master major comprehensive project - mindful...

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Apple: The Fruit of Knowledge

Summer D. Leifer

Master Major Comprehensive Project

CAPS600 – Graduate Project

June 22, 2013

Professor Randall Doll

Southwestern College Professional Studies

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Abstract

Apple presents an excellent management and leadership case study as it has evolved from a

small, entrepreneurial company to a global economic powerhouse. Apple’s leadership and

management styles have fluctuated over the past four decades as it has struggled to create and

maintain a distinct culture and product in a rapidly evolving technological market. Many of its

successes are a result of its ability to maintain a balance between innovative creativity with

practical business and marketing approaches. Conversely, many of its greatest challenges and

struggles have been a result of the inability to maintain an appropriate tension between creative

chaos and formalized structure. Furthermore, Apple faces the challenge of maintaining its

persona as an independent, free-thinking company while also holding the dominant position in its

market. The leadership and management lessons presented upon examination of Apple’s history

and current operations, strengths and challenges provide worthwhile lessons to contemporary

leaders and managers.

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Apple: The Fruit of Knowledge

From a small company operating in a garage to a multi-national technology behemoth,

Apple’s evolution provides rich lessons in management and leadership. During the last four

decades, Apple had a wide range of leaders and managers with markedly different styles. Their

approaches met with varying degrees of success as internal and external factors changed.

Furthermore, it is important to note these individuals had distinct strengths and weaknesses and,

as the context of Apple’s vision and operations changed, their individual effectiveness fluctuated.

Current and future Apple leaders are facing new challenges as contextual factors such as

intellectual property right laws, cyber security and technology change. Regardless of changing

leadership and management styles, the foundation of Apple—perfect product design and

experience—the force behind Apple’s creation, continues to underpin the company.

Apple’s CEO Leadership & Management Style, 1977 - 1985

Apple’s inception was the result of collaboration between Steve Jobs and Steve Wozniak.

Jobs and Wozniak were brilliant innovators; however, they did not have a background in

business management. Their growing business required stronger management and leadership

and, upon the advice of Mark Markkula, an Apple investor and its third employee, Wozniak and

Jobs hired the first Apple Chief Executive Officer (CEO), Michael Scott in 1977 (Yarrow, 2011).

With a strong background in business management and leadership, Scott introduced

administrative organization and structure to Apple allowing Jobs and Wozniak to focus more on

product design and less on human and resource management (Yarrow, 2011). Scott focused on

pragmatic concerns and creating a family-type environment within Apple while Jobs focused on

product perfection (Isaacson, 2011). Eventually, the differences in leadership styles proved too

great and, in 1981, Markkula was asked to replace Scott as CEO (Markoff, 1997). Markkula

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stressed three principles: empathy, focus and impute (Isaacson, 2012). Of these three, impute

(the concept that people do judge a book by its cover) became a core Apple leadership and

management principle. This third principle continues to shape Apple product design and

experience. In 1981, as Apple struggled to improve sales, it replaced Markkula with John

Sculley, a former PepsiCo Inc. president and the mastermind behind the very successful Pepsi

Challenge marketing campaign (Markoff, 1997). In a 2011 interview for the FINS website,

John Sculley stated he felt his move to Apple was well-timed as it allowed him to be part of a

company’s transformation while also allowing him to employ his greatest strength: bringing an

underdog to victory over its competitors (Guyon, 2011). During the FINS interview, Sculley

also stated he was not a great manager and preferred to take on tough projects and surround

himself by other great managers and experts (Guyon, 2011). Despite Sculley’s lack of

experience within the technology market and his misgivings about his management skills, his

initial years with Apple were very profitable (PBS, 2013). In 1985, his reputation as a strong

leader was solidified after he led the ousting of Steve Jobs from Apple.

Apple’s Leadership Strengths & Weaknesses, 1977 - 1985

In Organizational Theory and Design, Richard Daft describes the initial forces within a

new organization as the entrepreneurial stage where the owner/s primarily focus on the product

or service and creating a viable company (2009). Jobs and Wozniak’s drive for product

perfection during this stage was appropriate. As Apple first hired Scott and then Markkula as

CEOs, it transitioned from the entrepreneurial stage to what Daft defines as the collectivity state

whereby Apple began to establish distinct objectives and vision (2009). During this stage, Scott

took on the responsibility of bringing a pragmatic business approach to leading Apple while

attempting to establish a positive work environment. Markkula began to formalize marketing

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and sales policies; however, he continued to be primarily focused on product development rather

than company development (Isaacson, 2011). Apple remained in the collectivity stage from

1977 to 1981 and, upon the next crisis—the need for delegation—it moved into the third phase:

the formalization phase (Daft, 2009). During this phase of organizational leadership, the

organization establishes rules, standards, and policies. Once Sculley became CEO, Apple began

its transition into this third stage of establishing a company identity and presence (Daft, 2009).


Following Steve Jobs departure in 1985, Sculley continued to serve as the CEO of Apple,

Inc. Initially, Sculley was very successful and increased annual sales from $800 million to $8

billion over the course of a decade (Bloomberg Businessweek, 2011). However, after a series of

bad business and marketing decisions, he resigned his position in 1993 and was quickly replaced

with Michael Spindler (PBS, 2013). Spindler made some wise decisions initially but soon lost

control of the company as a result of his erratic and unpredictable behavior (Hormby, 2006).

Following disastrous sales and a failed attempt to sell Apple to Sun, Spindler was asked by the

board of directors to resign in 1996 (Hormby, 2006). Following Spindler’s resignation, Apple

appointed Gil Amelio as the new CEO in January 1996 (Carroll, 2011). Similar to Spindler’s

early moves, Amelio reorganized Apple and drove Apple’s purchase of Jobs’ company, NeXt, in

December, 1996. The acquisition terms of NeXt brought Steve Jobs back to Apple as an advisor

(Carroll, 2011). Although Amelio’s time as Apple’s CEO was approximately 500 days, he is

credited with initiating the turnaround from a declining company to a profitable company.


During a 2010 interview with Leander Kahney for Cult of Mac, John Sculley asserted

that he should never have been selected as CEO of Apple (Kahney, 2010). Initially, his role as

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Apple CEO was to boost the ailing Apple II sales to facilitate development and marketing of the

next big thing, the Mac (Sculley, 2011). Unfortunately, initial Mac sales far underperformed as

the Mac still lacked processing power and the Apple board of directors chose to remove Jobs as

vice-president of Apple Macintosh Division while retaining his title of Chairman of the Board

(Guyon, 2011). A few months later, Jobs left Apple to start his own company: NeXt. Following

an initial profitable period, it began to suffer setbacks as a result of bad timing, slower

innovation, and Sculley’s decisions to market Apple to the same customer base as its

competitors. When Spindler was selected to replace Sculley as CEO, his decision to flatten the

Apple hierarchy and infrastructure was wise. However, due to Spindler’s weak leadership style,

the company suffered disastrous sales and financial loss (Hormby, 2006). After Spindler’s

resignation following a failed attempt to sell Apple to Sun, the new CEO, Gil Amelio, tackled

Apple’s structure and led the company to buy Jobs’ company, NeXt, ultimately bringing Jobs

back to Apple as an advisor. Apple’s greatest leadership weakness during this time period related

to its lack of a clear, cohesive company vision and focus and its inability to bring its innovative

ideas into reality.


In a Trojan horse move, Steve Jobs maneuvered from his position as an advisor to replace

Amelio as Apple’s interim CEO (Edwards, 2012). During this time, Jobs reduced the Apple

product line by 70%, laid off more than 3,000 employees, replaced several key Apple leaders

with individuals he personally trusted, clamped down on all information coming out of Apple,

trimmed Apple’s advertising agencies to one, and made peace with Apple’s sworn enemy,

Microsoft (Edwards, 2012 & Stone, 2011). The CEO leadership and management style during

this time period was focused on tight company control, product innovation and marketing.

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While Jobs has been described by some as a transformational leader, I would argue he lacked

one important aspect of transformational leaders: individualized consideration (Bass, 2006).

Although Jobs demonstrated transformational component behaviors, his underlying intent was

often self-serving and he sought to be idolized through manipulation and intimidation. In a

Leadership Quarterly journal article, Ethics, Character and Authentic Transformational

Leadership Behavior, Bernard Bass and Paul Steidlmeier assert pseudo-transformational leaders

“seek power and position even at the expense of their followers’ achievements” (1999). Critics

have repeatedly asserted Jobs personally took credit for the design work and innovation of his

employees, such as Johnathan Ives, to further his own legacy as a genius. Jobs intentionally

distorted reality to suit his personal vision and self interests (Isaacson, 2011). Furthermore, Jobs

was convinced the perfect product would lure consumers into buying things they had not even

known they wanted—and he was proven right (Isaacson, 2011). Regardless of the judgment one

has of Jobs’ leadership style, it was effective and he successfully established Apple as a global

powerhouse.


During this time period, Jobs brought a laser focus to the company’s products and

culture. He streamlined Apple’s products into four quadrants: personal or business and laptop or

desktop. Additionally, he redirected Apple’s resources into creating a distinctive product and

niche. In 2001, Apple introduced the i-Pod and many consumers were enticed into the Apple

world through its sleek design (Stone, 2011). Likewise, many top business leaders and star

designers were attracted to Apple attracted by Jobs’ vision for Apple and its revitalized image as

a cutting edge company (Edwards, 2012 & Stone, 2011). The biggest shadow cast over Apple

during this time, was Jobs’ cancer diagnosis in 2003 of which he maintained tight secrecy. Jobs

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continued to be an unbeatable force of nature as he used Apple’s growing clout to strongarm the

music industry into $.99 sales and AT&T into an exclusive contract (Stone, 2011). Jobs’

commitment to creating the best company and product through distilling Apple down to the

essentials combined with his ability to define reality led to a distinct Apple culture.

Apple’s CEO Leadership & Management Style, 2011 - Present

Upon Jobs’ resignation as a result of his deteriorating health, Tim Cook was chosen as

Apple’s new CEO (Tyrangiel, 2012). Whereas Jobs’ leadership style was often described as

volatile, Cook has been described as more even tempered and transparent. Cook has turned

long-standing Apple policies on their head. As CEO, Tim Cook values diversity, to include

within leadership, collaboration, transparency, listening to the customer, focusing on the few

things Apple does well, and admitting mistakes (Tyrangiel, 2012; Markowitz, 2012). Cook’s

leadership style is aptly described as authentic transformational leadership. In addition to

providing intellectual stimulation, inspirational motivation and idealized influence, he does give

individualized consideration to his constituents. According to Bass and Steidlmeier, authentic

transformational leaders “who may have just as much need for power as pseudo-transformational

leaders, channel the need in socially constructive ways into the service of others” (1999).

However, Cook has not completely changed the Apple culture or business model. During the

Worldwide Developers Conference this past week, he stated,” We spend a lot of time on a few

great things...until every idea we touch...enhances each life it touches” (Farber, 2013).

Furthermore, Cook has retained the teamwork business model put in place by Jobs relying on

teamwork and synergy (Farber, 2013).

Apple’s Leadership Strengths & Weaknesses, 2011 - Present

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Cook’s commitment to transforming Apple’s public image has contradicted many of

Apple’s long-standing policies. For example, he initiated a program to match employee charity

gift giving, paid out shareholder dividends, delivered public apologies, and decided to bring a

portion of Apple manufacturing, i-Mac, to the USA (Dilger, 2013; Macworld, 2012;

Mourdoukoutas, 2012; Tung, 2013). These actions all directly oppose the stance Job took that

Apple was under no obligation to publicly declare charitable donations, pay out dividends,

apologize or bring final phase production to the U.S. (Isaacson, 2011). Although some investors

and stakeholders feel these are risky decisions, the general public has responded well to the more

open Apple atmosphere. On a critical note, some naysayers feel Tim Cook lacks the passion,

vision and flexibility to continue to lead Apple into a successful future (Satell, 2013 & Kaipa,

2013). Tim Cook’s leadership has, thus far, been lucrative for Apple and he has made progress

and built stronger connections with his stakeholders, customers and employees. It remains to be

seen if Cook’s significant departure from some of Apple’s core principles will strengthen the

company and its reputation and allow it to maintain its autonomy or lead it further down the path

of market homogenization and traditionalist business practices.

Apple’s Current & Future Leadership Challenges

Apple’s current leadership challenges center on defining Apple’s culture and vision

following Jobs’ departure. Tim Cook and his leadership team continue to lead a profitable and

growing company. Cook and his team must choose which aspects of Apple’s culture should

remain unchanged and which aspects should evolve. It remains to be seen if the changes already

put in place such as transparency, stock dividends and charitable giving will realize significant

success or endanger the company. Likewise, as Apple moves into the future it will increasingly

face intellectual property battles, cyber security threats and emerging competition. Apple’s

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future leadership challenges will likely include maintaining a balance between established

organizational infrastructure and an agile atmosphere of innovation. Apple’s future leaders must

demonstrate an ability and willingness to employ complex strategic thinking, creative problem

solving and unprecedented innovation. They will need to have a commitment to maintaining a

formalized structure while balancing on the edge of chaos. -For it is on this delicate edge

between structure and creative chaos where innovation often occurs.

Apple’s Leadership Experience & Comparison

As I compared Apple’s leadership history with my own experiences, I noted some

distinct commonalities and differences. As a professional working in the intelligence field, I

have a great appreciation for technological innovation and creative thinking. The products and

services we provide rely on critical thinking in a highly dynamic context. To accomplish our

missions and support our customers, we must maintain strict adherence to policies and guidelines

while also employing creative processes and techniques to maintain information superiority. As

a leader within this field, I often seek out and employ advanced technological tools and

applications while encouraging thoughtful and creative thought processes among my

constituents. On the other hand, as a military professional, I adhere to a hierarchical chain of

command and clear guidance and instructions to inform my decisions. The act of balancing the

two ends of the leadership and management spectrum, allow me to appreciate the different

leadership styles of Apple’s past and current CEOs. I can identify with the need to have

structure and practical processes in place while the need for innovation and creativity also

resonates with me. Furthermore, I appreciate the use of different leadership approaches applied

based on the situational context of the organization to include internal and external factors.

Whereas transformational leadership is often lauded as the most desirable leadership style, there

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are times when transactional leadership may be more appropriate. Finally, regardless of

preferred leadership styles or organizational structures, it is imperative for leaders and managers

to adjust their approach based on the overall vision, goals and context.

Impact on Personal Leadership & Management Style

Apple’s wide range of CEO leadership styles and their varying degrees of success have

demonstrated the importance of assessing leadership effectiveness within a holistic context.

Leadership is part of an overall system and does not exist independently of the follower/s, the

organization, the environment or the stakeholders. As a student of leadership and management, I

understand the importance of analyzing leaders and their respective styles without bias or

preconceived notions. Furthermore, to glean true lessons from past and current leaders, one must

be willing to examine all aspects of the leader and her/his style and the impact she/he had on an

organization without prejudice. Through my research of Apple’s leadership and management

styles, I have further solidified my belief that leaders and managers must adjust their respective

styles based on organizational vision, needs and contextual factors to remain relevant and

effective. It is important for leaders and managers to remain self-aware and aware of external

factors as they shape their styles and organizational structures while also remaining true to an

organization’s vision and foundation. Although leadership and management styles may need to

adjust dependent on the situation and context, proven core competencies and organizational

vision should remain steady and guide leadership and management decisions and actions.

Conclusion

From its beginnings, Apple has thrived on shaking up the status quo, breaking the mold

and creating the perfect product. Apple prides itself on its status as a rebel turning its back on

traditional paradigms of leadership, management and business operations. However, as it has

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grown into a global company with enormous profits, it has been faced with a growing dilemma:

balancing free-thinking, innovation and creativity with formalized, standardized infrastructure

and organizational hierarchy. As one examines Apple’s various leadership and management

styles over the last four decades, one notes the ebb and flow of transactional versus

transformational, controlling versus empowered styles shaping the organization and the impacts

of these changes on the company and its stakeholders. Currently, Apple is once again in a state

of transition as its operating paradigm continues to evolve under new leadership. Its greatest

challenge will involve maintaining its reputation as a maverick while also saturating the global

market. Every great company initially began as a novel idea—different from the status quo.

Large scale success erodes the novelty and the rebellious persona of startup companies. If Apple

does not find the balance between effective structure and creative chaos while retaining its

foundation based on perfect product design and experience, it risks becoming a caricature of the

companies it once mocked.

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References

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