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Technology strategy and management

The Legacy of Steve Jobs


Steve Jobs and image of an early Apple desktop

Much has been written about Steve Jobs since his announcement in August 2011 that he was stepping down as CEO of Apple and his death less than two months later in October. In the past, I have been disappointed that Apple did not pursue a more "open" strategy for the Macintosh (1984) as well as early versions of the iPod (2001), iTunes (2003), and the iPhone (2007) (see "The Puzzle of Apple," Communications, Sept. 2008). I have noted that Apple did become a better platform leader, gradually, and in May 2010 topped Microsoft to become the world's most valuable technology company (see "The Resurgence of Apple," Communications, Oct. 2010). Jobs probably did not care much about what professors write or what other companies do; he always followed a unique path in life and in business. Nonetheless, anyone who cares about technology and innovation, or the type of entrepreneurship that Americans should be most proud of, should take the time to reflect on the career and contributions of Steve Jobs.

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Products, Not Just Platforms

The point I made about Apple in the past was simple: In platform markets (those defined by a core technology and complementary innovations, driven by "network effects"—see "The Evolution of Platform Thinking," Communications, Jan. 2010), the best platform will usually win—even if there is a better product that we might benefit more from as consumers.a We saw this with the Macintosh computer, which was far superior to the DOS-Windows PCs that won the mass market. Dominant platforms need to be sufficiently open and modular technologically as well as priced right for the mass market but also attractive for other companies to adopt as foundations to produce their own complementary products and services. These outside innovations tend to make the platform increasingly valuable to users and often determine who wins or loses a platform battle.

The problem with many platforms, though, is that they involve design compromises; they need to accommodate the needs of many users and partners, as well as maintain continuity with the past, which constrains innovation. The Macintosh was a breakthrough product, pioneering new ground with its graphical user interface, mouse, language and graphics processing capabilities, among other innovations. Yet it was expensive, was incompatible with DOS, had relatively few business applications, and failed to become adopted by the mass market. The NeXT workstation computer, which Steve Jobs introduced in 1988, was an even more expensive marvel of hardware and software design; it attracted even fewer customers.

Today, Windows running on Intel-compatible chips remains the most common software platform for personal computers (though cellphones far outsell PCs and have become the dominant mode of computing). But Microsoft has introduced only incremental innovations, following the path set by the Macintosh more than 25 years ago. And Android-based smartphones and tablets, which rely on Google's "free" and "open" operating system, follow the lead of the iPhone and the iPad. My point is that Microsoft, Intel, and Google have taken the usual route to platform leadership, with inexpensive or free products, relatively open interfaces, and extensive efforts to cultivate a broad ecosystem of partners. But Jobs and Apple have shown us another path to platform leadership, and not just for a niche product segment: Design breakthrough products that set new standards for form, function, and aesthetics; market them creatively and aggressively, with some modest reductions in price over time; open them up gradually as industrywide platforms, and let the chips fall where they may. This strategy will be very hard to duplicate without a Steve Jobs at the helm. But it is more of a win-win scenario for the innovator (still lots of money to be made) and the user (we all end up with better products, not just platforms).

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Raising the Bar

But beating Microsoft or Google at their own platform game is not what seems to have motivated Steve Jobs. He appears to have cared most about the impact that technology and innovation, delivered in their most cultivated forms, can have on people's lives. For example, he is famous for a quip about Microsoft back in the mid-1990s that the company "has no taste" and did not bring the best of human culture into its products. Jobs cited the example of proportionally spaced fonts in the Macintosh, an idea he got from looking at beautiful books and the history of printing, and which Windows later copied.b


Beating Microsoft or Google at their own platform game is not what seems to have motivated Steve Jobs.


From the beginning, Jobs wanted Apple to create computers that would be as elegant and simple to use as a typewriter or even a toaster. Now, looking back, we can see that every product Jobs championed, whether or not it succeeded commercially, set new standards for aesthetics as well as utility, such as in ease-of-use or handling graphics and multimedia. What stands out most to me are the ultra-simple, intuitive user interfaces of the Macintosh (GUI plus mouse, albeit invented earlier at the Stanford Research Institute and Xerox PARC) and then the iPod's clickwheel and the iPhone and iPad touchscreens.

By contrast, Bill Gates and Microsoft focused on software operating systems that led to cheap and powerful PCs as well as lots of applications but were relatively clumsy and difficult to use for the average consumer. Today's PCs, digital media players, smartphones, and tablets based on Windows or even Android are as good as they are only because of how much Steve Jobs and Apple raised the bar—for everyone.

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Charisma and Leadership

In the 1996 PBS documentary, "Triumph of the Nerds," Larry Tesler, who used to work at Apple, discussed how Steve Jobs was able to inspire people to surpass what even they believed they could accomplish. He would never settle for anything less than someone's absolutely best effort, and then some. That is how Jobs raised the bar for the Macintosh project—whose competition was the character-based IBM PC and compatibles—and many products since then, most recently the iPad. Tesler recalled: "When I wasn't sure what the word charisma meant, I met Steve Jobs and then I knew."c

Let's be sure to give adequate credit to Apple cofounder Steve Wozniack for Apple's early products as well as to Jonathan Ive for being chief designer of the iPod, iPhone, iPad, and several hit Macintosh desktop computers and laptops. And to Scott Forstall, who headed iOS software development. New CEO Tim Cook, formerly the COO, has also been a highly effective leader of sales and operations since Jobs recruited him from Compaq Computer in 1998. But it has taken extraordinary charisma and leadership skills to bring so many diverse personalities together and channel their considerable talents so productively. This does not happen often or by chance.

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It's in the Details

When Jobs and Wozniak cofounded Apple in 1976, they believed, along with Bill Gates and Paul Allen, who cofounded Microsoft in 1975, that the world would one day be full of personal computers. These entrepreneurs had something else in common: They all had the skills, in varying degrees, to build the products they dreamed of. Jobs needed Wozniak's technical wizardry to shrink down the number of chips and construct the internals of Apple's early computers. Gates and Allen were preeminent software programmers, especially Gates. But Jobs stands far above his peers for the degree to which he combined extremely astute technological vision with an ability to dive into the smallest details of his products, including hardware, software, industrial design, and marketing.

We have heard about the care Jobs took to design the Apple II case, with consumer electronics as his model, and how he tackled the many challenges posed by the Macintosh, ranging from reducing the price tag to the time it took to boot up. The users that bought these and other Apple products quickly came to love them—truly love their elegant look and feel in a way that seems unparalleled in any other competitor's products.

Until recently, Jobs continued to be deeply involved in the iPhone and iPad designs, both of which have the same look and feel about them that we first marveled at in the original Macintosh. I should not have been surprised to learn from the recent reporting that Jobs is listed as a coinventor of 313 patents, beginning with personal computer cases but extending to internal PC electronics and designs for laptops, multimedia devices (the iPod), smartphones (the iPhone), operating systems (NeXT, iOS), keyboards, mice, and Apple TV.d

I am also left with the thought that great entrepreneurs do not really see the future as much as they create the future they envision. Steve Jobs knew how to build and sell game-changing products, down to the smallest details.

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Computers and Consumer Electronics

As Steve Jobs moved forward in his career, he also brought related but formerly distinct technologies—and businesses—together. In fact, he felt compelled to shed the historic "Apple Computer" name in 2007 in favor of "Apple, Inc." to reflect the broader set of aspirations that he and the company had adopted. It is instructive again to compare Jobs and Apple with Gates and Microsoft. Gates' main entrepreneurial legacy has been to create a mass-market software products company that continues to "print money" and exploit those remarkable gross margins of packaged software (see "The Legacy of Bill Gates," Communications, Jan. 2009). Indeed, Apple has yet to match Microsoft in profitability. But Microsoft is now a slow-growth gold mine, struggling to make money beyond the personal computer industry and the Windows and Office franchises.

By contrast, Apple has fully integrated computers with consumer electronics, including telephony and the mobile Internet (apps, music, video, text). Many firms played a role in merging computers with personal digital assistants, digital media players, and cellphones. But no one has pushed this convergence as far and as elegantly as Steve Jobs, especially as seen in the iPhone and the iPad. It was also important that Apple combined hardware and software in one company—something Microsoft could never do except in video games because it does not make hardware. And, with iTunes, Jobs solved an extremely vexing problem for the industry and for consumers: how to price digital content in the form of music, video clips, movies, and TV programs. This innovation in digital services is no less profound than Steve Jobs' innovations in consumer products.

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The Master Strategist

Early observers of Jobs and Apple, including myself, underestimated his ability to master the business side of technology. Clearly, over time, Jobs got better at this—much better—perhaps as the world caught up to what he was trying to do. Recall that he resigned under pressure from Apple in 1985, after the Macintosh failed to catch on in the marketplace. He started NeXT Computer the same year, but this company also failed. Jobs recovered by selling NeXT to Apple in 1996, a brilliant stroke because he not only rejoined Apple but was able to use NeXT's novel software technology to replace the aging Macintosh operating system. Meanwhile, Jobs' love of graphics, movies, and computers led him to found Pixar in 1986 by acquiring the computer animation department from Lucas Films (which he sold to Disney in 2006 for a cool $7.4 billion).


Early observers of Jobs and Apple underestimated his ability to master the business side of technology.


Jobs made other moves that showed he could put aside personal pride or biases to do what was necessary to save and grow the company. Two incidents stand out. First, when he rejoined Apple in 1996, the firm was practically bankrupt, with only a few months of cash left. But Jobs got a $150 million investment from archrival Microsoft as well as a commitment from Bill Gates that Microsoft would continue to produce Office for the Mac. This agreement was critical to maintain the Macintosh business, then the only real source of revenue for Apple. Second, in 2005, Jobs abandoned his 20-year commitment to the Motorola microprocessor and adopted archrival Intel's technology. This move helped bridge the growing cost-performance gap with Windows PCs, and enabled the Macintosh to continue as a second platform that was also much more interoperable with the Windows world. As I look back at this history—disappointment with the original Macintosh, failure at NeXT, success with Pixar, awkward but highly useful alliances with Microsoft and Intel, the two companies Apple customers loved to hate—one must conclude that, in addition to his other extraordinary talents, Steve Jobs truly was a master strategist, second to no one.

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The Legacy

And so now Apple grows not at the slow pace of the personal computer business, like Microsoft, or of Internet advertising, like Google, but at the breathtaking speed of exciting new global markets led by smartphones, tablets, app stores, cloud services (iCloud), and digital content distribution (music, video, and TV, as well as books, magazines, and newspapers—what we used to call "print"). Looking at rates of growth in sales and profits, or increases in market value, Apple has left Microsoft and Google, as well as IBM, Hewlett-Packard, Dell, Nokia, Intel, Cisco, EMC, Sony, AOL, and many other prominent technology firms, in the dust. Jobs and Apple defied conventional strategy Microsoft-style and have shown that more substantive innovation—coming up with consumer products that truly do seem new or almost new to the world, and not just to the company—can be exciting and fun, as well as enormously profitable.

Apple should do well for several years to come, as Tim Cook's team executes on the vision and product portfolio that Jobs has left behind. But most observers worry about what will happen when Apple exhausts the ideas still on the drawing board. Jobs will not be around to champion yet another product that changes the world and fills up yet another sales pipeline.

The end had to come, of course; no one lives forever and no company is immune to competition. We were somewhat prepared: Jobs was seriously ill for several years and had a limited role in Apple for the past couple of years. But words are inadequate to express what Steve Jobs meant to Apple and to the world of technology, innovation, and high-tech entrepreneurship American-style. Surely, as an entrepreneur and innovator, he represented the very best that the U.S., or any country, has to offer. Our thoughts must be with the people closest to him, beginning with his family and intimate friends. They will miss Steve Jobs the most, but they are not alone.

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Author

Michael A. Cusumano (cusumano@mit.edu) is a professor at the MIT Sloan School of Management and School of Engineering and author of Staying Power: Six Enduring Principles for Managing Strategy and Innovation in an Unpredictable World (Oxford university press, 2010).

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Footnotes

a. See Annabelle Gawer and Michael A. Cusumano, Platform Leadership (Free Press, 2002) as well as Michael A. Cusumano, Staying Power (Oxford, 2010), among other publications.

b. Public Broadcasting System, "Triumph of the Nerds," The Television Program Transcript, Part III; http://www.pbs.org/nerds/part3.html.

c. Public Broadcasting System, "Triumph of the Nerds," The Television Program Transcript, Part III; http://www.pbs.org/nerds/part3.html.

d. Shan Carter, "Steve Jobs' Patents," The New York Times (Aug. 25, 2011); http://www.ny-times.com/interactive/2011/08/24/technology/steve-jobs-patents.html?emc=eta1


Copyright held by author.

The Digital Library is published by the Association for Computing Machinery. Copyright © 2011 ACM, Inc.


Comments


CACM Administrator

The following letter was published in the Letters to the Editor in the February 2012 CACM (http://cacm.acm.org/magazines/2012/2/145403).
--CACM Administrator

Thank you to Michael A. Cusumano for his Viewpoint "The Legacy of Steve Jobs" (Dec. 2011). Before exploring that legacy, I'd like to express another view of why Microsoft DOS and later Windows became the dominant "platform" despite Apple's superior Macintosh "product." Microsoft platform dominance was a legacy of the "IBM factor" that said: "Nobody ever got fired for buying IBM."

Anyone who worked for a non-IBM vendor, 1960s-1980s, was continually thwarted by it, particularly mainframe vendor Burroughs, with a far superior mainframe, the B5000, guided by software concepts that are still with us today in Apple (via Alan Kay, a student of the B5000 designer, Bob Barton), including virtual machines (such as JVM), virtual memory, and combined software and hardware design leading to systems software written exclusively in high-level languages (such as ALGOL). The IBM factor was far stronger than even the "dominant platform" effect, and inherited by Microsoft from the lumbering IBM. Burroughs was extremely open, distributing the source of its software; following the theory of openness, Burroughs should have won.

Jobs stood against the resistance of those who were too ready to compromise, using "engineering" to justify obscurity while speaking in terms of megacycles and megabits. To those stuck in this technical rut, Jobs declared "Think Different," changing computing's focus to: "Yes, but what can computers do for me?," meaning the customer, rather than technologist or IT manager. The power-breaking effect explains the disdain for Apple by many people and earlier failure to accept Barton's B5000 concepts, which would have changed the focus to designing hardware to support software, but that battle was lost to the IBM factor, as well as being too far ahead of its time.

Jobs elevated design above technology, reversing the constraints of engineering compromise that puts technical specifications before design. Burroughs followed this ethic, and any serious student of computing should explore the resulting machines, as well as their direct and indirect descendants. Being far ahead in the computer industry usually does not pay off. Jobs and Apple understood this but were unwilling to compromise the principle of design over technical specification. Specifications are important only for enabling the possibilities of design. Specifications are not an end themselves, and changing this perspective is, perhaps, Jobs's greatest legacy. He also had the right no-nonsense, acerbic personality to see it through.

Jobs broke the power of IT managers, putting users and customers first, which should indeed be the foremost management paradigm of the 21st-century corporation: "Manage without management."(1)

The IBM factor could not last, as indeed it did not for IBM and is now breaking down for Microsoft. While others embraced such a vision before Jobs, the Jobs legacy is the breakdown of false power and longevity of good design. However, if Apple ever falls into making mediocre products (like IBM, with its 360, and Microsoft, with DOS and Windows), depending solely on reputation, I hope the day never comes when one could be "fired for not buying Apple."

Ian Joyner
Sydney, Australia

REFERENCE

(1) Koch, R. and Godden, I. Managing Without Management: A Post-Management Manifesto for Business Simplicity. Nicholas Brealey Publishing, 1999.


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