Leadership and Management at Apple

I define leadership (in part) as the stewardship of unrealized resources, and management as the stewardship of existing resources. To me, this is a fundamental difference between the skills of management and leadership: the nature of a stewarded resource. To illustrate the point, I have a case study for you, from Apple.

In 1997 Apple was 90 days away from bankruptcy. They decided to purchase NeXT for $429 million. The acquisition brought two resources to Apple: the NeXTSTEP operating system, and Steve Jobs.

Jobs returned to Apple as Interim CEO for 90 days to recruit a new CEO and set the company right. He had big ideas, but a visionary leader was not really what the company needed at that moment. Visionary leaders are great when the company has money to burn on R&D and experimentation. They are good with push-product marketing and don’t mind incurring losses on their way to disruptive discoveries.

But when a company is struggling to allocate limited resources under pressure, what it really needs is a strong manager. In the case of Apple, the manager’s name was Fred Anderson. While Jobs was scratching his head over what to do next and whether or not the company could be saved, Anderson was the guy that restructured the finances of the company behind the scenes, including selling stock to their competitor, Microsoft, for $150m in investment. This bought enough time for Apple to make a shift in its product offering. What shift?

Jobs’ focus was on network machines when he came on as CEO, as that’s what he was working on at NeXT, but that kind of product was not going to save Apple. The demand was not strong enough in the market for that kind of product to generate enough income within enough time to save the company. Apple needed someone who could steer the company in the direction of a market demand that actually existed, not a future demand that needed to be created.

Again, it was Fred Anderson that pushed Jobs to switch from network machines to a low-end consumer product. That consumer product was the iMac. Once Jobs had management direction, the visionary leadership component could thrive again. The all-in-one rounded and colourful case design was received as exactly the kind of product that both fit the market demand and made good use of Apple’s existing resources. The iMac turned the company from nearly a billion USD in losses to $300m in profit in 1998. Profits doubled to $600m in 1999.

That was the comeback for Apple. Anderson, the quiet, steady, research driven finance manager in the background, was the company’s real hero during the storm. If it wasn’t for him, Apple may have burned the last of their working capital building network machines that no one wanted. Jobs gets the credit for the visionary breakthroughs that came later. He drove the iPod, iPhone, iPad, and other great disruptive tech.

So the moral of the story? When you have money to burn, steer the power in the direction of your visionary leaders, these are the ones that will take greater risks, invest in R&D, and discover the disruptive innovations. But when times are tough, find and empower your best managers. The managers will generally be quieter, and perhaps less popular because they tend to make hard choices, like cost-cutting, or partnering with ‘the enemy,’ as in the case of Apple.

Leadership and management go hand in hand, but there are definitely times when one hand should be intentionally stronger than the other.

If you know someone that needs to read this, share the article. If you have any questions, feel free to write to me in the comments, or send me a message.

References

http://apple-history.com/h6

http://www.cnet.com/news/microsoft-to-invest-150-million-in-apple/

http://www.businessinsider.com/how-steve-jobs-took-apple-from-near-bankruptcy-to-billions-in-13-years-2011-1#1999-apple-stock-reaches-99-per-share-profits-increase-94-3

Gibney, Alex, Viva van Loock, and Steve Jobs. Steve Jobs: the man in the machine. 2016.