When Steve Jobs officially returned to Apple 15 years ago, it marked a moment of rebirth for the ailing company. Within eight months (September 17, 1997, to be exact), he
assumed the mantle of Interim CEO (later abbreviated to “iCEO” for cuteness) and executed a stark and keen strategy to save Apple from oblivion.
Almost a year after his
untimely passing, it’s a good time to look back at seven key moves Jobs made to right the Apple ship during his early days as iCEO.
This is not meant to be an exhaustive or complete study: Jobs made dozens of decisions a day. I don’t include some of his most important decisions—for example, the ones to pursue the development of innovative new products such as the iMac, OS X, and the iPod. Instead, I’m thinking about the operational decisions that put his company on the track it still follows to this day.
Taking the reins
The most important decision Steve Jobs made was to take control of Apple. It didn’t have to be that way.
After the purchase of NeXT in late 1996, Apple’s then-CEO
Gil Amelio brought Jobs in as a special advisor in January 1997. Jobs could have been content to simply provide advice and stay out of the way. Of course, that wasn’t in his nature. Jobs quickly convinced Apple’s board of directors to oust Amelio. It wasn’t long before Jobs nominated himself as a potential replacement. The board agreed, and Jobs was back in control.
Trimming the fat
Before Jobs came back to Apple, the company manufactured dozens of different Macintosh desktops, laptops, and servers in a dizzying array of variations. The firm also produced lines of printers, digital cameras, and other ancillary items, few of which made a profit.
Ultimately, Jobs axed more than 70 percent of Apple’s hardware and software products. Most famously, he cancelled the
Newton PDA, which still rankles some today.
In the Macintosh realm, Jobs wiped the slate clean. He defined a simple four-square grid to represent the future of the Macintosh: two for consumer desktops and portables (which would be occupied by the iMac and the iBook, respectively), and two for pro desktops and portables (filled by the Power Macintosh and the PowerBook, respectively). Anything that didn’t fit in that grid got cut.
His product cuts resulted in the layoffs of over 3000 employees during Jobs’s first year as iCEO. But those cuts, while painful at first, allowed Apple to focus on creating a handful of good products instead of dozens of mediocre ones.
By 1996, most members of Apple’s Board of Directors had been focused on how they could chop up Apple and sell it to the highest bidder. Upon his return, Jobs knew he needed a new board with a more positive attitude and a deeper loyalty to him as a leader. Within a few weeks, Jobs managed to force the resignation of most of Apple’s board members, including former CEO
Mike Markkula—the man who provided critical seed money to get Apple off the ground in 1977.
Jobs also restructured Apple as a company, clearing away the many product-centric departments that feuded and competed for company resources. In its place, Jobs installed company-wide departments for marketing, sales, manufacturing, and finance.
Prior to Jobs becoming iCEO, he had convinced Gil Amelio to place certain key NeXT employees in positions of influence at Apple. Most notable was
Avie Tevanian, the mastermind behind OS X, who became Apple’s Senior VP of Software Engineering in February 1997, and
Jon Rubinstein, who joined as Senior VP of Hardware Engineering the same month.
Before long, Jobs had hired a variety of NeXT veterans and other high-level employees loyal to the new CEO, which ensured that few executives would question his drastic new policies.
Plugging the leaks
Under Gil Amelio, intentional press leaks from Apple employees occurred frequently—attempts to embarrass the CEO into changing his policies. That stopped under Steve Jobs. Not long after accepting the position of Interim CEO, Jobs instituted a total ban on Apple employees talking to the press. That, along with key layoffs, helped quell dissent within the company.
Over the years, Jobs’s no-press policy also had the effect of creating the strict veil of secrecy, suspense, and surprise that accompanied Apple product announcements. By tightly controlling the flow of information out of Apple, Jobs kept the tech media in the palm of his hand.
Burying the hatchet
During his first tenure at Apple, Steve Jobs had been largely responsible for portraying the battle for the PC marketplace as a direct conflict between Apple and IBM. As an extension, that pitted Apple against Microsoft, the company that provided the IBM PC’s operating system and later sought to duplicate the look and feel of the graphical Macintosh OS with Windows.
The animosity between underdog Apple and market leader Microsoft continued well past 1985, when Jobs resigned from Apple. The rift became a part of Apple culture that manifested itself as a deep loathing for everything Microsoft or Wintel. Meanwhile, the Macintosh’s market share shrank down to single digits.
By 1996, Jobs had been comfortably removed from the situation long enough to admit that the desktop PC wars were over; Microsoft had won. It was counterproductive, Jobs thought, to spend money and energy fighting a battle against Microsoft that could not be won. No, Apple would have to play it cool and compete on its own terms. In the meantime, it would help to have the Redmond giant on its side instead of directly opposed to the struggling company.
In exchange for a
patent cross-licensing deal, Microsoft vowed to
devote significant manpower to developing new versions of Office and Internet Explorer for the Macintosh for at least five years. Microsoft also agreed to buy $150 million in Apple stock, which insured a vested interest in Apple’s success. In return, Apple also agreed to make Internet Explorer the default browser for Mac OS for five years.
This deal, famously announced by Jobs at Boston Macworld 1997 (featuring a giant Bill Gates on a screen behind him), was part of a public appeal to Mac fans to bury the hatchet and move on. Apple could succeed alongside Microsoft, not in spite of it, he said. Jobs’ new position on Microsoft freed up mental energy in Apple, so developers and fans alike could move on and conquer new markets in the years ahead.
Killing the clones
In 1994, Apple began licensing Mac OS to a handful of select vendors who paid Apple $80 per machine to use the operating system. As the years went by, it became apparent that this wasn’t such a great idea. The clone manufacturers produced relatively low-cost machines that cannibalized Apple’s most profitable product line, and the clones
did not have the intended effect of significantly expanding the footprint of the Mac platform.
So when Jobs returned to Apple, he knew the Mac OS licensing program had to go. He declined to license Mac OS 8 to the clone vendors upon its release in 1997, thus effectively ending the clone program (one manufacturer, UMAX, did manage to license OS 8 until 1998, however).
Jobs believed strongly in controlling the total user experience from hardware to software, and that could not be achieved if the hardware end was out of Apple’s hands. Clones watered down the Macintosh brand, and if they had remained, Apple could not have become as proficient at the secrecy, desire, and new product execution as they later became famous for.
Trusting Jonathan Ive
When Steve Jobs returned to Apple in 1996,
Jonathan Ive was already head of the company’s design team. He was thinking about quitting, in fact, until a company-wide presentation by Steve Jobs convinced him to stay.
At first, Jobs looked to outside star designers for a possible new head of design, but Ive and Jobs soon hit it off and became personal friends. They found that they shared key elements of their design philosophies.
As a result of the newfound camaraderie, Steve Jobs put his faith in the relatively untested designer instead of hiring someone new from the outside. The pair (with the assistance of the entire design staff, of course) would go on to create some of the most famous consumer electronics designs ever made.