October 26, 2012
Startup White Board

Steve Jobs’ Tough Lesson in Entrepreneurial Leadership – a Different Take on His Legacy

This website makes a big point that entrepreneurs and leaders have almost diametrically opposed personal ambitions. Entrepreneurs have selfish motives for their actions in wanting to make the world change to accommodate and accept their idea and what they want to do. A leader, on the other hand, need to make the people around them feel that he is selflessly committed to making them successful. Entrepreneurial Leadership (EL) requires a person walk the sharp razor’s edge that divide’s the two territories.

The razor’s edge severely injured Steve Jobs before he learned how to balance on it. I base my Jobsian EL tale on well established facts as described in either Issacson’s book or the other interesting books about Steve Jobs[1]. The story of Steve Jobs is a rags-to-riches-to-almost-rags-to-even-greater-riches story that hinges almost entirely on when and how Steve Jobs balanced on the dangerous razor’s edge of Entrepreneurial Leadership.

After several small money making adventures with his best friend Steve Wozniak, the two Steves formed Apple Computer to make computers for hard core hobbyists. Once Steve Jobs realized that Wozniak’s novel computer could generate some sales, he started arguing with Wozniak about his design. He was not afraid to debate the merits of Woz’s design choices even though he had only a fraction of the electronics experience. In the early days of Apple before the Apple II became a big success, the two Steves argued regularly and passionately about design and neither of them won every argument. Sometimes, to prove his point, Steve Jobs would perform brazen acts, such as cold calling Intel and talking them into giving several of their most expensive leading edge memory chips to their company. In every argument the winning point yielded an important competitive advantage to the Apple II design, one of the most successful products ever. Jobs argued hard but let the best idea win.

Steve Jobs also displayed significant entrepreneurial leadership skills in realizing that he and Wozniak needed help if they were going to make Apple a real success. In order to appear more businesslike Jobs used what money they earned from their first sales to hire a bookkeeper and an answering service. Steve brazenly pursued Silicon Valley luminaries in order to seek their advice and support. The advice he received was sometimes brutal, but he nonetheless followed it. Following their advice ultimately enabled Jobs to lure to Apple Computer two extremely experienced and highly regarded semiconductor executives to take over as the company’s Chairman and CEO. In order to lead Apple to success, Steve Jobs deferred his potential authority to more experienced and talented executives. Being an EL has nothing to do with being the CEO or Chairman of the Board.

Steve Jobs did everything right in the formation and early growth of Apple Computer, but nobody wanted to work for Steve. He was temperamental, he was irrationally demanding, and he had no empathy for anyone, not even Wozniak. Steve Jobs, in the early days of Apple Computer was a major Entrepreneurial Leader – in spite of the fact that nobody wanted to work for him – because everyone acknowledged that his vision for the company was compelling and he was working brilliantly and brazenly towards that vision. He was viewed as critical to fulfilling the Apple vision. Everyone that counted at Apple felt Steve Jobs was going to help them be very, very successful. The long-term potential benefits were worth having to endure the harassments.

Once Apple Computer became extremely successful, Steve and the top Apple executives began disagreeing on the direction of the company. Jobs asked for the opportunity to demonstrate his vision for the future of computers. The Board gave Steve permission to form a team to develop a new leading edge computer and he hired world-class computer scientists to the Lisa team but they quickly kicked him out of the team because of his meddling. The computer scientists did not view Jobs as a leader because they had their own vision of the future of computing and they did need his vision to supplement theirs.

Steve Jobs was again able to pursue his vision of the future of computers when he commandeered a small group of Apple researchers working on a team known as “Macintosh.” This team aspired to develop a computer that would be as simple as a toaster. This team was not composed of world-class computer scientists, but rather unconventional computer designers who were considered eccentric by Apple executives. Steve quickly and passive-aggressively pushed aside the original Macintosh team leader. In spite of Jobs’ poor treatment of the original Macintosh leader the team supported Steve because they felt he could move their project farther and faster than anyone else in the company. The Macintosh team dedicated their lives to Steve’s vision for the next three years of development.

Nonetheless, in spite of the brilliant Macintosh architecture and software, and the brilliant PR used to introduce the Mac, the first Macintosh was a commercial fizzle and a financial disaster. The Mac quickly acquired the reputation for being slow and cumbersome to use and most people decided to buy the less innovative IBM PC that had been recently introduced. The Mac team had worried about the Mac being too slow and cumbersome, but they had been overruled by Jobs. The points the Mac team made were similar to the ones Wozniak had made 7 years before. Jobs had conceded the points to Wozniak but Steve Jobs would not even discuss them with his Mac team. Because Steve Jobs would not even debate points where his own experts clearly knew the technical and market reality better than he did, he caused the original Mac to ultimately fail. With that failure, Steve’s vision of the future of Apple no longer held true and Apple’s top management, even the people hand picked by Steve, felt that he could no longer lead any part of the company.

When Steve Jobs was fired from Apple he immediately set up a new computer company, NeXT Computer, and almost simultaneously bought a company that he felt had very cool computer technology, a company called Pixar.

Jobs was able to raise $200 million to launch and grow NeXT Computer and hire some of the best computer scientists in the world. Nevertheless, NeXT’s computers suffered from the same flaws as the Mac and proved to be commercial and financial disasters. Steve Jobs had not yet rediscovered the importance of respecting the expertise of his team. He still wanted to prove to the world that he knew better than anyone else what the computer of the future would be like. After 5 years of flops, even Steve jobs had to admit that his vision wasn’t working and NeXT’s efforts to design and manufacture computers were shut down. Soon thereafter the investors brought in somebody else to run the company and they kept Steve Jobs only as the titular head of NeXT.

Initially, Steve Jobs did not spend much time at Pixar, he merely asked for monthly updates from the co-leaders of company, Ed Catmul and Alvy Ray Smith. When it became clear that Pixar’s computer would not be a commercial success, he increased the frequency of his meetings with Ed and Alvy and eventually realized that Pixar’s computer design and manufacturing should be shut down and sold off. The animation software and production parts of Pixar remained but were losing money and Steve had to personally fund all the losses. He demanded Pixar drastically reduce their expenses. Jobs argued for the elimination of the animation production department, run by John Lasseter, but he never overruled Alvy and Ed when they decided to severely cut costs elsewhere in order to save Lasseter’s group. Even with the drastic cuts, Pixar came close to draining Steve Jobs of all the wealth he had accumulated from founding Apple. In 1995, only because Steve did not insist he was right about the lack of potential value of animation production, Pixar finally was able to become a spectacular media and financial success.

Twelve years after firing Steve Jobs Apple stumbled badly in its attempts to develop a new generation of Macintosh operating system. Apple was forced to buy the remaining software portion of NeXT Computer to save itself and Steve had a rare second chance at leading. By that time his brush with financial disaster had humbled him. He had also married and had a growing family that he loved dearly – learning to love helps that EL sense of balance. Steve Jobs may have been humbled but he still had a keen ability to judge talent and he surrounded himself with brilliant designers and business leaders. He listened to and debated with this inner circle of talent and he ultimately let them do their jobs. He was no easier to deal with and no less demanding. He was no less opinionated and aggressive. But he was once again an Entrepreneurial Leader as his inner circle strove to transform into reality their collective vision of the future of computing. As a result of Steve Jobs’ transformation, a near bankrupt Apple Computer became the most valuable company in the world.

Any entrepreneur’s legacy in the business world hinges on their ability to balance on that razor’s edge called Entrepreneurial Leadership.

[1] Issacson, Steve Jobs, Simon & Schuster (New York), 2011. Moritz, Return to the Little Kingdom, Overlook (New York), 2010. Linzmayer, Apple Confidential 2.0, no starch press (San Francisco), 2008. Young & Simon, iCon, Wiley (New York), 2005. Wozniak, iWoz, Norton (New York), 2006.

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