(Fortune magazine) -- How's this for a gripping corporate story
line: Youthful founder gets booted from his company in the 1980s,
returns in the 1990s, and in the following decade survives two brushes
with death, one securities-law scandal, an also-ran product lineup, and
his own often unpleasant demeanor to become the dominant personality in
four distinct industries, a billionaire many times over, and CEO of the
most valuable company in Silicon Valley.
Sound too far-fetched to
be true? Perhaps. Yet it happens to be the real-life story of Steve
Jobs and his outsize impact on everything he touches.
The past
decade in business belongs to Jobs. What makes that simple statement
even more remarkable is that barely a year ago it seemed likely that
any review of his accomplishments would be valedictory. But by deeds
and accounts, Jobs is back.
It's as if his signature "one more
thing" line now applies to him as well. After a six-month leave of
absence in the early part of this year, during which he received a
liver transplant, he is once again commanding a 34,000-strong corporate
army that is as powerful, awe-inspiring, creative, secretive, bullying,
arrogant -- and yes, profitable -- as at any time since he and his chum
Steve Wozniak founded Apple (AAPL, Fortune 500) in 1976.
Superlatives
have attached themselves to Jobs since he was a young man. Now that
he's 54, merely listing his achievements is sufficient explanation of
why he's Fortune's CEO of the Decade (though the superlatives
continue). In the past 10 years alone he has radically and lucratively
reordered three markets -- music, movies, and mobile telephones -- and
his impact on his original industry, computing, has only grown.
Remaking
any one business is a career-defining achievement; four is unheard-of.
Think about that for a moment. Henry Ford altered the course of the
nascent auto industry. PanAm's Juan Trippe invented the global airline.
Conrad Hilton internationalized American hospitality.
In all
instances, and many more like them, these entrepreneurs turned captains
of industry defined a single market that had previously not been
dominated by anyone. The industries that Jobs has turned topsy-turvy
already existed when he focused on them.
He is the rare
businessman with legitimate worldwide celebrity. (His quirks and
predilections are such common knowledge that they were knowingly
parodied on an episode of "The Simpsons.") He pals around with U2's
Bono.
Consumers who have never picked up an annual report or even
a business magazine gush about his design taste, his elegant retail
stores, and his outside-the-box approach to advertising. ("Think
different," indeed.)
It's often noted that he's a showman, a born
salesman, a magician who creates a famed reality-distortion field, a
tyrannical perfectionist. It's totally accurate, of course, and the
descriptions contribute to his legend.
Yet
for all his hanging out with copywriters and industrial designers and
musicians -- and despite his anticorporate attire -- make no mistake:
Jobs is all about business. He may not pay attention to customer
research, but he works slavishly to make products customers will buy.
He's
a visionary, but he's grounded in reality too, closely monitoring
Apple's various operational and market metrics. He isn't motivated by
money, says friend Larry Ellison, CEO of Oracle (ORCL, Fortune 500).
Rather, Jobs is understandably driven by a visceral ardor for Apple,
his first love (to which he returned after being spurned -- proof that
you can go home again) and the vehicle through which he can be both an
arbiter of cool and a force for changing the world.
The financial
results have been nothing short of astounding -- for Apple and for
Jobs. The company was worth about $5 billion in 2000, just before Jobs
unleashed Apple's groundbreaking "digital lifestyle" strategy,
understood at the time by few critics. Today, at about $170 billion,
Apple is slightly more valuable than Google (GOOG, Fortune 500).
Its
market share in personal computers was plummeting back then, and the
cash drain was so severe that bankruptcy was a possibility. Now Apple
has $34 billion in cash and marketable securities, surpassing the total
market cap of rival Dell (DELL, Fortune 500). Macintoshes make up 9% of the PC market in the U.S. today, but that share is increasingly beside the point.
With
275 retail stores in nine countries, a 73% share of the U.S. MP3 player
market, and the undisputed leadership position in innovation when it
comes to mobile phones, Apple and its CEO are no one's idea of
underdogs anymore.
In 2006 Disney (DIS, Fortune 500)
paid $7.5 billion to acquire Pixar, the computer animation film studio
Jobs had nurtured and controlled. Jobs, in turn, became a Disney
director and the blue-chip company's largest shareholder. His net
worth, solely based on his stakes in Apple and Disney, is about $5
billion. Other executives have had stellar decades but none can compare with Steve's.
With
Jobs back at the helm of his company, plenty of challenges lie ahead.
Will the Goliath role suit him nearly as well as playing David clearly
has? How will he respond to the competition he has awakened,
particularly in smartphones, even as the personal computer fades in
relative importance? Has he fashioned an organization that can succeed
him? Can he possibly be as dominant in the decade to come as the one
that is ending?
The "decade" of Steve actually began in 1997,
when he returned to Apple after having been ousted a dozen years
earlier. That was a year of triage, of a humbling investment from
Microsoft (MSFT, Fortune 500), of paring Apple's product line to a bare minimum of four computers.
By the following year Steve's regime had kicked into gear. Jobs
completed the hiring of a new management team, which included several
executives from his previous company, Next. Those top players would
form the nucleus of the Jobs brain trust for nearly 10 years.
Then
came the first Macintosh after Jobs' return, the iMac, a breakthrough
all-in-one computer and monitor that heralded Apple's return to health.
The success of the pricey iMac, coupled with drastic cost cutting,
allowed Jobs to build a cash cushion. By repairing Apple's balance
sheet, he prepared the company for big investments to come, a shrewd
business move if ever there was one.
Jobs laid the foundation for
Apple's leap from stable to stratospheric when things looked darkest.
In 2000, Apple missed its financial targets in a September earnings
announcement, sending its stock price plummeting in subsequent months
to the equivalent of $7 in today's prices. Yet Jobs by this time had
set in motion the key elements of Apple's rejuvenation.
Over the
course of 2001, as global markets fell and the world headed into
recession, Apple launched the iTunes music software (in January), the
Mac OS X operating system (March), the first Apple retail stores (May),
and the first iPod (November), a 5GB model that Apple bragged would
hold 1,000 songs.
The market didn't catch on quickly to the
significance of those events. iTunes was just music-playing software
embedded into Macs and lacked an online store that sold music. The new
operating system, though impressive, powered a niche product. The iPod
was a snazzy MP3 player in an established market.
As the
company's stock languished, takeover rumors appeared from time to time.
What was never reported was that Jobs seriously contemplated taking the
company private with the help of newly formed buyout group Silver Lake
Partners. An Apple buyout would have been the deal of the century, but
according to people familiar with the talks, Jobs ultimately shut them
down.
That was actually the second serious proposal to buy Apple.
In 1997, Jobs' friend Ellison, later an Apple board member, lined up
financing to take over the company on the assumption that Jobs would
run it. In a recent interview Ellison said Jobs didn't like the idea of
being "second-guessed" if it looked as if he'd returned simply to make
money. "He explained to me that with the moral high ground, he thought
he could make decisions more easily and more gracefully," says Ellison.
For those paying attention after Jobs' return, the CEO was telegraphing Apple's trajectory. "I would rather compete with Sony (SNE) than compete in another product category with Microsoft," he told Time
in early 2002. "We're the only company that owns the whole widget --
the hardware, the software, and the operating system. We can take full
responsibility for the user experience. We can do things that the other
guy can't do."
Jobs was convinced that the masses would turn to
Apple, but only if he could speak directly to them -- and not just to
faithful Macintosh users, a club that included mainly artists and
students. The strategy of building company-owned retail stores, so
integral to Apple today, was derided at the time as a risky cash drain.
"He did this with a nervous board," says Bill Campbell, a former Apple executive who went on to become chairman of Intuit (INTU)
and an Apple board member. "He knew that this is what customers
wanted." What's striking looking back is how little there was to sell
in the original Apple stores. Jobs knew how he'd fill them.
Jobs
made it his business to know everything about Apple. "He's involved in
details you wouldn't think a CEO would be involved in," says Ken
Segall, a former Chiat/Day creative director who has worked with Apple
on and off for years. Jobs commissioned the iconic "Think different"
campaign, says Segall, well before any of Apple's new products were
introduced -- or even described to the ad team. "He'd say, 'The third
word in the fourth paragraph isn't right. You might want to think about
that one.' "
The rare pairing of micromanagement with big-picture
vision is a Jobs hallmark. Early in his return to Apple, he recognized
that gorgeous design was a differentiator for Apple in a computer
industry gripped by the successful blandness of Dell, Microsoft, and
Intel (INTC, Fortune 500).
"I
cannot count the number of clients who have marched in and said, 'Give
me the next iPod,' " writes Tim Brown, CEO of product-design consultant
Ideo, in his new book "Change by Design." "But it's probably close to
the number of designers I've heard respond -- under their breath --
'Give me the next Steve Jobs.'"
Jobs also has a knack for
pouncing at the right moment. The music industry had failed repeatedly
to develop its own digital-music sales site before Apple came along
with iTunes, which was by then prepared to become a store for buying
music.
Jobs cleverly made his pact with the record labels when
iTunes worked only on Macs, which in 2002 had a personal-computing
market share in the low single digits. Apple's humble position --
before iTunes became compatible with Windows, expanding its potential
market share to nearly all PCs -- was a virtue. This made iTunes an
experiment rather than a destructive paradigm shift.
"I don't
understand how Apple could ruin the record business in one year on
Mac," said Doug Morris, the head of Universal Music, according to
"Appetite for Self-Destruction," a new book about the record industry's
ills by Rolling Stone writer Steve Knopper. "Why shouldn't we
try this?" Writes Knopper: "By the time Steve Jobs came around, he was
the last resort. He was merely smart enough to know it. He played
tough, but not any tougher than any lawyer for a major label who had
negotiated an artist contract in recent decades."
A key Jobs
business tool is his mastery of the message. He rehearses over and over
every line he and others utter in public about Apple, which authorizes
only a small number of executives to speak publicly on a given topic.
Key
to the Jobs approach is careful consideration of what he and Apple say
-- and don't say. Harvard professor David Yoffie estimated that in the
months between announcing and selling the first iPhone in 2007, Apple
received $400 million in free advertising by not making any public
statements, thereby whipping the media into a frenzy.
Jobs
himself is careful to avoid overexposure, preferring to speak only when
he has products to promote. He didn't disclose his 2004 cancer surgery
until after it occurred, and then only in an employee e-mail that was
strategically released to news outlets. Similarly, he told the world of
his recent leave in another employee missive, with no additional
comment from him or anyone else at Apple.
Nobody in Jobs' sphere
speaks without the permission of the company's media relations team,
which reports directly to Jobs. Apple declined to make Jobs available
for an interview for this article. It did bless the participation of
some people in Apple's orbit to speak about him, while nixing requests
for others.
The secrecy has rankled corporate governance experts,
who insist the health of such an indispensable CEO warrants greater
disclosure.
Jobs was initially mum as well about a stock options
backdating scandal that embroiled the company's former finance chief
and general counsel. In an eventual SEC filing, Apple said Jobs was
aware that the company had adjusted option grant dates so that the
grants were more profitable for employees. Jobs apologized for the
backdating, calling the episode "completely out of character for Apple."
Jobs manages the money, the message, the deals, the design, and more. Consider the case fairly made that the long-ago enfant terrible
of the computer industry has built up impressive business chops and
that his company is peerless. But if nothing else, his recent illness
is a reminder that Steve Jobs is mortal. When he's gone, how long will
his company thrive without him?
Apple's future.
This
past September, when Steve Jobs made his triumphant return to the
public eye, he thanked precisely one Apple executive by name: Tim Cook,
Apple's chief operating officer.
At an event to introduce a new
line of iPods, Jobs first informed a crowd of journalists, analysts,
and Apple developers that he now possessed the liver of a
"twentysomething liver donor who had died in a car crash." Then he
thanked Cook and the rest of the management team for "ably" running
Apple in his absence. Cook, in turn, led a standing ovation for Jobs,
his arms raised over his head from the front row of a San Francisco
auditorium.
With Jobs back at work, the conversation has been
postponed as to whether Cook, or anyone else, is prepared to fill Jobs'
shoes. "At Apple the hierarchy is determined by who Steve calls," says
a former Apple executive. "There's a lot of value in 'Steve said.'"
Larry
Ellison, a CEO known to dislike the topic of succession, says of his
friend, "He's irreplaceable. He's built a fabulous brand. He's got a
wealth of products. Whenever he leaves, I hope he retires in good
health and he's sailing off in his yacht in the Mediterranean. But
they're going to miss him terribly, because it's a consumer products
company. The product cycle is so fast."
There are signs that Jobs
has inculcated the troops enough to last awhile without him. "The
organization has been thoroughly trained to think like Steve," says
someone with contacts among the Apple executive team. "That's why the
six months went so smoothly. People could envision, 'This is what Steve
would do.'"
Jobs, in fact, inspires far beyond Apple. Larry Page and Sergey Brin recently told The New Yorker
that Jobs is their hero. When Jeff Bezos released Amazon.com's smooth,
shiny Kindle 2, the Jobs envy was obvious. Venture capitalist Marc
Andreessen, who co-founded Netscape, says he often evokes Jobs in his
advice to entrepreneurs. He says, "The threshold for the release of the
first product should be, 'What would Steve Jobs do?'"
Looking out
on the next decade, Jobs may well be asking himself a variation of that
very question: After creating more than $150 billion in shareholder
wealth, transforming movies, telecom, music, and computing (and
profoundly influencing the worlds of retail and design), what should
Steve Jobs do next? Given his penchant for secrecy and surprise and his
proven brilliance, it's a fair bet that he'll let us know when he's
good and ready.
Reporter associate Doris Burke 
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