Being Steve Jobs' Boss

BusinessWeek

Confessions of the last man to manage the singular inventor.

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Steve Jobs (L) and John Sculley in New York City, 1984. (Diana Walker/Contour/Getty Images)

Steve Jobs was 28 years old in 1983 and already recognized as one of the most innovative thinkers in Silicon Valley. The Apple (NasdaqGS: AAPL - News) board, though, was not ready to anoint him chief executive officer and picked PepsiCo (NYSE: PEP, News) President John Sculley, famous for creating the Pepsi Challenge, to lead the company. Sculley helped increase Apple's sales from $800 million to $8 billion annually during his decade as CEO, but he also presided over Jobs' departure, which sent Apple into what Sculley calls its "near-death experience." In his first extensive interview on the subject, Sculley tells Cultofmac.com editor Leander Kahney how his partnership with Jobs came to be, how design ruled — and still rules — everything at Apple, and why he never should have been CEO in the first place.

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Welcome to Planet Apple

You talk about the "Steve Jobs methodology." What is Steve's methodology?

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. I remember going into Steve's house, and he had almost no furniture in it. He just had a picture of Einstein, whom he admired greatly, and he had a Tiffany lamp and a chair and a bed. He just didn't believe in having lots of things around, but he was incredibly careful in what he selected.

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Everything at Apple can be best understood through the lens of designing. Whether it's designing the look and feel of the user experience, or the industrial design, or the system design, and even things like how the boards were laid out. The boards had to be beautiful in Steve's eyes when you looked at them, even though when he created the Macintosh he made it impossible for a consumer to get in the box, because he didn't want people tampering with anything.

That went all the way through to the systems when he built the Macintosh factory. It was supposed to be the first automated factory, but it really was a final assembly and test factory with pick-to-pack robotic automation. It is not as novel today as it was 25 years ago, but I can remember when the CEO of General Motors, along with Ross Perot, came out just to look at the Macintosh factory. All we were doing was final assembly and test, but it was done so beautifully. It was as well thought through in design as a factory as the products were.

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 (NYSE: HPQ - News) is, that's what Apple is, and that's what most companies are, because they outsource to EMS — electronics manufacturing services.

Isn't Nike a good analogy?

Yeah, probably, Nike (NYSE: NKE - News) is closer. 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.

He was fascinated by the Sony factories. We went through them. They would have different people in different colored uniforms. Some would have red uniforms, some green, some blue, depending on what their functions were. It was all carefully thought out, and the factories were spotless. Those things made a huge impression on him.

The Mac factory was exactly like that. They didn't have colored uniforms, but it was every bit as elegant as the early Sony factories we saw. Steve's point of reference was Sony at the time. He really wanted to be Sony. He didn't want to be IBM (NYSE: IBM - News). He didn't want to be Microsoft (NasdaqGS: MSFT - News). He wanted to be 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.

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