Adam Lashinsky covers Silicon Valley and Wall Street for FORTUNE Magazine. Here in this talk, he talks about his 2012 bestseller Inside Apple: How America’s Most Admired – and Secretive – Company Really Works.
Adam Lashinsky – Author
A couple of caveats I’m going to steal a line from a telephone executive who would like to say I know it’s common to ask people to shut down their phones but he liked to hear the sound of ringing and so he encouraged people to leave their phones on. Rather than ask you to put down your laptops or your smartphones I will say that if you are looking into a screen I’m assuming you’re going to be posting to Google+ about how interesting this is and encouraging people to buy the book and that’ s just fine with me.
My other caveat is that although I do have direct comparisons in the book between Apple and Google and they will be part of my comments and I am happy to discuss them with you in the Q&A, I didn’t spend the last year of my life studying Google, I spent the last year of my life studying Apple. So beyond the conclusions that I am willing to draw or the observations that I am willing to make about the comparisons of the two companies, in particular cultural issues, I don’t want to put too much of the compare and contrast burden on me for comparing Apple and Google, I’ll put that burden on you and I’ll tell you about Apple and leave you to make your own conclusions about the differences between the two companies.
One of my major epiphanies in working on the book and on the article in Fortune Magazine before it is just how differently Apple does business from the way everybody else does business. And indeed how the Apple way of doing business is different from what’s taught in business school. And Steve Jobs was quite clear on this, he didn’t particularly care for business school and he didn’t particularly care for MBAs in general. And part of the reason for doing Apple University over the past four years was to, as he put it, “To try to create our own kind of MBA.”
And so I’ll ask you to keep in mind as I make my points how much Apple differs from everybody else. The question arises, well if they’re so exceptional and they’re so unique and they had this extraordinary one of a kind leader how much can we learn from them? And I would suggest there absolutely is a ‘don’t try this at home’ aspect to Apple’s way of doing business.
Having said that Apple is currently the world’s most valuable company and is absolutely crushing it in a way and growing in a way that no large company does, and maybe no large company ever has and so I would submit that if they do things differently it’s at least worth asking the question how and why. And I really wish we had one of those setups where we could pan the room because I just love people sitting on the floor for a talk – wonderful.
Apple in 1997
A moment on what Apple was like in 1997 when Steve Jobs returned to the company. He would be quoted frequently and in ensuing years talking about the fact that Apple was 90 days from insolvency when he rejoined the company in 1997. The company was a shambles; it had too many factories in the United States and abroad, it had too much inventory, it had too many middle managers, Jobs went on to fire about 4,000 of them. The culture in his opinion had become infected with people who were more interested in making money than they were in making beautiful products, and the company was structurally dysfunctional in a way that he would change.
And the example that I share in the book is that at the time Apple had 16 advertising budgets. Now the adverting budgets is a good metaphor for fiefdoms; if you were a general manager in the business and you had an advertising budget that probably wasn’t the only budget that you had, you were an important person in your own right. Jobs wanted to eliminate that, he wanted to get rid of fiefdoms, he got rid of the whole notion of general manager, and he wanted to emphasize the notion of one company, one brand, one Apple, and so on.
And in eliminating the advertising budgets he was able to say to people who were responsible for a product, “If you think your product deserves advertising spend then you’ll come to me and ask for advertising spend and I’ll decide whether or not to give it to you and we’ll make a decision at a central, at a corporate level about how to advertise.” And we all know how that’s gone for Apple.
This was not about cost cutting by the way; within short order advertising spending at Apple increased, it didn’t decrease and Apple developed this very virtuous circle of tending to only advertise one or two major things at a time, but there being a halo effect to the other products that weren’t being advertised and this worked particularly well once the stores were up and running and became a force of their own. Advertise an iPod and people might come in and buy an iPhone; advertise the iPhone and people have to walk past the Macintoshs to get to the iMac’s or the laptops to get to the iPhone and so on. And so that’s something that Jobs cleaned up in his first few years back at the company in ’97.