V
viewpoints
doi:10.1145/2043174.2043184
Michael A. Cusumano
Technology Strategy
and Management
The Legacy of Steve Jobs
M
uc h h a s b e e n written
about Steve Jobs since his
announcement in August
2011 that he was stepping down as CEO of Apple and his death less than two months
later in October. In the past, I have been
disappointed that Apple did not pursue
a more “open” strategy for the Macintosh (1984) as well as early versions
of the iPod (2001), iTunes (2003), and
the iPhone (2007) (see “The Puzzle of
Apple,” Communications, Sept. 2008).
I have noted that Apple did become a
better platform leader, gradually, and
in May 2010 topped Microsoft to become the world’s most valuable technology company (see “The Resurgence
of Apple,” Communications, Oct. 2010).
Jobs probably did not care much about
what professors write or what other
companies do; he always followed a
unique path in life and in business.
Nonetheless, anyone who cares about
technology and innovation, or the type
of entrepreneurship that Americans
should be most proud of, should take
the time to reflect on the career and
contributions of Steve Jobs.
Products, Not Just Platforms
The point I made about Apple in the
past was simple: In platform markets (those defined by a core technology and complementary innovations,
driven by “network effects”—see
“The Evolution of Platform Thinking,” Communications, Jan. 2010), the
best platform will usually win—even if
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there is a better product that we might
benefit more from as consumers.a
We saw this with the Macintosh computer, which was far superior to the
DOS-Windows PCs that won the mass
market. Dominant platforms need
to be sufficiently open and modular
technologically as well as priced right
for the mass market but also attractive
for other companies to adopt as foundations to produce their own complementary products and services. These
outside innovations tend to make the
platform increasingly valuable to usa See Annabelle Gawer and Michael A. Cusumano, Platform Leadership (Free Press, 2002) as
well as Michael A. Cusumano, Staying Power
(Oxford, 2010), among other publications.
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ers and often determine who wins or
loses a platform battle.
The problem with many platforms,
though, is that they involve design
compromises; they need to accommodate the needs of many users and
partners, as well as maintain continuity with the past, which constrains innovation. The Macintosh was a breakthrough product, pioneering new
ground with its graphical user interface, mouse, language and graphics
processing capabilities, among other
innovations. Yet it was expensive, was
incompatible with DOS, had relatively
few business applications, and failed
to become adopted by the mass market. The NeXT workstation computer,
which Steve Jobs introduced in 1988,
was an even more expensive marvel of
hardware and software design; it attracted even fewer customers.
Today, Windows running on Intelcompatible chips remains the most
common software platform for personal computers (though cellphones
far outsell PCs and have become the
dominant mode of computing). But Microsoft has introduced only incremental innovations, following the path set
by the Macintosh more than 25 years
ago. And Android-based smartphones
and tablets, which rely on Google’s
“free” and “open” operating system,
follow the lead of the iPhone and the
iPad. My point is that Microsoft, Intel,
and Google have taken the usual route
to platform leadership, with inexpensive or free products, relatively open
Photogra ph by AP Ph oto/Paul Sakum a
Reflecting on the career and contributions of the Apple cofounder.
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interfaces, and extensive efforts to cultivate a broad ecosystem of partners.
But Jobs and Apple have shown us another path to platform leadership, and
not just for a niche product segment:
Design breakthrough products that set
new standards for form, function, and
aesthetics; market them creatively and
aggressively, with some modest reductions in price over time; open them up
gradually as industrywide platforms,
and let the chips fall where they may.
This strategy will be very hard to duplicate without a Steve Jobs at the helm.
But it is more of a win-win scenario for
the innovator (still lots of money to be
made) and the user (we all end up with
better products, not just platforms).
Raising the Bar
But beating Microsoft or Google at
their own platform game is not what
seems to have motivated Steve Jobs.
He appears to have cared most about
the impact that technology and innovation, delivered in their most cultivated
forms, can have on people’s lives. For
example, he is famous for a quip about
Microsoft back in the mid-1990s that
the company “has no taste” and did not
bring the best of human culture into
its products. Jobs cited the example of
proportionally spaced fonts in the Macintosh, an idea he got from looking at
beautiful books and the history of printing, and which Windows later copied.b
From the beginning, Jobs wanted
Apple to create computers that would
be as elegant and simple to use as a typewriter or even a toaster. Now, looking
back, we can see that every product Jobs
championed, whether or not it succeeded commercially, set new standards for
aesthetics as well as utility, such as in
ease-of-use or handling graphics and
multimedia. What stands out most to
me are the ultra-simple, intuitive user
interfaces of the Macintosh (GUI plus
mouse, albeit invented earlier at the
Stanford Research Institute and Xerox
PARC) and then the iPod’s clickwheel
and the iPhone and iPad touchscreens.
By contrast, Bill Gates and Microsoft
focused on software operating systems
that led to cheap and powerful PCs as
well as lots of applications but were
b Public Broadcasting System, “Triumph of the
Nerds,” The Television Program Transcript,
Part III; http://www.pbs.org/nerds/part3.html.
Beating Microsoft
or Google at their
own platform game
is not what seems
to have motivated
Steve Jobs.
relatively clumsy and difficult to use
for the average consumer. Today’s PCs,
digital media players, smartphones,
and tablets based on Windows or even
Android are as good as they are only
because of how much Steve Jobs and
Apple raised the bar—for everyone.
Charisma and Leadership
In the 1996 PBS documentary, “Triumph of the Nerds,” Larry Tesler, who
used to work at Apple, discussed how
Steve Jobs was able to inspire people
to surpass what even they believed they
could accomplish. He would never
settle for anything less than someone’s
absolutely best effort, and then some.
That is how Jobs raised the bar for the
Macintosh project—whose competition was the character-based IBM PC
and compatibles—and many products
since then, most recently the iPad. Tesler recalled: “When I wasn’t sure what
the word charisma meant, I met Steve
Jobs and then I knew.”c
Let’s be sure to give adequate credit
to Apple cofounder Steve Wozniack for
Apple’s early products as well as to Jonathan Ive for being chief designer of the
iPod, iPhone, iPad, and several hit Macintosh desktop computers and laptops.
And to Scott Forstall, who headed iOS
software development. New CEO Tim
Cook, formerly the COO, has also been
a highly effective leader of sales and operations since Jobs recruited him from
Compaq Computer in 1998. But it has
taken extraordinary charisma and leadership skills to bring so many diverse
personalities together and channel their
considerable talents so productively.
This does not happen often or by chance.
c Public Broadcasting System, “Triumph of the
Nerds,” The Television Program Transcript,
Part III; http://www.pbs.org/nerds/part3.html.
It’s in the Details
When Jobs and Wozniak cofounded
Apple in 1976, they believed, along with
Bill Gates and Paul Allen, who cofounded Microsoft in 1975, that the world
would one day be full of personal computers. These entrepreneurs had something else in common: They all had
the skills, in varying degrees, to build
the products they dreamed of. Jobs
needed Wozniak’s technical wizardry
to shrink down the number of chips
and construct the internals of Apple’s
early computers. Gates and Allen were
preeminent software programmers,
especially Gates. But Jobs stands far
above his peers for the degree to which
he combined extremely astute technological vision with an ability to dive into
the smallest details of his products, including hardware, software, industrial
design, and marketing.
We have heard about the care Jobs
took to design the Apple II case, with
consumer electronics as his model,
and how he tackled the many challenges posed by the Macintosh, ranging from reducing the price tag to the
time it took to boot up. The users that
bought these and other Apple products
quickly came to love them—truly love
their elegant look and feel in a way that
seems unparalleled in any other competitor’s products.
Until recently, Jobs continued to be
deeply involved in the iPhone and iPad
designs, both of which have the same
look and feel about them that we first
marveled at in the original Macintosh.
I should not have been surprised to
learn from the recent reporting that
Jobs is listed as a coinventor of 313
patents, beginning with personal computer cases but extending to internal
PC electronics and designs for laptops, multimedia devices (the iPod),
smartphones (the iPhone), operating
systems (NeXT, iOS), keyboards, mice,
and Apple TV.d
I am also left with the thought that
great entrepreneurs do not really see
the future as much as they create the
future they envision. Steve Jobs knew
how to build and sell game-changing
products, down to the smallest details.
d Shan Carter, “Steve Jobs’ Patents,” The New
York Times (Aug. 25, 2011); http://www.nytimes.com/interactive/2011/08/24/technology/steve-jobs-patents.html?emc=eta1
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Computers and
Consumer Electronics
As Steve Jobs moved forward in his
career, he also brought related but
formerly distinct technologies—and
businesses—together. In fact, he felt
compelled to shed the historic “Apple
Computer” name in 2007 in favor of
“Apple, Inc.” to reflect the broader set
of aspirations that he and the company
had adopted. It is instructive again to
compare Jobs and Apple with Gates and
Microsoft. Gates’ main entrepreneurial
legacy has been to create a mass-market software products company that
continues to “print money” and exploit those remarkable gross margins
of packaged software (see “The Legacy
of Bill Gates,” Communications, Jan.
2009). Indeed, Apple has yet to match
Microsoft in profitability. But Microsoft
is now a slow-growth gold mine, struggling to make money beyond the personal computer industry and the Windows and Office franchises.
By contrast, Apple has fully integrated computers with consumer electronics, including telephony and the
mobile Internet (apps, music, video,
text). Many firms played a role in merging computers with personal digital
assistants, digital media players, and
cellphones. But no one has pushed
this convergence as far and as elegantly
as Steve Jobs, especially as seen in the
iPhone and the iPad. It was also important that Apple combined hardware
and software in one company—something Microsoft could never do except
in video games because it does not
make hardware. And, with iTunes, Jobs
solved an extremely vexing problem for
the industry and for consumers: how
to price digital content in the form of
music, video clips, movies, and TV programs. This innovation in digital services is no less profound than Steve Jobs’
innovations in consumer products.
The Master Strategist
Early observers of Jobs and Apple, including myself, underestimated his
ability to master the business side of
technology. Clearly, over time, Jobs got
better at this—much better—perhaps
as the world caught up to what he was
trying to do. Recall that he resigned under pressure from Apple in 1985, after
the Macintosh failed to catch on in the
marketplace. He started NeXT Comput28
commun ic ation s of t he ac m
Early observers
of Jobs and Apple
underestimated
his ability to master
the business side
of technology.
er the same year, but this company also
failed. Jobs recovered by selling NeXT to
Apple in 1996, a brilliant stroke because
he not only rejoined Apple but was able
to use NeXT’s novel software technology to replace the aging Macintosh operating system. Meanwhile, Jobs’ love
of graphics, movies, and computers led
him to found Pixar in 1986 by acquiring
the computer animation department
from Lucas Films (which he sold to Disney in 2006 for a cool $7.4 billion).
Jobs made other moves that showed
he could put aside personal pride or biases to do what was necessary to save
and grow the company. Two incidents
stand out. First, when he rejoined
Apple in 1996, the firm was practically
bankrupt, with only a few months of
cash left. But Jobs got a $150 million
investment from archrival Microsoft
as well as a commitment from Bill
Gates that Microsoft would continue
to produce Office for the Mac. This
agreement was critical to maintain the
Macintosh business, then the only real
source of revenue for Apple. Second,
in 2005, Jobs abandoned his 20-year
commitment to the Motorola microprocessor and adopted archrival Intel’s
technology. This move helped bridge
the growing cost-performance gap with
Windows PCs, and enabled the Macintosh to continue as a second platform
that was also much more interoperable
with the Windows world. As I look back
at this history—disappointment with
the original Macintosh, failure at NeXT,
success with Pixar, awkward but highly
useful alliances with Microsoft and Intel, the two companies Apple customers loved to hate—one must conclude
that, in addition to his other extraordinary talents, Steve Jobs truly was a master strategist, second to no one.
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The Legacy
And so now Apple grows not at the
slow pace of the personal computer
business, like Microsoft, or of Internet advertising, like Google, but at the
breathtaking speed of exciting new
global markets led by smartphones,
tablets, app stores, cloud services
(iCloud), and digital content distribution (music, video, and TV, as well as
books, magazines, and newspapers—
what we used to call “print”). Looking
at rates of growth in sales and profits,
or increases in market value, Apple has
left Microsoft and Google, as well as
IBM, Hewlett-Packard, Dell, Nokia, Intel, Cisco, EMC, Sony, AOL, and many
other prominent technology firms, in
the dust. Jobs and Apple defied conventional strategy Microsoft-style and
have shown that more substantive innovation—coming up with consumer
products that truly do seem new or almost new to the world, and not just to
the company—can be exciting and fun,
as well as enormously profitable.
Apple should do well for several
years to come, as Tim Cook’s team executes on the vision and product portfolio that Jobs has left behind. But most
observers worry about what will happen when Apple exhausts the ideas still
on the drawing board. Jobs will not be
around to champion yet another product that changes the world and fills up
yet another sales pipeline.
The end had to come, of course; no
one lives forever and no company is immune to competition. We were somewhat prepared: Jobs was seriously ill
for several years and had a limited role
in Apple for the past couple of years.
But words are inadequate to express
what Steve Jobs meant to Apple and to
the world of technology, innovation,
and high-tech entrepreneurship American-style. Surely, as an entrepreneur
and innovator, he represented the very
best that the U.S., or any country, has
to offer. Our thoughts must be with the
people closest to him, beginning with
his family and intimate friends. They
will miss Steve Jobs the most, but they
are not alone.
Michael A. Cusumano ([email protected]) is a
professor at the MIT Sloan School of Management and
School of Engineering and author of Staying Power: Six
Enduring Principles for Managing Strategy and Innovation
in an Unpredictable World (Oxford University Press, 2010).
Copyright held by author.