Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful, that’s what matters to me.
—Steve Jobs
Steve and I spent a lot of time discussing the core of the company’s values. He kept emphasizing that they had to reflect the nature of a start-up company and of a company driven by innovation, entrepreneurship, and products that truly satisfied the user. He wanted the company to be based on values, and he wanted values that would remind everyone not to compromise the integrity of the product in the name of profit. He wanted the company to be an innovator and a premier manufacturer of personal computers—but as the value leader, not the price leader.
He also wanted the statement to be based on two further premises:
We had long discussions about what should be included in a values statement for Apple. What I came up with, following his guidance, was a document that began by stating the business principles and then presented a set of values.
The business principles included these items:
When we had finished our work, the set of values included these:
These values became part of everyday communication and a standard by which employees could measure how they themselves and their management were performing.
How did Apple, still a young company, come to recognize the need for a values statement? Most young companies don’t have a written set of corporate values that lay the groundwork for the culture of the company. There are so many key things that need to get done all at the same time, just for the company to survive, that writing down a set of values seems like a back-burner item.
At Apple, the motivation for creating values guidelines arose out of a negative incident. On February 25, 1981, when the company had been in business for only five years, then-CEO Mike “Scotty” Scott looked out the window of his office early one afternoon and saw about 30 Apple people outside, hanging around, chatting. Nothing unusual about that—when they were struggling over some thorny problem, pairs or whole teams of engineers, in particular, often hung around in the fresh air while they batted ideas back and forth. I have no doubts that many technical problems were probably solved in just that way. On that particular day, Scotty for some reason didn’t read that scene as Engineers at work but, I guess, as something like People standing around wasting the company’s money. He had been frustrated with the failure of the Apple III, blamed mismanagement for this failure, and wanted to make a point. He decided to do that by firing some people.
There was no economic reason for this. Apple was growing at a frenzied pace, with sales booming and plenty of cash in the bank.
Scotty advised board chairman Mike Markkula and the other board members what he wanted to do but didn’t wait for their response. In what would become known in the corridors of Apple and in the Apple histories as Black Wednesday, he started calling people into his office and telling them, one by one, that they were being let go—about 30 people in all, among them some very talented engineers.
It was a bad decision and had quick consequences. As a result of this bizarre action, the top jobs of the company were reshuffled. Mike Markkula took over as president, Steve Jobs as chairman (his title had been VP of technology), and Mike Scott left the company soon after.
In the aftermath, a task force was formed to put together and set down on paper a statement of Apple’s values.
It was critical that this culture of Apple values become a worldwide system—so every Apple employee, in every office, in every country would be in tune with the values that had been set at Apple headquarters in Cupertino. This was accomplished by making values indoctrination a part of the process for new hires in all countries and a refresher in leadership training seminars for new Apple managers. The values document became part of the fabric of the company.
In human resources, I made it one of the key responsibilities of the HR people to make sure the values were being adhered to on a daily basis, and I was to be advised of any deviations. I had listening posts all over the world, and the information I received was key to making this an accountable value system.
When executives from Cupertino would travel, we made it a key part of their job to discuss and monitor how values were being implemented in all parts of the world. Since in the early days I spent a lot of my time in Europe and Asia, I was able to make sure that the value system was being adhered to in Paris and Tokyo as it was in New York and Cleveland. At any Apple facility Steve and I visited, we would go on walk-throughs and in casual discussions with employees bring up the question, “How are the values doing here?”
I also created Apple Corporate TV. All employee meetings we would have in Cupertino would be available via satellite in Apple offices around the world.
Believing in the power of the pen, I also established an official Apple newspaper for all employees. Adapting the name of the street in Cupertino that the Apple buildings were located on, Bandley Drive, we called the new publication the Bandley Shuffle, or the BS for short. (That abbreviation was typical Apple irreverence and brought smiles.)
The unique thing about the Bandley Shuffle was that the editor I hired from a newspaper was given the authority to run any article without getting management approval for content, as required in almost every other company I know about. Of course, the editor understood that the contents had to be in line with Apple values, but beyond that, he had a free hand.
All companies have secrets, of course. The origin of Apple’s culture of secrecy isn’t hard to understand. When the first Macintosh was in the late stages of development, some reporters knew many of the details. Writers such as the prominent technology journalist John Dvorak published inside knowledge of the Mac configuration, as well as business decisions and even conversations from Mac team meetings, before many Apple employees heard these details. Even Apple people in the know would grab up Dvorak’s latest column to see if he had any tidbits they hadn’t heard yet. So it didn’t surprise anyone that Microsoft and Sony had extensive knowledge about the Mac before it was unveiled.
Steve became so frustrated by the leaks that he had our main conference room swept for hidden microphones. He and I came up with a plan to expose one Mac team member we thought might be slipping stories to Dvorak. We concocted some bits of misinformation, which I casually mentioned to the suspect. Dvorak never published those details, so our man wasn’t the snitch, after all. (If he ever found out we had suspected him, I hereby apologize for our mistrust.)
I ran into Dvorak some 10 years later and said, “Okay, who was it?”
He didn’t have to ask what I was talking about. His response was, “It wasn’t one person. There were many.” So Apple had been like a sieve, leaking from many places.
The truth is that even Steve himself would sometimes curry favor with a particular reporter by whispering some supposedly secret tidbit to him. He gave rise to a saying that began to be heard around the corridors of the company: “Apple is the only ship that leaks from the top.”
All that would change quite drastically—a subject we’ll come back to later.
I had come to Apple already well aware of the power of values. At IBM I had seen a value system that was amazingly powerful and was a guiding light for the operation of the company. It was the underpinning of a very strong culture and, I was convinced, had helped the company become so successful: in terms of market capitalization, IBM was ranked number 6 in the world and was the only nonunion company among the top 135 companies globally.
I have always felt the IBM success was, in particular, largely the result of several key aspects of the culture. Among them respect for the individual and the open-door policy have always seemed especially key. (The open-door policy referred to the practice of being able to approach any executive in the company with a problem or suggestion, including going to the chairman of the board with an issue.) I used to marvel that every man in the 300,000-person IBM workforce would put on a white shirt and a tie every morning—that one simple fact showing the dedication that can come from adhering to shared values.
But I was aware of one big problem with IBM’s values: most of them were not written down. It was like England, where the people speak proudly of their constitution, though there is no such written document.
Though I came to Apple already admiring IBM’s values, I learned to admire one other company as well. Steve was always very impressed with Sony. In our visits to Japan and meetings with the company’s CEO and cofounder, Akio Morita, we were always struck by the remarkable attitude of all of Sony’s employees. We talked a lot about how Sony kept its entrepreneurial and product-orientation spirit alive. How did they communicate their values?
It was interesting to Steve and me that they did not have a values statement. Rather, it was part of the Japanese culture to be completely committed to one’s company and job. It was not specified in a document; they just lived it. But Sony did underpin the culture by providing its employees with certain perks that supported who they were.
Samsung on the other hand did have a written values statement. A few of the items were these:
Culture informs success, not the other way around. And leadership drives culture. After Steve left Apple, CEO John Sculley realized it was critically important to make sure the employees of Apple felt that the management change would not affect the future of the company. At the grass roots of Apple, the culture that had been established in 1981 was alive and very strong. Still, it needed to be reinforced.
As vice president of human resources, I had the challenge of figuring out how to refresh the Apple culture. For all his drawbacks, Steve had nonetheless established a culture that made Apple a place where you felt appreciated and rewarded even though it was a demanding place to work.
Shortly after Steve’s departure, I met with John, the other executives, and the board of directors and made a presentation that became known as Apple’s “Stakeholders’ Report.” This outlined a plan to create stronger communication about the Apple values and to make sure the values were reinforced and adhered to. This was critical to the company’s future.
It was also at this meeting that I suggested, “One Apple messiah is gone. We need to bring the other one back.” It was a plea to get Steve Wozniak involved again. John Sculley immediately left the room and called Woz, who agreed to accept a role with the company.
I put into place a daily “Breakfast Club” meeting that became famous—getting all the key executives together at 7 AM every morning to keep everyone completely updated. To deal with gossip and any troubling rumors and to answer questions, I also launched the Hearsay Café—making an Apple executive available in the cafeteria at certain announced times, so any employee, without feeling pressure, could get questions answered.
John Sculley understood the power of the Apple culture and knew that one of the secrets to his success in managing Apple was going to be to fully support and adhere to the culture. He knew that the Apple culture was one of the key drivers of results and that its importance should not be underestimated.
In 1985, sales and profits declined and Apple experienced the first losing quarter in its history. In a massive layoff, John ordered that 1,200 people from around the world be let go. As I prepared the 1985 Annual Report, John gave me a statement to be included, saying in part, “It’s remarkable that we accomplished a reorganization and managed to respect the human dignity of those who left and at same time cultivating the spirit of those who remained. Jay really cares about people, the environment in which they work, the integrity of the values they share, and the importance of giving Apple people the opportunity for personal growth. Apple could not have grown up so fast without this.”
I appreciated the praise, but it did not forestall a future locking of horns between John and me.
While Steve was running NeXT, he and I had a conversation that I thought odd at the time. Now, though, I understand.
His conversation was all about Apple. It was clear he was keeping very closely in touch with what was going on, showing a lot more knowledge about the internal workings than he could have learned from reading newspaper and magazine articles. Talking as if he was still at Apple, he complained that the products were bad, and buyers didn’t have the old passion for the company and its products. He complained there were too many products and that it was a mistake to try to turn out products for every market group—personal, education, business, and so on. And he complained that the computer stores still stocked Apple products in the corner, practically out of sight, because dealers could make more money selling Windows machines.
Later, when Steve returned to Apple and was named the interim CEO, nobody had any doubt the culture was going to be changing. He had several key priorities. Foremost, get the organization back to being focused on product. Then find the right talent, organize those people in small teams, and restructure the product lines. In a very short period of time, Steve was able to reorganize the company in his flat, small-team, direct-communication Pirate style—all with a focus on the product.
Meanwhile, a Jobsian e-mail went out banning all smoking anywhere on the Apple campus. One employee ran into Steve, introduced himself, and introduced his dog; five minutes later, another e-mail: dogs no longer allowed. Nobody wanted to step onto an elevator and encounter Steve, who was asking people, “What have you done today to earn what I’m paying you?” A rumor circulated that someone had been fired for not presenting an acceptable answer during one of those elevator rides—though nobody could ever put a name to such a person. Still, people who never exercised began using the stairs.
In March 1998, to concentrate on a simple product plan that is the essence of a creative, innovative operation, Steve cancelled a number of products, including the Newton, a ground-breaking early PDA that even including handwriting recognition. Newton sales had just turned the corner; the product was beginning to make money for the company. Some thought Steve was crazy for cancelling what promised to turn into a highly profitable item. He didn’t care: Apple’s core product was computers, and he knew that’s what he needed to get the company focused on. Computers and nothing else. That would change later, of course, but not until he had returned the company to good health.
With the help of Apple’s chief designer, Jony (pronounced Johnny) Ive, Steve shook his innovation wand to usher in a new look for personal computers, making the new Macs in their own way as distinctive as the very first one had been. While work was progressing on major software and hardware innovations, Steve had his troops gin up some signs that the company was turning a corner. Some of the new Macs came in candy colors, others in gleaming metals with rounded edges. He wanted to show proof of innovation, and it was happening.
I’ve lost track of who originally described Steve as living by the adage that “cool products demand cool pitches.” When he rejoined Apple, the company had more than a dozen ad agencies. He fired them all except for the team at Chiat/Day, the company that had created the “1984” commercial.
The agency came through again with another campaign that made advertising history: “Think Different.” (Grammatical English would have been “Think Differently,” but it didn’t have the same punch; the intentional error didn’t interfere with the campaign winning many major advertising awards.) The ads were built around large pictures of famous people who had achieved great things because they were able to “think different.” The hope was that these people were so famous that the giant posters and the magazine ads did not need to bear their names: you were expected to recognize their faces. Many of the people were chosen by Steve himself. The selection included scientist Albert Einstein, Martin Luther King Jr., architect Frank Lloyd Wright, and John Lennon of the Beatles, as well as Steve’s personal music hero, Bob Dylan.
One of the big advantages for Steve after his return was the power of the Apple values. At the grass roots, the culture that had been established in 1981 was still alive and strong, despite all the changes in top management. Steve took advantage of the Apple workers who had been longing for his return to lead them out of troubled waters.
The standard version of the company’s financial condition at the time, according to Walter Isaacson and just about everyone else, is that the company was on the verge of bankruptcy. It’s the version that Steve preferred everyone to believe. Yet the truth is that Apple had some $1.5 billion in the bank—vastly more than enough to purchase NeXT while at the same time enriching Steve to the tune of 1.5 million Apple shares.
True, the products weren’t selling well and the company was bleeding cash, but there was more than enough cash on hand to give Steve time to get the company back on track. If Apple really had been weeks from filing bankruptcy, he never would have agreed to take control. Being in command of Apple when the company had to go out of business was the last thing he would ever have chosen to do.
As his early plan of action, Steve could have focused on touting all the products that were then in the Apple lineup. Instead he focused on renewing Apple’s original start-up culture. He did this by focusing on three basic things.
First, rethink the product strategy: instead of marketing a multitude of products, he wanted to decide which ones were really true to Apple’s core business and would be shutting down some product lines, even though they were generating revenue.
Second, put in place a cohesive strategy to end executive and manager infighting. When new ideas are forming and exceptionally bright people wrestle with difficult problems together, there are going to be disagreements. Out of this tension, complicated ideas get born and take shape. Steve wanted to make sure that any conflict would be dealt with up front and in positive ways, rather than allowing conflicts to fester, which too often leads to destructive behaviors.
And third, achieve a cross-disciplinary view of how the company should operate. He was looking for a positive atmosphere of teamwork across the company at every level, from product concept to sales.
Each of us has our own set of values, our own sense of what is important. If you have read other articles or books about Steve Jobs, you already know that at the top of his list of priorities was a compelling sense that attention to even the smallest details is crucial. Anyone involved in product development could hardly pick a more important value to have at the top of his or her own list.
On our walks together, one frequent subject was design, which, he complained, most people understood as how something looks but really should be understood as referring to the product as a whole. This was the first time I heard him express the concept that design means how it looks, but more important, it also means how it works.
Once, music-industry CEO Hilary Rosen was allowed to sit in on a session when two Apple team members were showing Steve their new version of a screen display that Steve had rejected on the previous go-around. “Steve spent about twenty minutes back and forth with the engineers about the best place within a three square inch section to put three words,” the CEO reported later in a private conversation. “He was that focused on the details of the design.”1
Journalist Tim Scannell once sat down with Steve to do an interview. Halfway through his first question, Steve put up his hand and interrupted to ask what he knew about—of all things—washing machines. Like most of us, the journalist didn’t know much more than how to load them and turn them on. He later wrote that over the next 10 to 15 minutes, Steve talked washing machines, “and I learned more about the man and his intense curiosity and zest for knowledge than I did about any washday miracles.”2
That must have been about the same time that Steve also did an interview with Gary Wolf of Wired magazine, because he still had washing machines on his mind. Steve regaled the writer with a story about how his whole family had been involved in the selection of a new washing machine and dryer. “We spent some time in our family talking about what’s the trade-off we want to make. We spent about two weeks talking about this. Every night at the dinner table we’d get around to that old washer-dryer discussion.” In the end, the decision came down to a choice between Miele machines (pronounced Mee-luh), made in Germany, or an American brand. Steve told the journalist that the American machines took about half as long to wash the clothes but that, in his view, the machines made by Miele “did a much better job, used about one-quarter as much water, and treated the clothes more gently so they would last longer.” (Of course, Steve, for his part, dressed the same way almost every day and owned probably a hundred of his favorite black turtleneck shirts and ditto for his favorite brand of jeans. So how long it took for the laundry to be finished was never going to be one of his challenges.)
In the end, they chose the Miele. At today’s prices, Miele washers sell in the neighborhood of $3,000, compared to machines from American companies that are available in the $300 to $600 price range. Steve explained to the journalist that the Mieles were “too expensive, but that’s just because nobody buys them in this country.”
Of course, the conversation around the Jobs’ dinner table wasn’t really about washing machines; it was about passing along his sense of the importance of design to his children. And he obviously thought the message had gotten through. He told the journalist that the new machines were “one of the few products we’ve bought over the last few years that we’re all really happy about.” And perhaps it’s not surprising for a man so focused on design that he finished the story by saying, “I got more thrill out of them than I have out of any piece of high tech in years.”3
So there’s a challenge for each of us: be able to relate a story that so vividly captures one of the values we prize.
It’s not enough that the values and culture of a company are embraced by the employees; they also need to be a reflection of the company’s customers. Walk into any Apple store and you can see and feel the Apple culture at work.
The same is true of some other values-oriented companies. Consider Starbucks: They have a published set of values that every employee is expected to know, understand, and follow—and their values statement is very customer oriented. I especially admire the way that the wording goes beyond pedestrian, everyday language, as shown by these excerpts:
Our mission is to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.
We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done.
And about the customers:
When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers—even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.
If you were to visit the Apple campus, one of the things you would likely find striking is the evidence of how committed the employees are to the Apple products. You would see that every Apple staffer carries an iPhone, has a MacBook or MacBook Pro, and has an iPad. If you are an observant person, you would likely conclude from the intensity on their faces and the bounce in their steps that they are extraordinarily committed and extraordinarily enthusiastic about their work.
That cannot be said about the workers in most companies, although I have observed similar attitudes in the employees of companies like Google, Oracle, and, yes, even Microsoft. Bravo for them—companies with a strong and well-defined values system are the kinds of places we all want to work.
Notes
1. From interview in William L. Simon and Jeffrey Young, iCon (Hoboken, NJ: John Wiley & Sons, 2005).
2. Tim Scannell, “Apple after Jobs,” Technology Guide, undated.
3. Gary Wolf, “Steve Jobs: The Next Insanely Great Thing,” Wired, April 2002, www.wired.com/wired/archive/4.02/jobs_pr.html.