Saturday, October 23, 2010 1 comments

Sculley on Steve Jobs

Steve Jobs and John Sculley during the good times
(Photo by Diana Walker for Countour/Getty Images)

I ran across a very good interview in Bloomberg Businessweek (brought to my attention by Yahoo! Finance) with John Sculley, discussing Steve Jobs of Apple. John Sculley was the CEO of Apple in the 80's/early-90's and given how he worked closely with Jobs for many years, this is good reading if you are into business, technology, or corporate strategy.

Steve Jobs is a very tough guy to work for—I would hate working for him. But he is brilliant and extremely talented. Sometimes you have bosses who are ruthless but don't know what they are doing; but at other times you have bosses who are knowledgeable—and right! Steve Jobs is the latter.

This is a fascinating interview and I'm going to throw in my opinions below, but if you don't want my views, read the original interview.

(source: "Being Steve Jobs' Boss," Leander Kahney for Bloomberg Businessweek. October 20, 2010. Available on Yahoo! Finance as well.)


The Design Focus

(All quoted comments are by John Sculley, unless otherwise mentioned)


Steve, from the moment I met him, always loved beautiful products, especially hardware. He came to my house, and he was fascinated, because I had special hinges and locks designed for doors. I had studied as an industrial designer, and the thing that connected Steve and me was industrial design. It wasn't computing.

Steve had this perspective that always started with the user's experience; and that industrial design was an incredibly important part of that user impression. He recruited me to Apple because he believed the computer was eventually going to become a consumer product. That was an outrageous idea back in the early 1980s. He felt the computer was going to change the world, and it was going to become what he called "the bicycle for the mind."

What makes Steve's methodology different from everyone else's is that he always believed the most important decisions you make are not the things you do, but the things you decide not to do. He's a minimalist.

... 

Now if you leap forward and look at the products that Steve builds today, today the technology is far more capable of doing things; it can be miniaturized; it is commoditized; it is inexpensive. And Apple no longer builds any products. When I was there, people used to call Apple "a vertically integrated advertising agency," which was not a compliment.

Actually today, that's what everybody is. That's what Hewlett-Packard is, that's what Apple is, and that's what most companies are, because they outsource to EMS — electronics manufacturing services.
The focus on design is taken for granted now but it was very different from other computer companies back in the 80's and 90's. As suggested above, nowadays almost everyone is design-focused, with companies like Dell, HP, and the like, doing little outside of designing (and marketing). I wonder how successful this strategy will be in the long run. Apple is able to execute it successfully because Steve Jobs is very talented in design engineering. Other companies don't have the same management skill and what is to stop some cheaper competitor, say a Chinese or Korean company, would beating them on design?

The Biggest Influence: Sony
The one Steve admired was Sony (NYSE: SNE, News). We used to go visit Akio Morita, and he had really the same kind of high-end standards that Steve did and respect for beautiful products. I remember Akio Morita gave Steve and me each one of the first Sony Walkmans. None of us had ever seen anything like that before, because there had never been a product like that. This is 25 years ago, and Steve was fascinated by it. The first thing he did with his was take it apart, and he looked at every single part. How the fit and finish was done, how it was built.

...Steve's point of reference was Sony at the time. He really wanted to be Sony. He didn't want to be IBM. He didn't want to be Microsoft. He wanted to be Sony.
I didn't know Jobs was influenced by Sony but it ties into how Apple has morphed over the last decade. Interestingly, Apple basically stole Sony's crown (in some key markets). I guess Jobs' goal of ascending to Sony's level—the 1990's status—has been accomplished.

I always wondered why, or how, Apple was able to successfully transition into a consumer-oriented company and it is all starting to make sense. Steve Jobs considered Sony to be the role model whereas business press, analysts, and investors almost always made it seem like the battle was between Apple and Microsoft—that Apple wanted to be Microsoft. Yet reality was different. What happened in the 2000's is simply an extension of what Steve Jobs wanted to accomplish in the 1980's and early 1990's.

This long-term admiration and focus on the successful 1980's Sony is probably one reason traditional computer companies won't succeed like Apple has. Trying to turn Microsoft or Dell into Apple is going to go nowhere. (One of the critics of Nokia suggested turning Nokia into a more design-focused company like Apple but I wonder if that is something will also fail. Apple has been thinking about design for the last 30 years; has Nokia been doing the same thing? I doubt it.)

The Fall of Sony

The Japanese always started with the market share of components first. So one would dominate, let's say, sensors, and someone else would dominate memory, and someone else hard drives and things of that sort. They would then build up their market strengths with components, and then they would work toward the final product. That was fine with analog electronics, where you are trying to focus on cost reduction — and whoever controlled the key component costs was at an advantage. It didn't work at all for digital electronics, because you're starting at the wrong end of the value chain. You are not starting with the components. You are starting with the user experience.

And you can see today the tremendous problem Sony has had for at least the last 15 years as the digital consumer-electronics industry has emerged. They have been totally stovepiped in their organization. Sony should have had the iPod, but they didn't — it was Apple. The iPod is a perfect example of Steve's methodology of starting with the user and looking at the entire end-to-end system.
I disagree with Sculley's view on why Sony stumbled. He suggests that the shift from analog to digital electronics the culprit. I have a different theory.

My view is that, not just Sony but nearly all Japanese consumer electronics companies have been struggling, due to the ascent of software over hardware. Once upon a time, the software was very limited while the hardware was more powerful and capable. Right now it's the opposite. Japanese companies just weren't good at software. It's a mystery to many why Japan never developed good software engineering but that's what happened (theories for the failure range from difficulty with programming given the completely different language alphabets; to bureaucracy at MITI, which drove a lot of the innovation in Japan; to complacency). Kind of unrelated to the companies discussed here but do note that Japan also missed the Internet revolution and doesn't have strong Internet companies. I believe the cause of Japan's failings in Internet is probably the same as what cause them to lag behind on software.

So, my view is that Japanese companies like Sony failed to capitalize on the emergence of the software-over-hardware paradigm. Maybe Sculley's comment about the shift from analog to digital electronics was responsible for the software revolution but I think one should really think about them separately. (Part of Sony's failure is also due to the lack of executives and thinkers to take over from Akio Morita. Needless to say, Apple will also face a similar problem once Steve Jobs steps aside or isn't able to function near his peak.)

Steve Jobs' Role Models

The interviewer asks John Sculley about Steve Jobs' heroes: 
I remember when Steve and I went to meet Dr. Land [Edwin Land]. Dr. Land had been kicked out of Polaroid. He had his own lab on the Charles River in Cambridge. It was a fascinating afternoon, because we were sitting in this big conference room with an empty table. Dr. Land and Steve were both looking at the center of the table the whole time they were talking. Dr. Land was saying: "I could see what the Polaroid camera should be. It was just as real to me as if it was sitting in front of me before I had ever built one."

And Steve said, "Yeah, that's exactly the way I saw the Macintosh." He said, "If I asked someone who had only used a personal calculator what a Macintosh should be like, they couldn't have told me. There was no way to do consumer research on it, so I had to go and create it, and then show it to people, and say now what do you think?"

Both of them had this ability not to invent products but to discover products. Both of them said these products have always existed — it's just that no one has ever seen them before. We were the ones who discovered them.
...

Ross Perot came and visited Apple several times and visited the Macintosh factory. Ross was a systems thinker. He created EDS [Electronic Data Systems] and was an entrepreneur. He believed in big ideas, change-the-world ideas. He was another one.

Akio Morita was clearly one of his great heroes. He was an entrepreneur who built Sony and did it with great products — Steve is a products person.
I don't know much about any one of them :(

Pepsi Marketing

I don't want to quote long passages but the following one may be insightful to those who are into marketing or sales:
I described to him that there's not much difference between a Pepsi and a Coke, but we were outsold 9 to 1. Our job was to convince people that Pepsi was a big enough decision that they ought to pay attention to it, and eventually switch. We decided we had to treat Pepsi like a necktie. In that era people cared what necktie they wore. The necktie said: "Here's how I want you to see me." So we have to make Pepsi like a nice necktie. When you are holding a Pepsi in your hand, it says, "Here's how I want you to see me."

We did some research and discovered that when people were going to serve soft drinks to a friend in their home, if they had Coca-Cola in the fridge, they would go out to the kitchen, open the fridge, take out the Coke bottle, bring it out, put it on the table, and pour a glass in front of their guests. If it was a Pepsi, they would go out into the kitchen, take it out of the fridge, open it, and pour it in a glass in the kitchen, and only bring the glass out. The point was people were embarrassed to have someone know that they were serving Pepsi. Maybe they would think it was Coke, because Coke had a better perception. It was a better necktie. Steve was fascinated by that.

We talked a lot about how perception leads reality and how if you are going to create a reality, you have to be able to create the perception. We did it with something called the Pepsi Generation. I had learned through a lecture Dr. Margaret Mead had given that the most important fact for marketers was going to be the emergence of an affluent middle class — what we call the baby boomers, who are now turning 60. They were the first people to have discretionary income. They could go out and spend money for things other than what they had to have. When we created [the] Pepsi Generation it was created with them in mind. It was always focusing on the user of the drink, never the drink.

Coke always focused on the drink. We focused on the person using it. We showed people riding dirt bikes, waterskiing, or kite flying, hang gliding — doing different things. And at the end of it there would always be a Pepsi as a reward. This all happened when color television was first coming in. We were the first company to do lifestyle marketing. The first and the longest-running lifestyle campaign was — and still is —Pepsi.

We did it just as color television was coming in and when large-screen TVs were coming in, like 19-inch screens. We didn't go to people who made TV commercials, because they were making commercials for little tiny black-and-white screens. We went out to Hollywood and got the best movie directors and said we want you to make 60-second movies for us. They were lifestyle movies. The whole thing was to create the perception that Pepsi was No. 1 because you couldn't be No. 1 unless you thought like No. 1. You had to appear like No. 1.

Steve loved those ideas. A lot of the stuff we were doing and our marketing was focused on when we bring the Mac to market. It has to be done at such a high level of perception of expectation that he will sort of tease people to want to find out what the product is capable of. The product couldn't do very much in the beginning. Almost all the technology was used for the user experience. In fact, we did get a backlash where people said it's a toy. It doesn't do anything. But eventually it did as the technology got more powerful.

Apple is famous for the same kind of lifestyle advertising now. It shows people living an enviable lifestyle, courtesy of Apple's products. Hip young people grooving to iPods.
You can see Sculley's influence on Steve Jobs and Apple even to this day. Sculley very clearly articulates how the perception of a product is sometimes just as important as the product. Some people wonder why Steve Jobs is such a meglomaniac when it comes to releasing information about products, and it all makes sense.

Culture Wars - Apple vs Microsoft

Why Microsoft will never be Apple, and vice versa:

A friend of mine was at meetings at Apple and Microsoft on the same day. And this was in the last year, so this was recently. He went into the Apple meeting (he's a vendor for Apple), and as soon as the designers walked in the room, everyone stopped talking, because the designers are the most respected people in the organization. Everyone knows the designers speak for Steve because they have direct reporting to him. It is only at Apple where design reports directly to the CEO.

Later in the day he was at Microsoft. When he went into the Microsoft meeting, everybody was talking and then the meeting starts and no designers ever walk into the room. All the technical people are sitting there trying to add their ideas of what ought to be in the design. That's a recipe for disaster.

...

If you are someone who doesn't care about it, you end up with simplistic results. It's amazing to me how many companies make that mistake. Take the Microsoft Zune. I remember going to [the Consumer Electronics Show] when Microsoft launched Zune, and it was literally so boring that people didn't even go over to look at it. The Zunes were just dead. It was like someone had just put aging vegetables into a supermarket. Nobody wanted to go near it. I'm sure they were very bright people, but it's just built from a different philosophy. The legendary statement about Microsoft, which is mostly true, is that they get it right the third time. Microsoft's philosophy is to get it out there and fix it later. Steve would never do that. He doesn't get anything out there until it is perfected.
Jobs vs Sculley

The management hiring mistake of the late 80's/early-90's:
The reason why I said it was a mistake to have hired me as CEO was Steve always wanted to be CEO. It would have been much more honest if the board had said, "Let's figure out a way for him to be CEO. You could focus on the stuff that you bring, and he focuses on the stuff he brings."

Remember, he was the chairman of the board, the largest shareholder, and he ran the Macintosh division, so he was above me and below me. It was a little bit of a facade, and my guess is we never would have had the breakup if the board had done a better job of thinking through not just how do we get a CEO to come and join the company that Steve will approve of, but how do we make sure we create a situation where this thing is going to be successful over time?
Yep... sounds like a weird situation. This is a big risk for a company like Google as well. At Google, you have the two founders who own a sizeable chunk of the shares, set long-term strategies, influence R&D, and so forth; while you have a CEO is supposed to be controlling spending, watching over R&D, setting long-term plans, and so forth. The Google situation can also blow up very badly in my opinion. However, one big difference between Google and Apple is that Steve Jobs appears to have a big ego and is extremely competitive. I don't get the impression that Sergey Brin and Larry Page have the same grand ambitions. (Having said that, Google has the additional risk of a potential conflict between Brin and Page.)

Postscript
Interviewer: People say he killed the Newton — your pet project — out of revenge. Do you think he did it for revenge?

John Sculley: Probably. He won't talk to me, so I don't know.

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1 Response to Sculley on Steve Jobs

Anonymous
December 19, 2011 at 11:02 AM

Great post! Thanks.

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