Apple: history of a business resurrection.

Apple was given as “dead” in 1997. Steve Jobs returned and created a strategy in 4 weeks to resurrect the company. What were the key points of that strategy, and how did that allow Apple to create the iPod and the iPhone?

Here are some quotes from the press in 1997: “Apple has become irrelevant”, “Apple can’t execute anything”, “Apple’s culture is anarchy, you can’t manage it”…

Would you even believe that today?

My interest while writing this post is asking myself if we are doing a good job at Surgeworks. I found Steve Jobs keynote at Macworld Expo 1997 very inspiring and I hope it can be for you as well.

Jobs found a company that totally lost their focus and was unaware of their market presence and strengths. The fundamental problem he highlighted back then was the fall of Apple’s profit on an year-by-year basis for the last few years.

That’s not our and probably not your case as well. But in the good times, it’s good to keep an eye on what to do to prevent the bad times, right?

Management Change

The first thing Steve Jobs did was changing the Board of Directors, recognizing the great talent Apple people had and their ability in execution — basically blaming the situation on a lack of strategy.

Jobs brought in a lineup of highly experienced managers that also had (or said to have) a passion for the Mac.

In other words, Apple needed a good strategy. What would this strategy be based on?

Marked Focus

Jobs identified two key markets in which Apple was still “relevant” at the time: or in other words, where is the real money coming from?

Content creation market (80% of design, pre-press, etc and 64% of websites were created on Macs at the time) and education (more then 60% of computers in education were Macs). This meant the company had to create better products for these class of customers, while at the same time expanding into the consumer market (Jobs noted that Education and Consumers want the same key things from a product: for it to be cheap, essential, and fast. This strategy, among other things, resulted in the first iMac introduction one year later).

What are your business’ areas of relevance?
Do you have good focus on these areas?

Core Assets

As a great leader and a men with class, Jobs has put the emphasis on the customer base to be the best asset of the company, and promised more care for what customers desired.

The real assets though were the Apple brand, one of the most recognized brands in the world and the Mac OS.

To revitalize the Apple brand as a whole, Jobs started ad campaigns, the most popular being the “Think Different” one, which really gave pride to customers and created a lot of interest and new relevance to the brand as building products for the “elite people” that “some can consider crazy, while we see genius”.

While at that time Apple was already working on Rhapsody — which eventually became Mac OS X — Jobs insisted that Mac OS was not going to be abandoned. There was the real risk to have key developers to abandon the platform.

The big shift from abandoning Mac OS “classic” was to create a layer of compatibility that did not require all developers to create new apps from scratch (Carbon) allowing an “easy” transition to the new OS.

Identifying the core assets has been key to Apple’s “resurrection”. What are your business core assets? Are you paying enough attention to these?

Meaningful Partnerships

1997 was the year of the shocking partnership with Microsoft. A scene that was so “dramatic” it was even featured in the “Pirates of Silicon Valley” movie.

Jobs was very clear in pointing out that “for Apple to win, Microsoft doesn’t need to lose”. He worked out a perpetual cross-license for patents that were reportedly infringed by both companies in the early days of personal computing industry, and for all patents that were going to be filed in the next five years.

Thanks to this agreement, Apple’s co-founder was able to get a commitment from Microsoft to support the Mac platform for five years releasing the same number of major releases of their Office suite they were planning for Windows. Microsoft also invested 150 million dollars in the company, without the right to vote.

Apple instead committed to adopt IE as the default browser on all Macs (while still shipping Netscape as pre-installed as well).

Jobs said: “The era of setting this up as a competition between Apple and Microsoft is over as far as I am concerned.”

Jobs also pointed out that Apple wasn’t caring enough for key developers such as Adobe (10% to 15% of Apple’s customers bought a Mac only to run Photoshop), and that was going to change.

So who are your meaningful partners? Are you caring enough of them? Are you relevant to them?

New Product Paradigm

Apple’s co-founder did not explain what he meant with this during this specific keynote. We discussed this a few months later the same year, at the WWDC.

He pointed out Apple had more then 15 product lines and several platforms (Macs, PowerBooks, Newton, eMate, Pippin… yeah the Pippin actually counted as a real product!) and to make a long story short, that didn’t make any sense.

Apple drastically simplified the product line to have 4 products only: a desktop and a portable for the pro market, and a desktop and a portable for the educational and consumer market.

But that is not all. The new product paradigm Jobs referred to in his key points in ’97 really were about getting back to be innovative, to lead the industry.

As I mentioned, this strategy saw the introduction of killer products: the iMac, the iBook, the PowerBook G3 and the PowerMac G3 series. Apple leveraged it’s “lifestyle” brand into products that weren’t just computers: these were a status symbol and a choice of life to customers.

“People need to think differently to get an Apple computer”, Jobs said at the MacWorld Expo in ’97.

I’d say you can see how this vision is driving Apple’s products today. After Apple got back to be a healthy company by cutting out all non-profitable markets, including the Newton and the Pippin, the company effectively got back into these markets (handheld devices and gaming consoles) with the iPod and then the iPhone, the iPod Touch and now the iPad.

This proves to me that things like a “mission” and a “vision” are not just marketing talk for a business.

What is your product paradigm?
What’s the culture behind your brand?
What is the vision that is driving your strategy?

Hey, if you’ve read all this… I wish to thank you for taking the time to read this lengthy post. And since you have so much spare time, I recommend you watch the full length keynote on YouTube. :)