Inside Steve''''s Brain Business Lessons from Steve Jobs, the Man Who Saved Apple by Leander Kahney_9 ppt

products, the company concentrated on making maximumprofit from its interface monopoly.“The product people aren’t the ones that drive thecompany forward anymore,” Jobs said of Apple duri

search of problems for those technologies to solve Takethe Internet bubble of the late 1990s The bubble wasdefined by this kind of thinking It was a carnival ofworthless innovation—half-baked business ideas pumpedinto vast money-burning concerns in a misguided attempt

to get big quick and beat the competition Entrepreneurslaunched websites for selling pet food over the Net, or builtgiant warehouses for delivering groceries by van, beforethere was any inkling customers wanted to shop this way.And it turns out they didn’t No one wanted to get theirgroceries delivered from Webvan’s automatedwarehouses The Internet bubble burst, taking with itbusinesses that had developed solutions to problems thatdidn’t exist

“You need a very product-oriented culture, even in atechnology company,” Jobs said “Lots of companies havetons of great engineers and smart people But ultimately,there needs to be some gravitational force that pulls it alltogether.”11

Jobs notes that before he returned, Apple had lost itsproduct-oriented culture In the late 1980s and early 1990s,there was great technology being developed in thecompany’s labs, but there wasn’t a product culture to putthat technology to work Instead, the company turned itsfocus to milking its key asset: the Mac user interface Jobsnoted that Apple had a monopoly on the graphical userinterface for almost ten years, which sowed the seeds forits demise Instead of trying to develop new, breakthrough

products, the company concentrated on making maximumprofit from its interface monopoly.

“The product people aren’t the ones that drive thecompany forward anymore,” Jobs said of Apple during thatperiod “It’s the marketing guys or the ones who expand thebusiness into Latin America or whatever Because what’sthe point of focusing on making the product even betterwhen the only company you can take business from isyourself?” Jobs said in situations like this, the people whobuilt the company in the first place— the product-orientedstaffers—tend to become replaced by those with a salesfocus “Who usually ends up running the show?” askedJobs “The sales guy.”12

Jobs cited as a good example Steve Ballmer atMicrosoft, the company’s chief salesman who took overfrom Bill Gates, the programmer “Then one day, themonopoly expires for whatever reason,” Jobs continued

“But by then the best product people have left, or they’re nolonger listened to And so the company goes through thistumultuous time, and it either survives or it doesn’t.” Luckilyfor Apple, it survived

Pure Science vs Applied Science

Money isn’t the key to innovation Apple spends a lot lessthan other companies on R&D, yet appears to get a lotmore bang for its buck Microsoft in 2006 spent more than

more bang for its buck Microsoft in 2006 spent more than

$6 billion on R&D and is on track to spend $7.5 billion in

2007 Microsoft finances several large and well-fundedresearch centers in Redmond, Silicon Valley, Cambridge inthe UK, and China There are some very impressivetechnologies being developed in Microsoft’s research labs.The company boasts that it is leading research in speechrecognition and fast search of massive databases Eachyear, Microsoft gives journalists a tour of its Redmondresearch facility, and it is a treat for those invited to see allthe cool toys and clever technologies the researchers aredeveloping But it is unclear how much of Microsoft’sresearch is being directed toward its products Except forspeech recognition in Vista, which has been well received,there’s little evidence that the labs are leading major newproduct initiatives “You know, our friends up north spentover $5 billion on R&D, but these days all they seem to becopying is Google and Apple,” Jobs said at Apple’s WorldWide Developers Conference in 2006 “Shows moneydoesn’t buy everything.”

In 2007, the management consultancy Booz AllenHamilton released a study of worldwide corporate R&Dspending and concluded that there’s little evidence thatincreased R&D investment is linked to better results “It’sthe process, not the pocketbook,” Booz Allen concluded

“Superior results seem to be a function of the quality of anorganization’s innovation process—the bets it makes andhow it pursues them—rather than either the absolute orrelative magnitude of its innovation spending.”

Booz Allen cited Apple as one of the thriftiest R&Dspenders in tech, but one of the most successful According

to Booz Allen, Apple’s 2004 R&D-to-Sales ratio was 5.9percent, compared to an industry average of 7.6 percent

“Its $489 million spent is a fraction of its largercompetitors,” Booz Allen said “But by rigorously focusingits development resources on a short list of projects withthe greatest potential, the company created an innovationmachine that eventually produced the iMac, iBook, iPod,and iTunes.”13

Apple’s R&D spending is like the old distinction betweenpure science and applied science Pure science is thepursuit of knowledge for its own sake Applied science isapplication of science to particular problems Of course,pure science is extremely important, and will sometimeslead to the kind of fundamental breakthroughs that appliedscientists don’t even look at But applied science, likeengineering, is focused on more practical, pressingproblems The former head of Microsoft’s research labs,Nathan Myhrvold, gained fame for academic papers hewrote about dinosaurs He may have contributed to the field

of paleontology, but did Microsoft invent the iPod?

Jobs uses as his inspiration Hewlett-Packard, one of thefirst Silicon Valley companies and one that has always had

a strong engineering culture—it was driven by engineerswho made products “The older I get, the more I’mconvinced that motives make so much difference,” Jobssaid “HP’s primary goal was to make great products And

our primary goal here is to make the world’s best PCs—not

to be the biggest or the richest.” Jobs said Apple has asecond goal, which is to make a profit—both to makemoney but also to keep making products “For a time,”Jobs said, “those goals got flipped at Apple, and that subtlechange made all the difference When I got back, we had tomake it a product company again.”14

The Seer—and Stealer

Jobs keeps his eyes peeled for promising newtechnologies, or existing technologies that Apple canimprove, like early MP3 players or, lately, smart phones.Jobs has a reputation as a seer He seems to have amagical ability to peer into the future and know beforeanyone else what consumers want Jobs downplays hisreputation as an oracle: “You can’t really predict exactlywhat will happen, but you can feel the direction that we’regoing,” Jobs told Rolling Stone “And that’s about as close

as you can get Then you just stand back and get out of theway, and these things take on a life of their own.”15

Jobs has said he looks for “vectors going in time”—whatnew technologies are coming to market, which ones areending their run “You try to spot those things and howthey’re going to be changing over time and which horsesyou want to ride at any point in time,” Jobs said “You can’t

be too far ahead, but you have to be far enough ahead,

because it takes time to implement So you have tointercept a moving train.”16

Jobs cited USB as an example Intel invented the ubiquitous Universal Serial Bus (USB), and Apple was one

now-of the first PC companies to build it into its computers.Jobs recognized its consumer-friendly potential: it wasn’tfast, but it was plug and play, and it provided power todevices, eliminating an extra wire and power brick Itseems unremarkable now that USB is wildly popular, butApple was one of the first companies to adopt it—and itmay have never reached critical mass if it hadn’t

Innovation can—and often does—come from outsideApple There’s a long list of technologies that weren’tdeveloped at Apple that Jobs or his engineers recognizedhad innovative potential WiFi wireless networking,developed by Lucent and Agere, didn’t get much tractionuntil Apple used it across its entire line of computers andbuilt it into its Airport base stations, ushering in the era ofwireless laptops

Some observers note that innovation at Apple has less to

do with inventing brand-new technologies than takingexisting technologies and making them easy to use Jobstakes technologies out of the lab and puts them in thehands of ordinary users

The first and best example is the graphical userinterface, which Jobs first spotted at age twenty-four in

1979, during a paid tour of Xerox’s famed Palo Alto

Research Center During his visit, Jobs was given ademonstration of the Xerox Alto, the first computer with amouse and point-and-click interface “I thought it was thebest thing I’d ever seen in my life Now remember it wasvery flawed, what we saw was incomplete, they’d done abunch of things wrong But we didn’t know that at the timebut still thought they had the germ of the idea there andthey’d done it very well and within you know ten minutes itwas obvious to me that all computers would work like thissome day.”17

But Xerox’s management had no idea what its scientistshad cooked up in the lab Despite dozens ofdemonstrations, Xerox’s executives didn’t see its potential

“Basically they were copier heads that just had no clueabout a computer or what it could do,” said Jobs “And sothey just grabbed defeat from the greatest victory in thecomputer industry Xerox could have owned the entirecomputer industry today.”18

When it comes to innovation, Jobs is fond of quotingPicasso’s famous dictum: good artists copy, great artistssteal To which Jobs adds: “And we have always beenshameless about stealing great ideas.”

The Creative Connection

For Jobs, innovation is about creativity, putting things

together in unique ways “Creativity is just connectingthings,” Jobs told Wired magazine “When you ask creativepeople how they did something, they feel a little guiltybecause they didn’t really do it, they just saw something Itseemed obvious to them after a while That’s because theywere able to connect experiences they’ve had andsynthesize new things And the reason they were able to dothat was that they’ve had more experiences or they havethought more about their experiences than other people Unfortunately, that’s too rare a commodity A lot of people

in our industry haven’t had very diverse experiences Sothey don’t have enough dots to connect, and they end upwith very linear solutions without a broad perspective on theproblem The broader one’s understanding of the humanexperience, the better design we will have.”19

Apple’s use of magnetism is a good example of how thecompany takes a technology—something as simple asmagnets—and plays with it, putting it to different uses Thefirst magnets appeared in the latches of Apple’snotebooks A magnet would pull the latch out of its housing

as the lid was closed Then Apple added magnets to itsremote controls, so that they could be safely storedattached to the side of the computer Newer MacBookshave dispensed with latches altogether in favor of strongermagnets that hold their lids closed when not in use; theyalso have MagSafe power adapters which stay in placethanks to magnets They are designed to easily detachfrom the power cord, stopping the computer from crashing

to the floor It’s an idea Apple took from Japanese ricecookers, which have had magnetic power adapters forseveral years for the same reason—to prevent boilingwater from being thrown across the kitchen if a child snagsthe power cord.

Jobs has said that everything he learned about products

he learned from Heathkits as a kid Heathkits were popularkits for building electronics like ham radios, amplifiers, andoscillators The kits taught Jobs that products weremanifestations of human ingenuity, not magical objectsdropped from the sky “It gave a tremendous level of self-confidence, that through exploration and learning one couldunderstand seemingly very complex things in one’senvironment,” he said “My childhood was very fortunate inthat way.”20

Jobs has always been a keen student of design, ofarchitecture, and of technology His offices would be full ofelectronics devices he’d dismantled to see how theyworked John Sculley remembered that Jobs was alwaysstudying other manufacturer’s products “ [E]lectronicparts and cases of products were scattered about theroom,” he wrote “It was cluttered and disorganized, withposters and pictures taped to the walls He had justreturned from Japan with a new product that he had takenapart Pieces of it were on his desk Whenever Steve sawsomething new that he was curious about, I discovered, hewould buy it, take it apart and try to understand how itworked.” 21

Sculley recalled a trip he and Jobs took to Japan to meetwith Akio Morita, the legendary cofounder of Sony Moritapresented the pair with two of the first Walkman players offthe production lines “Steve was fascinated by it,” Sculleyrecalled “So the first thing he did with his was take it apartand he looked at every single part How the fit and finishwas done How it was built.”22

Jobs often took staff on tours of museums and to specialexhibits to educate them about design or architecture Hetook the Mac development team to an exhibit by the greatArt Nouveau designer Louis Comfort Tiffany, becauseTiffany was an artist who commercialized his work AtNeXT, Jobs took a group on a field trip to Frank LloydWright’s Fallingwater house in Pennsylvania to study thegreat architect’s design At NeXT, Jobs would often wanderover to the Sony offices across the hall He’d pick upSony’s brochures, carefully examining the fonts and layoutsand the weight of the paper

On one occasion, Sculley found Jobs madly dashingaround the parking lot at Apple’s HQ examining cars Hewas analyzing the details of their design, looking for cuesthat he could use in the design of the Macintosh case

“Look at the Mercedes design,” he told Sculley, “theproportion of sharp detail to flowing lines Over the yearsthey’ve made the design softer but the details starker.That’s what we have to do with the Macintosh.”23

Jobs has had a long-standing interest in German design

In the eighties, his bachelor mansion was empty except for

a grand piano and a big black BMW bike He’s alwaysgreatly admired Braun, the German electronicsmanufacturer best known for its clean industrial design.Braun blended high technology with artistic design Jobshas said several times that he thinks technologicalcreativity and artistic creativity are two sides of the samecoin When asked by Time magazine about the differencebetween art and technology, Jobs said: “I’ve never believedthat they’re separate Leonardo da Vinci was a great artistand a great scientist Michelangelo knew a tremendousamount about how to cut stone at the quarry The finestdozen computer scientists I know are all musicians Someare better than others, but they all consider that animportant part of their life I don’t believe that the bestpeople in any of these fields see themselves as one branch

of a forked tree I just don’t see that People bring thesethings together a lot Dr Land at Polaroid said, ‘I wantPolaroid to stand at the intersection of art and science,’and I’ve never forgotten that I think that that’s possible, and

I think a lot of people have tried.”24

Flexible Thinking

Apple used to be fiercely proprietary, fielding its owntechnology and shunning industry standards During itsearly years, Apple used nonstandard technology for almost

everything Keyboards, mice, and monitors all usednonstandard connectors But since Jobs has returned,Apple has become much more flexible and practical It isshedding a lot of its baggage Across the board, Appleuses as many standard components and connections aspossible, like USB or Intel’s chips The Mac even supportsthe two-button mouse.

Creativity is being open and flexible, and not protectingyour business model There’s got to be an element ofreckless abandon, a willingness to bet the company on thenext new thing One example is Jobs’s decision to open theiPod to Windows Initially, the iPod was conceived as Mac-only Jobs wanted to use it as bait to snare Windows users

He hoped it would be an incentive to switch to the Mac.There was a long, hard debate inside Apple “There was along discussion,” said Jon Rubinstein, former head ofApple’s hardware and iPod divisions “It was an importantdecision for us We didn’t know what the effect was going

to be, so we debated both sides of the argument, weplayed devil’s advocate.”

Rubinstein said they eventually decided that givingWindows users a taste of Apple’s technology would have a

“halo effect”—it would give a saintly glow to the rest of thecompany’s products “In the end the halo effect was muchmore important than losing a few Mac sales,” Rubinsteinsaid “The iPod would get people to go into stores, andthey’d check out the Mac at the same time.” Rubinsteinsaid the combination of retail stores, the iPod, Macs, and