Case

Customers of Apple Computer often act like members of a religious cult. Thousands of them
flock to the annual MacWorld convention to hear about Apple Computer's newest gadgets. They
form long lines outside Apple retail outlets to purchase the latest iPhone or iPad. Millions pay
more than they would for competing products to own iBook and iMac computers. Apple
believers helped revolutionize the music industry by purchasing iPods and buying songs from the
iTunes store.

If Apple is a cult, then cofounder and CEO Steven Jobs serves as the group's leader and chief
evangelist. Jobs and Steve Wozniak started Apple Computer in 1976, working at first out of a
garage. Jobs's vision was to make the world a better place through technology, by designing
electronic tools for the average person. However, he was forced out of the company during a
power struggle with CEO John Sculley in 1985. He then founded NeXT, Inc., and purchased
most of Pixar Animation Studios. Pixar produced a series of successful computer-animated
features, including Toy Story and Finding Nemo, making it one of the most profitable studios in
the history of Hollywood. Jobs eventually sold the production company to Disney, pocketing
billions. NeXT was much less successful, though the firm developed an operating system that
was adopted by Apple in 1996. As part of the operating system purchase agreement, Jobs
rejoined Apple, first as a consultant and then as CEO. When Jobs came back in 1996, the firm's
computer market share had shrunk to 8%, and it seemed that it would take a miracle for the
company to turn its fortunes around.

Apple's rebound under Jobs could indeed be considered miraculous. A flow of new products,
ranging from stylish new computers to music devices and phones, has generated record sales and
profits. The company's market capitalization jumped from US$2 billion to US$16 billion in the
first two and a half years after his return. Apple stock, at US$4 a share when Jobs returned to
Apple, soared to over US$170 a share in 2009.
Steven Jobs is now synonymous with Apple. He oversees every stage of product development,
constantly pushing for designs that are stylish as well as functional. (Jobs even insists that the
circuit boards of Apple devices be attractively designed.) The CEO refuses to rely on consumer
research, arguing, “A lot of times, people don't know what they want until you show it to them”
(Rodriguez, 2010). A charismatic leader, Jobs is able to command allegiance through the force of
his will, personality, and persuasive abilities. His persuasive power is showcased during his 90-
to 120-minute new-product presentations before the Apple faithful and FOS (Friends of Steve) at
MacWorld. Biographers Jeffrey Young and William Simon describe a Jobs performance this
way:

Steve Jobs has the same uncanny instinct for achieving dramatic flair that will produce maximum
audience impact as the legendary moguls of Hollywood's early days.

Working with the technical crew is often as far as he goes to prepare. He knows the product, he
knows the details, and he knows which features will make the eyes of the Macintosh faithful
light up. While his public relations people stand in the wings, panicked because they have no
idea what to expect, Steve takes the stage with the aura of Mick Jagger. He is a sensational
speaker, gripping, magnetic. To know that he does this without notes, without a TelePrompTer,
without rehearsal, is to know you are witnessing a magic act. Steve Jobs, magician
extraordinaire, pulls the rabbit out of the hat every time. (p. 273)

Jobs's impressive achievements have come at a significant cost to his followers. Employees
describe the “good Steve” and the “bad Steve.” The good Steve is a creative visionary able to
bring out the best in his followers, helping them achieve more than they ever imagined possible.
Observers note that he has matured since his initial removal from Apple. He is much more
willing to give credit to others and, at times, can be lavish in his praise of them. The “bad Steve”
is an obsessive bully. Not only does the CEO constantly intervene in the design process and
routinely shut down projects, he has a reputation for mistreating others. When an executive at
Pixar went too far in challenging his authority, Jobs not only fired him but also removed any
mention of his name from the company's history. At NeXT, he would routinely challenge
employees he met in the hall by asking, “What do you do here and why are you worth what I am
paying you?” (Young & Simon, 2005). Apple employees would take the stairs rather than risk
being stuck with him on an elevator and losing their jobs before the doors opened. They continue
to endure his routine temper tantrums and fear “being Steved” (becoming the target of his wrath).

CEO Jobs routinely clashes with outsiders. In one case, he told a reporter to “ ‘f**k off,’ for
asking the ‘stupidest, lamest question’ he had ever heard” (Pontin, 2000). He called another
reporter to say, “I think you're a slime bucket who gets most of his facts wrong” (Nocera, 2008).
He is a notoriously hard bargainer, continually renegotiating or nullifying contracts made with
suppliers and business partners like Disney.

Since his return to Apple, Jobs has created a culture of secrecy. Earlier in the firm's history,
employees would routinely leak information to the press to undermine corporate executives.
Now, talking to the press is grounds for instant dismissal, and executives deliberately release
misinformation in one part of the company in order to trace leaks back to the source. New
products are literally kept under wraps. Developers are monitored by cameras and are required to
cover up their work when leaving their stations. The initial iPod prototypes were kept in sealed
boxes; wires and controls were randomly placed so no one could determine how they were
placed on the actual unit.

Secrecy has also surrounded the CEO's health. In 2003, Jobs was diagnosed with a rare, treatable
form of pancreatic cancer and underwent successful surgery, facts that were not released until
months later. In 2008, cancer appeared again, on his liver. The Apple faithful and the press noted
that he was losing weight, but Jobs claimed at first that he was suffering from a bug or a
hormone imbalance. In reality, his cancer required a life-saving liver transplant. Only when news
of the operation leaked out did Jobs acknowledge he had received a new liver. During this
period, Apple's board refused to reveal any information on Jobs' medical condition. Although
federal law doesn't require the release of CEO health information, governance experts believe
that in the case of Apple, such data are critical to shareholders because the success of Apple is
directly tied to Steve. In fact, when Jobs took six months off to deal with his health issues,
Apple's stock price plummeted. The SEC is investigating to determine if Apple gained any
financial advantage from keeping news about Jobs' health from the public.

Jobs returned to his full-time position as CEO after his liver transplant and continued to wow
Apple cult members. However, in 2010 he again took a leave of absence, though he did appear at
the unveiling of the newest iPad in March 2011. Though he mellowed, those who dealt with him
could expect to encounter the two faces of Steve, described by one reporter as “fearless leader,
savvy pitchman, inscrutable guru, notorious nitpicker, obsessive perfectionist, ruthless man-
child, ultimate death-defying comeback kid—and top CEO of the first decade of the second
millennium” (Rodriguez, 2010)

Discussion Questions

1.Do Apple products and Steven Jobs have a cult-like following? If so, what accounts for
this extreme loyalty?

2.Do you own any Apple products? Have you stood in line to buy any Apple devices?
Why or why not?

3.Would Jobs be as effective if he didn't periodically intimidate employees?

4.Why do you think employees continue to work for Jobs even when they have
experienced the “bad Steve”?

5.Would you want to work for Steve Jobs? Why or why not?

6.Was Jobs justified in lying about his health? Why or why not?

7.Should companies be required to release medical information about their CEOs to

investors and the public?

References

Nocera, J. (2008, July 26). Apple's culture of secrecy. The New York Times, p. C1.