Tuesday, June 29, 2010

Invincible Apple: 10 Lessons From the Coolest Company Anywhere

Everyone wants to be like Steve Jobs and his powerhouse company. It's not as easy as it looks.

On Wednesday, May 26, 2010, just after 2:30 p.m., the unthinkable happened: Apple became the largest company in the tech universe, and, after ExxonMobil, the second largest in the nation. For months, its market capitalization had hovered just under that of Microsoft -- the giant that buried Apple and then saved it from almost certain demise with a $150 million investment in 1997. Now Microsoft gets in line with Google, Amazon, HTC, Nokia, and HP as companies that Apple seems bent on sidelining. The one-time underdog from Cupertino is the biggest music company in the world and soon may rule the market for e-books as well. What's next? Farming? Toothbrushes? Fixing the airline industry?
Right now, it seems as if Apple could do all that and more. The company's surge over the past few years has resembled a space-shuttle launch -- a series of rapid, tightly choreographed explosions that leave everyone dumbfounded and smiling. The whole thing has happened so quickly, and seemed so natural, that there has been little opportunity to understand what we have been witnessing.
The company, its leader, and its products have become cultural lingua franca. Dell wants to be the Apple for business; Zipcar the Apple for car sharing. Industries such as health care and clean energy search for their own Steve Jobs, while comedian Bill Maher says the government would be better run if the Apple CEO were head of state. (The Justice Department and FTC, which are both investigating Apple's tactics, might disagree.) A Minnesota Vikings fan dubs his team the "iTunes of quarterbacks," serially sampling one track from a player's career, as with Brett Favre, rather than buying the whole album as the Colts have done with Peyton Manning.
This shorthand is useful but tends to encourage a shallow notion of what it takes to emulate Apple. And Apple doesn't delineate the key factors of its success. Those principles are more closely guarded than its product pipeline. Jobs did not comment for this article. On-the-record comments from the CEO occur in only the most orchestrated environments (at MacWorld, say, or in newsweekly magazine stories timed to new product announcements), or in late-night email messages that defy explication. When it comes to the special sauce that makes his company the paragon of U.S. and global business, the CEO is silent.
How does one become the "Apple of [insert industry here]"? After speaking with former employees, current partners, and others who have watched Apple for many years, it's clear that the answers center around discipline, focus, long-term thinking, and a willingness to flout the rules that govern everybody else's business. It's an approach that's difficult to discern and tougher to imitate. But everyone wants to give it a try. Here, then, is our report on the Apple playbook. Short of something falling into your hands in a Bay Area bar, this may be as close to the truth about Apple as you're going to get.

{1} Go Into Your Cave

If Steve Jobs were an architect, he'd work at the futuristic glass-and-steel San Francisco offices of international architecture and design firm Eight Inc. The walls are bathed in white, and the vibe is akin to working behind the Genius Bar. Here, on the second floor, look to the back wall. There you'll discover a frosted-glass door emblazoned with a white Apple logo. Behind it is Eight's Apple team -- a small group that has worked with the company since the late 1990s to conceive the look and feel of its "branded consumer experiences," which include its trade shows, high-impact product announcements, and 287 retail stores. The door is locked.
What goes on behind the locked door? "We really can't say too much," says Wilhelm Oehl, a principal designer, when I visit him one cloudy spring afternoon. He describes his work with Apple in only the vaguest, most anodyne terms -- to "redefine elegance," to keep an "integrity of design" that "makes the product the hero." Finally, Oehl mumbles, "We try to capture something that feels like magic."
These frosted-glass doors, and similar ones all around the world protecting other caves of Apple thinkers, are emblematic of Apple's fanaticism for secrecy. But those doors are more than mere paranoia. Apple sets its own agenda and tunes out the tech wags -- competitors, industry observers, analysts, bloggers, and journalists like myself -- who constantly spew torrents of advice, huzzahs, and brickbats in its direction. Behind its doors, Apple can ignore us all.
Jobs has never cared much about what the tech industry has to say. Back in the early 1980s, when he was leading the team building the Mac, Jobs would often give his engineers guidance on what the computer should look like. "Once, he saw a Cuisinart at Macy's that he thought looked incredibly great," says Andy Hertzfeld, one of the engineers on the original Mac team and the author of Revolution in the Valley: The Insanely Great Story of How the Mac Was Made. "And he had the designers change the Mac to look like that." Another time, he wanted it to look like a Porsche.

Get the picture? Computers should be more like sports cars and kitchen appliances. That's Apple's audience: high-end mainstream, the folks who buy -- or aspire to buy -- Porsches. You don't connect with those consumers by listening to Silicon Valley. Techies, even after all these years of Apple watching, still get bogged down in specs, speeds, and developer contracts. Magic doesn't happen in an echo chamber.

{2} It's Okay to Be King

Mike Evangelist (yep, that's his name) still remembers one of his first meetings with Jobs. It took place in the Apple boardroom in early 2000, just a few months after Apple purchased the American division of Astarte, a German software company where Evangelist was an operations manager. Phil Schiller, Apple's longtime head of marketing, put Evangelist on a team charged with coming up with ideas for a DVD-burning program that Apple planned to release on high-end Macs -- an app that would later become iDVD.
"We had about three weeks to prepare," Evangelist says. He and another employee went to work creating beautiful mock-ups depicting the perfect interface for the new program. On the appointed day, Evangelist and the rest of the team gathered in the boardroom. They'd brought page after page of prototype screen shots showing the new program's various windows and menu options, along with paragraphs of documentation describing how the app would work.
"Then Steve comes in," Evangelist recalls. "He doesn't look at any of our work. He picks up a marker and goes over to the whiteboard. He draws a rectangle. 'Here's the new application,' he says. 'It's got one window. You drag your video into the window. Then you click the button that says burn. That's it. That's what we're going to make.' "
"We were dumbfounded," Evangelist says. This wasn't how product decisions were made at his old company. Indeed, this isn't how products are planned anywhere else in the industry.
The tech business believes in inclusive, bottom-up, wisdom-of-crowds innovation. The more latitude extended, the greater the next great thing will be. Nowhere is this ethos more celebrated than at Google, where employees are free to spend some of their working hours building anything that strikes their fancy. A few of these so-called 20%-time projects have become hits for Google, including Gmail and Google News.
Apple's engineers spend 100% of their time making products planned by a small club of senior managers -- and sometimes entirely by Jobs himself. The CEO appoints himself the de facto product manager for every important release; Jobs usually meets with the teams working on these new gadgets and apps once a week, and he puts their creations through the paces. "He gets very passionate," Evangelist says. "He'll say, 'This is shit, we can do much better.' "
How can it be wise for so few people to have the authority -- not to mention the time -- to make most of the creative decisions at a company as large as Apple? Bottlenecks do result. According to one former Apple engineer, a staff of about 10 "human interface" designers is in charge of the entire Mac operating system. With such a small group making decisions, Apple can put out only one or two new products a year.
But this approach works because Jobs and his team know exactly what they want. A more decentralized company like Google may launch dozens of products a year, but more of them fail. (Have you Waved much lately?) Apple hits for a high average. And Apple's strong management keeps the troops focused. "Everybody knows what the plan is," says Glenn Reid, a former Apple engineer who created iMovie and worked on several other iLife apps. "There's very little infighting."

"I still have the slides I prepared for that meeting, and they're ridiculous in their complexity," Evangelist says, remembering how everyone in the room understood, immediately, that Jobs's rectangle was right. "All this other stuff was completely in the way."

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