let’s compare that with Steve Job’s approach. When Jobs returned to Apple he was infamous for straddling his Porsche across two handicapped parking spots without a license plate on his car.
He would walk barefoot across Apple campus. He gathered the top lieutenants in a meeting to get an overview of the business. Instead of demanding 5 minute presentations that went for hours he told them to bring models of their products so he could see them.
In the first meeting he would absorb as much information as possible. In the second, he would start asking them questions that would force them to prioritize such as, “If you had to cut half your products what would you cut?”
He summarized his experience in his 1997 MacWorld address, “I came today to give you a status report on what’s going on and to try to fill you in on some of the steps we’re taking to get Apple healthy again…” He began.
“Now when I started to get involved a lot of people gave me advice and some of the advice that was most popular was, ‘Apple has become irrelevant’... ‘Apple can’t execute anything’... ‘Apple’s culture is anarchy, you can’t manage it…’”
On the surface, what the people were telling Jobs had good evidence. The company’s market share had slid 30%, the company had gone years without a hit product and the culture had fallen into disarray.
Jobs saw these facts, but was able to look even deeper.
“After four weeks here’s what I found: Apple’s not as relevant where it used to be everywhere, but in some incredibly important market segments it’s extraordinarily relevant… Apple is executing wonderfully on many of the wrong things… They’re doing some of the wrong things because the plan has been wrong. And lastly, what I found is rather than anarchy, I found people who can’t wait to fall into line behind a good strategy, there just hasn’t been one.”
By exploring what the underpinnings of reality were, Jobs was able to diagnose the root of the problem. He looked at the objection of irrelevancy and rather than taking that as gospel truth, he asked, what is real?
He found that the critics did have some merit in their argument in that there were specific segments that weren't making a meaningful contribution, but more importantly he discovered that there were actually places that could become fertile areas of growth with a little pruning.
He found that they were executing well, just not at the right things and he realized that if they could adjust those aspects of the company it was highly likely they could create really great things.
From Amelio’s vantage point he saw only a company refusing to fall in line with his vision, from Job’s perspective he saw brilliant people, major market opportunities and the potential to make something great.
They both faced the exact same situation, but their perspectives were entirely different on the course of action that they needed to take.
First Principle Thinking
Amelio’s biggest mistake however, was to reason by analogy rather than first principles. His logic went something like: “Apple is a struggling company like National Semiconductor, I have a process that worked to turn around National Semiconductor and I will implement it here to the same effect.”
When you bring a set of applications that work in a particular circumstance to a new environment with different fundamental dynamics you are setting yourself up for failure.
Steve Jobs would not make the same mistake. Job’s logic was much more fundamental, he thought:
- Apple is a product company and people buy products they want: To make Apple relevant again Apple must produce products people want
- Apple has limited resources, resources that go to one project cannot go to another. We should focus our resources only on products that will help us become relevant and profitable
- Talented people make great products: We must replace untalented people with talented people at each position
Because Jobs thoroughly understood the first principles, he was able to make rational and swift action throughout the company. For example, when he returned they had more than 15 different product platforms, and as he described it more than a “zillion” product variations.
He understood that on a basic level, if they can’t explain to their friends which products to buy then how could they expect the consumer to be able to? He then went even further, if they cut the product lines down to “Four great products, that’s all (they’d) need… If (they) only had four great products then (they) could put the A team on every single one of them. And if (they) only had four they could turn them all every 9 months instead of every 18 months.”
Knowing that Apple could not become a great company again without a great leadership team. He systematically replaced anyone that was a poor fit and put in people with the vision to take the company forward.
He was bold. Only two of the original board members would survive, the rest were being replaced by his cast of all stars including names like Larry Ellison the CEO of Oracle, Jerry York the former CFO of IBM, and Bill Campbell the CEO of Intuit.
Jobs understood the first principle that decisions are made by people, good decisions are made by capable people.
And that was the beginning of Apple’s ascendance to its lofty position as the most valuable company in the world. All of their future growth was dependent on their ability to see clearly what caused what, develop a strategy that focused all their efforts on that, and then to execute on it brilliantly.