Inside Apple, How the Company Really Works

Fortune Magazine Senior Editor at Large   Adam Lashinksy spoke to students  at Stanford University Wednesday   as part of the DFJ Entrepreneurial Thought Leaders lecture series.  The topic - Inside Apple.  Lashinsky is  the author of   “Inside Apple: How America’s Most Admired – and Secretive – Company Really Works”.   The lecture took place at NVIDIA Auditorium in the Huang Engineering Center, close to   the Packard Electrical Engineering Building and Gates Computer Science Building.

“Apple doesn’t want us to know what goes on inside of Apple,” stated Lashinsky.  At the store on the main Apple campus, individuals can buy a shirt that has on it,   “I visited the Apple campus.  But that’s all I’m allowed to say.”

He felt that Apple’s way of doing business violates “Everything you learned in business school.”  Lashinsky emphasized that businesses should learn from Apple, but not try to copy them.  “Competitors can better understand how to go against Apple by understanding how Apple does it”.

“Today, the company is not led by entrepreneurs.”  Nonetheless, Lashinsky  felt that the company is entrepreneurial and that people under Jobs were challenged (even rudely) to do their best work. 

“Jobs ran Apple as a productive narcissist," Lashinsky said.  He explained that , the company had become a number of fiefdoms by the time Jobs returned   in the 90's. .  They had become a fractionalized company.  Jobs wanted one fiefdom, run by him.  

As examples of  centralizing his fiefdom and focusing  Apple, Jobs slashed the number of products the company offered when he returned to four. Multiple advertising budgets under multiple people were combined into one.  All execs reported to Jobs.    Steve Jobs hated organizational charts,.Something about not making it easy to not poach members of the executive team. Jobs’ right hand person when he returned to Apple was Tim Cook, who is now CEO of the company.  

Apple’s campus, culture, and work are compartmentalized, according to Lashinsky.  Everything is a secret.  If employees aren’t working on a specific project, their card keys won’t give them access to areas dedicated to that project.  Individual’s not working on a product’s UI, for example, may not even know what the UI looks like until the product introduction is held.

  

Apple managers  micromanage, operating on a milestone basis.  Each action item is assigned to one person, the DRI, for "directly responsible individual".

There aren’t a lot of politics at Apple, Lashinksy stated.  “You don’t have a lot of information to play politics.  So you go to work.”

 “Apple has a culture of fear”, according to Lashinsky.  They have the “ultimate need to know culture.".     Part of the culture is that Apple keeps secrets from itself.  “You don’t talk about what you’re working on.  You charge forward with 100% of your energy” to do great things 

Apple operates on the basis that customers don’t really know what they want/need until it’s provided to them. Then when the product is introduced, the company can “delight its customers with the next new thing.”  He contrasted Apple with companies that do a lot of market research on products.  

As part of its rewards for employees, Apple has an annual Top 100 retreat.    Attendees  are not chosen by rank.  Under Jobs, the meeting room at the retreat was swept for bugs.  Jobs wouldn’t let people take when food servers were in the room.

One Apple's obsessions is their internal focus on integration between marketing,   manufacturing, product management, engineering, and design in a  “Highly  regimented, milestoned way.  Design is paramount at Apple.”

Some other keys to  Apple's  success:

Stay on script.  Determine the message and stay with it.  Keep the press at arm’s length, except important reviewers.  He mentioned the Wall Street Journal’s Walt Mossberg as one of those reviewers.

“Simplify, simplify, simplify”   is on the wall in the marketing building on the main campus,    Lines are drawn through the first two simplifies. 

Sweat the details.  “I would submit that most companies are bad at it.”  If you obsess, it leads to excellence, the company feels.

 Lashinsky felt that Jobs left the company with approximately an 18 month roadmap. It should get interesting after that. 

The Meg Whitman Era Begins at Hewlett Packard

There are some great articles in Channelnomics detailing what’s been happening at Hewlett Packard most recently. The “Anatomy of a Meltdown” chronicles the events since mid-August. http://channelnomics.com/2011/09/25/hp-anatomy-meltdown-recovery/ Being in Silicon Valley, you do get more of a sense of the flavor and history of the not so positive transformation of Hewlett Packard, beginning with the hiring of Carly Fiorina (acquired Compaq, wrecked the culture, $45 million parachute). She was followed by Mark Hurd (good eye for the bottom line, and grew the business, around a $20 million parachute). Then Leo Apotheker from SAP (probably the less said, the better), and now Meg Whitman.

Hopefully the Meg Whitman era won’t parallel what happened with Apple when Steve Jobs, recruited Sculley from Pepsi Cola. During the recruitment process, Jobs asked Sculley: "Do you want to spend the rest of your life manufacturing colored water or do you want to change the world?" Scully came to Apple, Jobs got pushed out. Sculley had 10 year tenure and grew revenue from $800 million to $8 billion before he was pushed out (and supposedly never really learned to use a Mac). Nonetheless, the company wasn’t in fantastic shape when he departed. Sculley never bonded with the engineers. Anyone remember the Lisa?

Whitman lacks a technology background. This will be a strike against her at Hewlett Packard. Call it a slight hurdle to overcome.

She made an interesting statement during her first interview with the press upon being named CEO.

"I have run a large company -- not obviously as large as HP, but I have run a very large company," she said. "While I don't have years of experience in an enterprise business, I bought a lot of software. I was one of the largest enterprise customers in Silicon Valley."

"That's like saying, 'I've bought an iPhone, so I can run Apple Inc." said Whitmore at Deutsche Bank.

Whitman joined Hewlett-Packard's board in January following her failed bid to become California's governor last year. During her campaign, she spent roughly $142 million of her own money. Cost per vote for the campaign, $46. That was a relative bargain. Her cost per vote to win the primary was $76 per vote. For a billionaire, Whitman can be just plain folks and seen at south bay restaurants with her significant other on weekends.

Before eBay, Whitman worked as an executive at the toy company Hasbro, the floral service FTD Inc., footwear maker Stride Rite Corp. and Walt Disney Co.

eBay made some acquisitions during Whitman’s tenure. Their acquisition of Skype proved to be an expensive $2.6 billion venture that didn’t pan out.

Whitman has said that a decision on what Hewlett Packard will do with their $40 billion PC division by the end of the year. Perhaps they’ll come to a final decision on the HP TouchPad well before then. I need another one to complete my coaster collection.

August 2011 – Virus Bulletin RAP Averages Quadrant, February 2011 through August 2011, Steve Jobs

November update - go to a more current write-up at http://kensek.blogspot.com/2011/11/october-2011-virus-bulletin-rap.html

Virus Bulletin released their latest RAP Averages Quadrant, representing February 2011 through August 2011 data. The bar gets set higher on this blog for a mention since almost 30 companies achieved greater than 90% on Reactive Detection and 80% on Proactive Detection. The standard this time, 90% Reactive and Proactive. Ten companies met this threshold; in approximate order - Bkis, Coranti, TrustPort, BullGuard, G Data, F-Secure IS, Avira Pro, Kaspersky Pure, Nifty (who the heck are they?) and Check Point.

Coranti, TrustPort and BullGuard were among the top four during the December 2010 through June 2011 test. Congratulations for consistency.

Double kudos to Avira and Kaspersky. These two companies had products that received the only 3 stars in AV-Comparatives.org’s Anti-Virus Comparative Retrospective test (static detection of new/unknown malicious software) earlier this year. http://kensek.blogspot.com/2011/05/av-comparatives-retrospective-test.html

What’s with Kingsoft solutions? They’ve consistently been in the lower left hand corner of the grid with around 15%/20% with respect to Reactive/Proactive Detection. In their case, consistency is bad.

The relative performance of vendors can best be viewed by looking at the RAP Averages Quadrant chart at http://www.virusbtn.com/vb100/latest_comparative/index Subscribers to Virus Bulletin's publications have access to more details on the results.

This test measures products' detection rates across four distinct sets of malware samples. The first three test sets comprise malware first seen in each of the three weeks prior to product submission. These measure how quickly product developers and labs react to the steady flood of new malware emerging every day across the world. A fourth test set consists of malware samples first seen in the week after product submission.

Best Wishes to Steve Jobs

Applause and best wishes to Steve Jobs and his family. To the extent he wants/demands it; he should be given his privacy. Jobs has been an icon, introducing some “insanely great” products to the world. He’s been a fanatic on product design. The 1984 Super Bowl advertisement was a classic. He may also, on a humorous note; be remembered for his “don’t hold it that way” comment…. regarding the iPhone's earlier reception problems. He drove the growth of Pixar before selling it to Disney for a gazillion dollars.

The computer mouse and GUI may have originally been developed by PARC (Palo Alto Research Center). However, it was Jobs and Apple that took these technology leaps, saw their value and introduced them into widespread use. Fortune Magazine recognized Steve Jobs as the CEO of the Decade in 2009.

Interesting books to read - “iCon: Steve Jobs, the Greatest Second Act in the History of Business”. “Options: The Secret Life of Steve Jobs - A Parody”. The Woz introduced the author at a book signing at Kepler’s books in Menlo Park, California in 2007, when the book came out. Wozniak was hilarious. Yes, I was there. Also, “The Journey Is the Reward” by Jeffrey S. Young, a biography about Jobs.