In recent years, there’s been an inordinate amount of commentary written examining the secrets to Apple’s success, and how Steve Jobs built the company.
Of all the material that’s come to light, there is one clip in particular that I think should be absolutely mandatory viewing for anyone running a company – especially one that’s struggling.
First, some quick background. After co-founding Apple in 1976, Jobs was pushed out of the company as the result of a boardroom coup in 1985. He returned as interim chief executive (or “iCEO”) in 1997.
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As difficult as it might be to imagine today, Apple was in a very dire position at the time he returned. While the company’s sales increased for a number of year after Jobs was pushed out, the Mac failed to grab a strong toe-hold in the business market where IBM and Windows dominated.
Many Apple enthusiasts selectively forget what a nightmare Macs were to deal with before Mac OS-X. Classic Macs lacked true multitasking and proper memory management, and a single program crashing would, more likely than not, bring down your whole computer.
With the release of Windows 95 in 1995, Microsoft and the PC world had not just caught up with, but had overtaken the Mac. Other computer platforms that were technically superior competitors to the PC, such as Commodore’s Amiga and Acorn’s Archimedes system, had already fallen by the wayside.
That’s without mentioning travesties of product design and good corporate strategy such as the Apple QuickTake digital camera, the Apple PowerCD remote controlled CD player, the Apple Interactive Television, and the Apple Pippin home video game system.
By 1997, Apple was in serious trouble. There was serious speculation at one point that Netscape, a predecessor of Firefox maker Mozilla, would buy out the troubled company.
Business analysts were calling for Apple to be broken up into a software company that would compete against Windows and Microsoft and a hardware maker that would compete against the likes of Dell, HP and Compaq.
It would not be until several years after Jobs’ return, in 2001, that the company would release the iPod.
The video below was filmed at an internal strategy meeting around eight to 10 weeks after Jobs returned to Apple, and details his three-point make-or-break strategy to save the company. Suffice to say, it worked out better than even Jobs himself would have predicted.
Here are the three key parts to Jobs’ strategy:
The core of Jobs’ strategy was getting rid of distractions, such as the digital cameras and video game systems, and instead focusing on doing the basics really well. Jobs got rid of 70% of the product line and replaced it instead with two professional and two home user focused computers. The aim was to make the product line “much simpler and much better”.
“I got out of the meeting with people who just got their projects cancelled, and they were three feet off the ground with excitement, because they finally understood where the heck we were going,” Jobs said.
2. Inventory management
How Apple manages its supply chain is a topic I touched upon in another recent column.
Before Jobs’ return, Apple used to keep two to three months of inventory in the company’s manufacturing supplier pipeline, and an equal amount in its distribution channel pipeline.
“We’re having to make guesses about what the customer wants four, five, six months in advance, and we’re not smart enough to do that – I don’t think Einstein is smart enough to do that,” Jobs said.
Jobs’ strategy focused on meeting customer demand fast, rather than having a large amount of inventory stuck in just in case.
3. Market your values, not your product
The other key shift under Jobs, discussed by brand expert Michel Hogan, is shifting Apple’s marketing focus from products to the core values the company stood for.
“Values and core values – those things shouldn’t change,” Jobs said.
“But even a great brand needs investment and caring if it’s going to retain its relevance and vitality.”
Jobs’ inspiration was Nike, whose marketing “makes you feel like it’s [about] something other than a shoe company”, and the US dairy industry’s ‘got milk’ campaign.
“The dairy industry tried to convince you for 20 years that milk was good for you. It’s a lie, but they tried anyway. And the sales were going like this [gesturing downward]. And then they tried ‘got milk’ and the sales went like this [gesturing upwards]. Got milk doesn’t talk about the product – in fact it talks about the absence of the product,” Jobs said.
If your business is struggling, the key lessons from all of this is threefold. First, see if you need to dramatically cut your product offering and refocus on the things your business does well. Secondly, look for waste – especially in your inventory management. And third, invest in your brand and market your values rather than what your product does.