Category Archives: Business

Steve Jobs: Rare Speech 1983

Steve Jobs 1983

 

The Personal Computers Explained (according to Jobs):

 

The electric motor was invented in the 1800s, but it was not cost effective to build in a factory. Then someone took the electric motor and connected it to 15 smaller machines in a factory, thereby allowing a large motor to be cost justified in a medium level task. Then there was the invention of the fractional electric motor which has a 1/55 horsepower motor.  Today that is in everyhousehold in 1983.

 

The Eniac was the first computer in 1947 (http://en.wikipedia.org/wiki/ENIAC) to track ballistic missiles. Then in the 1960s there was this idea of time-sharing of a super computer between people through a terminal so that 5 people could use the one computer at one time because the computer was so fast they all thought it was only working for themselves. This justifies super computers in universities. Fractional horse power computing was the innovation of Steve Jobs and Wozniak. The only reason Apple was successful is that they innovated 5 years before anyone else had by creating fractional horse power computing. They had closed off the terminal concept of computing where you would have to go to a university terminal that was connected to a large computer (called time sharing because each person would have 30 minutes with this powerful machine).

 

A computer is just doing a series of simple instructions but doing so very quickly. So then we build a higher levels of abstraction are translated down to simple instructions.

http://soundcloud.com/mbtech/talk-by-steven-jobs-idca-1983

Lee Iacocca: Let The Employees Manage Themselves

Iacocca supported management by Quarter Reviews at Ford Motor Company. Accountability to themselves as employees is more important than accountability to the boss. The employee will know whether they are doing well or not, and can effectively marshal, fire or promote themselves. You don’t want to intervene too early as a boss and a quarterly review system is ideal for self-assessment and goal setting. Iacocca would ask three questions of his line managers: 1) What is your goal for the next 90 days?; 2) What are your aspirations, dreams?; 3) How are you going to get there?

This allows workers to set their own agenda; making them more productive and motivated and this helps the best ideas bubble to the top. Once there was an agreement in goals, goals would be written down and signed off on. For Lee, putting objectives down on paper forces you to get down to specifics. Understanding what you have achieved, what is to be accomplished next and how to go about it is crucial to self-accountability. The quarterly reviews also create a dialogue between the manager and his boss so that good workers do not get passed over and their working relationship usually improves through interaction. If someone is not appropriate for a given role then red flagging it sooner than later is always better for everyone. Iacocca is skeptical of moving people around from role to role however because specialization has to set in at some point.

This is a synopsis & analysis based on Iacocca: An Autobiography and other miscellaneous research sources. Enjoy.

Steve Jobs: The Original Macintosh Had Bad Sales

The Original Macintosh Had Bad Sales: During the planning for the release of Macintosh, the marketing costs needed to be factored into the price according to then CEO John Scully. Scully said $1,999 price was too low because the marketing budget required to spend more in order to sell Apple to the masses. As a result, they set the price to $2,499 for the Macintosh. Steve Jobs argues that this price was the reason that the Macintosh did not sell well in 1984. After the 2nd quarter of 1984, Macintosh started to slump in sales. It was slow, dazzling but not powerful enough. In addition, Macintosh had only 2 applications so there was a major software development gap. It was beautiful but Macintosh used a lot of memory. Lisa functioned on 1000K of Ram. Macintosh had 128K of Ram. There was lack of an internal hard-disk drive.

Jobs wanted to have a floppy disk drive. Macintosh did not have a fan so it over heated easily. When people became aware of flaws, reality hit. By the end of 1984, Jobs made a strange decision, he took unsold Lisa’s grafted on a Macintosh emulation program, and sold them as a new product. Jobs was producing something that wasn’t real, it sold well, and then it had to be discontinued within the company once the extra LISA’s were sold.

People attend the annual Apple Expo at the CNIT center at La Defense in Paris September 15.  Apple p..The distribution system did not respond to demand effectively, and there was an inventory backlog which was unintended by Apple Inc. Macintosh very simply did not sell well enough for the production level of building a copy of the computer every 23 seconds. This would later help Jobs realise that a Just-In-Time inventory strategy would be better suited. This was Dell computer’s competitive advantage.

On balance, Jobs’ marketing from 77 to 85 was brilliant but there were some patchy points. Not everything that Apple did on a marketing level had been genius under Jobs’ influence in the 1977-1985 era. We always talk about the 1984 commercial but check out the worst Apple ad ever from 1985 which reads: “you corporate hacks are buying IBM computers without really thinking.”

This is an analysis based on Steve Jobs by Walter Isaacson and other sources of research. Enjoy.

 

Steve Jobs: Being Vindictive Is Part Of Leadership

Being Vindictive Is Part Of Leadership: In 1985, Jobs refused a $50,000 bonus for Macintosh engineers who went on vacation during the bonus awarding period. Andy Hurtzfeld quit because he didn’t like Macintosh’s team, or Jobs. Woz and Jobs were no longer friends. As an expression of that, Jobs also shot down Wozniak’s universal remote control company ‘Cloud 9’ by arguing that the design agency should not be allowed to work with 3rd party companies such a Woz’s. Steve Wozniak left Apple saying that the company was not being run properly for the past 5 years. Jobs was vindictive, and convinced himself that Woz’s remote control designs was a problem because it resembled other of Frog’s designs which were used to design Apple products. In 1999, Adobe refused to write programs for the iMac, so when the iPhone was released, Steve Jobs refused to allow flash on its products arguing that these products ate too much battery power, when in reality the core problem was that Adobe had screwed Apple in the past. In other words, being vindictive is part of business leadership as far as Steve Jobs is concerned.

Steve Jobs Rolling StonesRolling Stone PR Stunt: Apple wanted to build a relationship with Rolling Stone magazine, and Steve Jobs pitched them to get on the cover but they rejected Jobs’ idea. In response, Jobs said that Rolling Stone was a piece of shit in the early 1980s to a Rolling Stone journalist, and that they needed to get a new audience of people who care about technology.

Finding Similarities Between Yourself & Your Business Partners May Not Be Good: John Scully, and Steve Jobs were perfectionists, and they were self-deluded about each other. They had different values, and Scully did not learn quickly. Jobs managed to manipulate Scully into believing Scully was exceptional. Jobs was secretly astounded at Scully’s deference. Scully would never yell at employees, or treat them horribly as Jobs had. Jobs tried to find similarities between himself and Scully in order to justify choosing Scully as Apple’s CEO. Thinking in this way is a mistake.

This is an analysis based on Steve Jobs by Walter Isaacson and other sources of research. Enjoy.

Steve Jobs: A Messy Company Can Still Work

John Scully Hello WorldA Messy Company Can Still Work: When Scully joined Apple, he was surprised at the disorder, and bickering between Jobs and the Lisa team over a) why Lisa was a failure, and b) why Macintosh had not been launched in 1983. Scully felt that Apple was ‘like a household where everyone were running to the beach when there was an earthquake only to discover a tsunami was approaching that forced them back into the house.’ (Isaacson Biography). Things weren’t great on the numbers side for Scully’s first year as CEO either. He had to announce at the 1984 shareholders meeting that 1983 was a bad year for Apple. It was. The competitors were entering the market with cheaper products that were not as user-friendly as Apple but still semi-useful machines. The Apple balance sheet still showed major growth but IBM had launched the PC, and there were many lower-priced clones on the market in 1981 onward which were harming Apple’s competitive advantage.

Steve Jobs Mike ScullyBut Macintosh was marketed as “the computer for the rest of us” and would refocus Apples efforts away from their core Apple II & LISA product offerings. Apples future was bright because there were 25 million information based users in offices across America, and their work had not changed much since the industrial revolution. The only desktop product people used was the phone until the personal computer. Apple hoped that their market share would expand with the unveiling of Macintosh….1984 would prove pivotal for Apples future (to be continued). Below is the balance sheet for the January 24th, 1984 Apple Shareholders meeting.  Apple was a chaotic start-up turned revolutionary full fledged company. It was a messy operation from the standpoint of senior management but generally Apple worked.

Apple RainbowThe Apple Computer, Inc Balance Sheet In 1983

Current Assets 

Fiscal Year 1983

Cash and Investments

$143,000,000

Receivables – Net

$136,000,000

Inventory

$143,000,000

Other

$47,000,000

Total Current Assets

$469,000,000

Net Fixed Assets

$67,000,000

Other Assets

$21,000,000

Total Assets

$557,000,000

Current Liabilities

$129,000,000

Long-Term Liabilities

$50,000,000

Shareholders’ Equity

$378,000,000

Total Liabilities & Equity

$557,000,000

This is an analysis based on Steve Jobs by Walter Isaacson and other sources of research. Enjoy.

Lee Iacocca: Understand Your Customers

Ford DealershipFor Lee, the dealers are the ONLY CUSTOMER of Ford, not the end user of the automobile. Ford’s business model relied heavily on key partners such as dealers who were franchised out. Sales representatives, such as Iacocca, would directly interact with dealerships for that purpose. Making sure that the dealers felt needed as part of the team was very important. Bringing them in as part of the ‘head table’ was one thing other managers did not grasp at Ford. Iacocca knew that happy relations with the dealers = greater profits and responsiveness to demand. Dealers were the guts of the car business in the 20th century and were the quintessential entrepreneurs according to Lee.

Since the dealerships manage the relationship with the customer, Iacocca had only a passing exposure to those interactions but a simple dealer sales tip to remember is that anybody who buys a car will rationalize the purchase for at least a few weeks, even if it was a mistake. Buyer’s remorse is always an issue when the product is a large purchase such as a home or automobile. One of Lee’s mentors was a sales guy who would phone a recent buyer 30 days after completing a sale and ask “how did your neighbours like your new car?” By asking about friends instead of directly asking about the car, the sales rep could get new leads + the customer will want to justify that it was still a smart buy in the face of social status.

This is a synopsis & analysis based on Iacocca: An Autobiography and other miscellaneous research sources. Enjoy.

Steve Jobs: Bringing In An Outside Expert Can Be Costly

Bringing In An Outside Expert Can Be Costly: Steve Jobs was too rough-edged to be Apple CEO so Markkula and Jobs went shopping for an alternative. They focused away from the tech sector to find a marketing genius. John Scully was an outsider who was an expert in management, and a consumer marketer who had a corporate polish. He invented the Pepsi Challenge campaign at Pepsi, and he was good at marketing, and advertising. Scully was struck by how poorly marketed computers were in the mid-1980s. Scully did not actually like computers because they seemed to be too much trouble, however Scully was enthusiastic about selling something more interesting than Pepsi Co.

Scully decided that Apple should work on the idea of ‘enriching their users lives’. Scully was good at generating PR, and excitement around Pepsi. The ability to generate a buzz about Pepsi would be replicated by Steve Jobs in the unveiling of new Apple products subsequently. Initially the two hit it off very well in their meetings about Scully joining Apple. They both admitted to be smitten with each-other over the big ideas surrounding computer technology. Jobs knew how to manipulate Scully’s insecurities to his advantage. Jobs and Scully seemed to understand each-other, and they had become friends, and emotional confidants. The problem was that most marketing people are paid posers, according to a former Apple manager. Scully actually did not care about computers but cared largely about marketing, and selling an idea to the public.

When Jobs showed Scully the Macintosh, he was more interested in Steve Jobs presentation skills than the computer itself. Scully claimed to share with Jobs goals but he was not 100% enamored with the product. Steve Jobs knew that Scully would be able to teach him the most, and Scully successfully sold Jobs the idea of his being appropriate for Apple. Jobs asked him famously: “do you want to go on the rest of your life selling sugar water, or do you want a chance to change the world.” Scully received $1,000,000 in salary, and a $1,000,000 signing bonus as the new CEO of Apple in April 1983.

This is an analysis based on Steve Jobs by Walter Isaacson and other sources of research. Enjoy.

Lee Iacocca: Finance Analysts Versus Sales/Marketing People

According to Iacocca, if you have only financial analysts (bean counters) in your company then you tend to have a defensive, conservative and pessimistic organization. Sales and marketing people are more aggressive, speculative and optimistic; they are always pushing to go forward regardless of the macro-context of the company. A good company will have natural balance between the two. If the bean counters are too weak then the company will go bankrupt. Conversely, in the 1970s, Ford needed to have wild-eyed dreamers as the company was dying in the market place. Some so-called bean counters would cross the divide like Robert McNamara who helped develop the Falcon (one of the first compact cars selling over 417,00 units in the first year). Unfortunately, the Falcon was simply a vehicle to help people get from A to B, and it was not a major seller for long but it is worth mentioning as a case where someone crossed the divide between theses two groups. Robert McNamara was a true visionary and quoted a truth in 1967 to which many managers can agree that “Management is the gate through which social and economic and political change, indeed change in every direction, is diffused through society.”

This is a synopsis & analysis based on Iacocca: An Autobiography and other miscellaneous research sources. Enjoy.