Salon ran an excerpt from the new book Team Genius: The New Science of High-Performing Organizations. One of the chapters focuses on Steve Jobs and Apple.
One of the greatest examples in business history of a large organization’s maneuverability took place right before our eyes: Apple Inc. In September 2002, Apple’s future was thought to be so bleak you could buy shares in Apple Computer at a price that valued its operating enterprise at less than zero. What you were buying, if you had been so bold, was Apple’s cash reserves of $5 billion. Beyond that, you were buying a prayer that Apple could do something with that cash.
Remember, this was five years after the return of Steve Jobs. Contrary to myth, Jobs did not immediately turn around Apple’s dismal fortunes. Yet just one decade later, Apple would drop the “Computer” from its name but win the world. It would become the richest company on earth in September 2012, valued at $656 billion.
Meanwhile, during that decade of Apple’s extraordinary ascent, other great American companies, stalwarts of reliable business success, fared poorly. Among them were Pacific Gas & Electric, Enron, WorldCom, Tyco, Adelphia Communications, US Airways, Trump Entertainment Resorts, Northwest Airlines, Lehman Brothers, Washington Mutual, Chrysler, and General Motors. Thus, even while Apple prospered, a greater number of American companies went bankrupt or out of business altogether than in any decade in the country’s history, including during the Great Depression.
The book offers an interesting analysis. I think the authors get much of this right, but miss a core element of Apple’s success: The birth and evolution of Apple’s walled ecosystem. And a big reason for the success of that ecosystem was the quality of the operating system on which it was based.
The ideas behind NeXTSTEP, the operating system that came on board with the return of Steve Jobs in 1997, evolved into OS X and, eventually iOS. All of the software on every device Apple makes is either based on or is designed to connect to those operating systems. Obviously, Apple is much more than software, but the consistency of the software interface is a big part of what makes Apple devices feel so familiar, makes them so easy to use. Those underpinnings were a critical part of Apple’s success.
I think a big influence was Apple’s public commitment that they would not retrench workers because of the US economic depression of the early-mid 2000s’.
This not only generated great morale but allowed Apple to keep focus on generating updated products and developing new ones.
Compare this to companies like Sony or Microsoft who felt the need to publish profits more than keeping employees. There is a palpable lack of energy in these companies now, that was definitely there at the turn of the millennium. Apple has had its own share of mistakes that, in those days, spanned it’s two main lines of profits. The iPod Hi-Fi and the Power Mac G4 Cube are probably the best remembered.
The majority of Apple’s profits today are generated from ideas that originally stemmed from around this time.
Funny how so many companies on that list either failed because of high-level internal fraud or something close to it.