Steve Jobs in Four Easy Steps
What the electronics industry can learn from his tenure at Apple
Photo: David Paul Morris/Bloomberg/Getty Images
The last time I spoke to the late Steve Jobs, he was screaming at me over the phone, "I'm not a failure! I'm not a failure!" His shouts got so loud, I put him on speakerphone so that my editor could hear him.
With Apple among the most valuable companies in the world because of its immensely popular products, the notion of Jobs as a failure seems ridiculous. But less than 20 years ago, in the mid-1990s, when Jobs was struggling to keep his forgettable NeXT computer company afloat, the idea of him failing—the possibility I'd raised in The Wall Street Journal that spurred his furious phone call—terrified him.
I'd hardly call him a failure now, but the reasons for his success aren't always properly understood.
Better than any of his peers, Jobs blended an understanding of technology and society, business and economics, markets and corporate power. In leading Apple past Microsoft on its way to becoming the most valuable technology company on the planet, Jobs repudiated four pillars of business and technology wisdom.
First, Jobs refused to accept that software and hardware were best designed and engineered separately. For him, the venerable insight summarized by Thomas Hughes, the grand historian of American technology, as "the system must be first" became a lodestar. Jobs understood that Apple was fundamentally a builder of technological systems, not a generator of products. As a young man, he watched IBM lose its central role in computing by handing off the PC's basic operating system to an outsider (Microsoft). When in the 2000s Microsoft struggled (and largely failed) to persuade cellphone makers to adopt a variant of Windows, Jobs turned the industry upside down by building a cellphone with an Apple OS at its core. In embracing what traditional industrialists called "vertical integration," he propelled Apple to first place in smartphones.
Second, Jobs denied what is perhaps the most closely held article of faith of the information age: that openness and the wisdom of crowds are essential for successful technological systems. Under his leadership, Apple produced "closed" systems—devices whose basic functions could not be altered—and consumers loved them. "It's not the consumer's job to know what they want," Jobs once famously said. Though an ex-hippie, he proved to be a throwback to an earlier age of top-down leadership: A direct line runs from Henry Ford's Model T to the iPad. To Jobs, Apple's systems are always open—in the sense that their uses can be adapted to an owner's needs and desires. But as iTunes demonstrates, Apple's ability to control the content, the applications, and the purchase opportunities on its mobile devices is far greater than anything carried off by its rivals.
Third, Jobs found a way of selling Apple's products directly—through company-owned stores or online—which was perhaps his greatest and mostly unlikely business triumph. Makers of computers and consumer electronics had always offloaded the task of reaching customers to a motley crew of retailers, who provided no consistent purchasing experience or brand loyalty while shredding the manufacturer's profit margins. Again, going against convention, Jobs created the most valuable retail stores in the world (outselling Tiffany's on a per-square-meter basis). He then sold the inimitable iPhone through those stores and via one other channel (AT&T), in what was a daring business tactic that paid enormous dividends.
Fourth, Jobs found a way to dominate consumer electronics, an arena that the United States seemed to have irretrievably lost to Japan, Korea, and China. The iPod, first released by Apple 10 years ago, marked a stunning shift in global competitive dynamics in consumer electronics. No longer did U.S. firms need to presume they couldn't compete with Canon, LG, Panasonic, Samsung, Sony, and other Asian powerhouses in miniaturized digital appliances. To be sure, Jobs relied heavily on Asian production networks—Apple reportedly employs 10 times as many people in China as in the United States—but the style, engineering, and interactivity of Apple's devices are classically American.
How long Apple will be able to hang on to that domination is an open question. Some say that in Apple, Jobs built a company with his own way of thinking, so it will go on just fine without him at the helm. But whether this is true doesn't really matter in the near term: Apple has a pipeline of good products and about US $75 billion in cash.
What then was the elusive genius of Steve Jobs? Despite his infamous bad temper, his impatience, and his penchant for tantrums, Jobs was the ultimate human-centered technologist—even while he was the ultimate digital autocrat. No democracy either internally or externally, Apple has proved the merits of enlightened dictatorship, at least in realms technological. Jobs once summed up his method as "trying to expose yourself to the best things humans have done and then trying to bring those things into what you are doing." This simple credo should long motivate designers and engineers who will inevitably walk in the footsteps of this singular master.
This article was updated on 06 October 2011.