One of the greatest examples in business history of a large organization’s maneuverability took place right before our eyes: Apple Inc. In September 2002, Apple’s future was thought to be so bleak you could buy shares in Apple Computer at a price that valued its operating enterprise at less than zero. What you were buying, if you had been so bold, was Apple’s cash reserves of $5 billion. Beyond that, you were buying a prayer that Apple could do something with that cash.
Remember, this was five years after the return of Steve Jobs. Contrary to myth, Jobs did not immediately turn around Apple’s dismal fortunes. Yet just one decade later, Apple would drop the “Computer” from its name but win the world. It would become the richest company on earth in September 2012, valued at $656 billion.
Meanwhile, during that decade of Apple’s extraordinary ascent, other great American companies, stalwarts of reliable business success, fared poorly. Among them were Pacific Gas & Electric, Enron, WorldCom, Tyco, Adelphia Communications, US Airways, Trump Entertainment Resorts, Northwest Airlines, Lehman Brothers, Washington Mutual, Chrysler, and General Motors. Thus, even while Apple prospered, a greater number of American companies went bankrupt or out of business altogether than in any decade in the country’s history, including during the Great Depression.
How did Apple do it? Why did it succeed while it’s bigger and (initially) more successful neighbors faltered?
The simple answer is that during this period Apple managed to introduce a series of four monumental products and services—the iPod, iTunes, the Apple Store, and the iPhone and iPad—that created not only new industries but also entirely new multibillion-dollar market categories.
To understand how Apple did this, we need to appreciate the real contributions of Apple’s cofounder Steve Jobs, who had been out of the company for twelve years, and who returned at the beginning of this historic era in the company’s history. It was, in fact, a wiser and more confident Steve Jobs who took command of Apple for the second time in 1997. And though he remained the same mercurial, rash, dangerously unpredictable, and impetuous Steve Jobs who had been driven out of Apple in 1985, he had learned two important pieces of wisdom in the interim: (1) Build a company that rewards risk rather than punishes it; and (2) Never forget that all successful enterprises, no matter how big and wealthy, are an aggregation of teams large and small, loyal and renegade, stabilizing and anarchistic, from the lowliest engineers to executive row—all of them working, sometimes in harmony and sometimes at cross-purposes, toward the success of the company.
Throughout Apple’s story, in good times and bad, freakishly great teams from the unlikeliest corners of the company have arisen to play a crucial role in its future—and have often kept the company alive. They have come from design (the friendly competition between the Lisa and Macintosh teams), education (which gave the company a second chance when IBM captured the corporate market), the Apple operating system (which kept users loyal as company hardware declined in quality), and marketing and advertising (which maintained the Jobs style after he was fired) . . . and ultimately to the team organized by engineering chief Jon Rubinstein that designed and built the iPod and set Apple off on its third era. Many of these teams operated independently from the larger corporation—and a few were outright renegades. Almost every one showed a kind of genius.
Ultimately, it was these teams that built the early Apple, held it together under second-rate management through the hard times, and exploded with innovation in Apple’s resurrection and triumph. So the question is, why were Apple’s teams, often with many of the same members, so effective during some parts of the Apple story and utterly ineffectual in others? Three reasons:
Technology—Where did the flexibility and adaptability of Apple’s teams come from? From the technology itself. As we’ve already noted, the pace of technological change is so fast that if you can latch on to it and hang on, it will accelerate you past all traditional competition. Unfortunately, as many companies have learned to their dismay, doing so is a lot harder than it looks. But Apple did keep up with Moore’s law. Because it incorporated the law (via microprocessors and the latest memory media) into its products, it built rapid change into its culture, and it unleashed its teams to pursue the quickest possible paths to their goals.
People—Like Google, Facebook, and Twitter today, Apple in its first two decades (and in its most recent decade) enjoyed an almost unmatched star quality—and it shrewdly used that charisma to attract the best and brightest young talent to join its ranks. But that’s the easiest half of the story. Hot companies can always draw talent; the real challenge is keeping it when the excitement ends, the stock options have been exercised, and the cultural cachet fades. Apple managed to create such a powerful culture in its early years—the “kool-aid”—that it still managed to retain a surprising number of those top employees when the excitement faded and Apple slogged through the dreary early nineties. They were still there to lead the company when Jobs returned.
Risk—Steve Jobs’s greatest contribution to the resurrection of Apple was that he reinstilled a culture of risk within the company that had been missing for fifteen years under his replacements. At Apple in the twenty-first century, you were punished for taking insufficient risk—employees quickly learned to never approach Jobs with a careful plan or a conservative design. It is hard to convey just how rare such a risk-embracing culture really is in the corporate world. And Apple did it better, through its risk-taking teams guided by Jobs himself, than any company ever.
Speed, people, and a risk-embracing culture were just the ingredients. What made them work was their expression through Apple’s army of established, loyal, and well-composed teams. Those teams, in turn, felt unleashed to pursue their destinies—and to show their commitment to the company—with the knowledge that their efforts, once again and at last, would be supported by the CEO himself. Together they enabled Apple to maneuver like no giant company ever had before. And for that opportunity, they were willing even to labor in near anonymity and let that CEO take most of the credit.
The result was historic. Unfortunately, the reality of how Apple and Steve Jobs achieved such astonishing results has been overshadowed by an irresistible myth that portrays Jobs as a brilliant lone wolf, executing one miracle at Apple after another, a solitary hero fighting against the high-tech status quo. There is a lot of truth to that image—except for the word “solitary.”
For one thing, you can’t ignore the thousands of Apple employees who brought their ideas to Jobs (he had few original product ideas of his own) and who, once they got his support, made those ideas real. But more than that, a careful look at Jobs’s remarkable career shows that he almost never operated solo; there was always at least one partner, some famous and others all but invisible, whom he could use as a resident genius, as a reality check, as a protector, to execute his ideas or to calm the chaos that he often left in his wake. In fact, Steve Jobs can be seen as a serial partner, pairing up with different business partners who best served each phase in his career: Apple’s cofounder Steve Wozniak (“Woz”), chairman Mike Markkula, John Sculley, Bud Tribble at NeXT, John Lasseter at Pixar. Some of these pairings worked brilliantly, for a while; others failed, either because Jobs chose someone too much like himself, or because he retained too much power and overwhelmed his counterpart.
But one of Jobs’s greatest strengths was his ability to learn, not least about himself and his weaknesses. Thus, his last choice for a business partner was arguably his best: Apple’s COO (and now CEO) Tim Cook, a business partner who completed his skills, and whom he grew to trust completely.
Cook, a computer industry veteran from IBM, had been hired by Jobs soon after he returned to Apple. It was a team pairing of opposites. Low-key, disciplined, and organized, Cook was almost everything Jobs was not. Better yet, Cook seemed to understand Jobs, creating an environment at Apple that, on the one hand, kept him away from the daily functioning of the firm, while on the other implemented structures that made Apple instantly responsive to Jobs’s latest creative impulse.
Finally, Cook had to accept that he would have to work almost anonymously and behind the scenes. That’s because Jobs always insisted throughout his career—both because it gave him greater control over the company and because it reduced employee raiding—that he take almost all the credit for the company’s successes. Indeed, many people still believe that Jobs invented the Apple computer, the iPod, and the iPhone—and even many industry veterans can’t tell you who actually did. The trade-off was that Jobs was often intensely loyal to, and rewarded well, those people who acquiesced to this arrangement.
Tim Cook was willing to live with that arrangement. Steve Jobs rewarded him more than anyone by entrusting him with his company in the end. Together, they made the most powerful business pair-team of their generation. And the world learned of it only when Jobs became too sick to continue.
Reconsidering Steve Jobs
The more you study the career of Steve Jobs, the more obvious it becomes that Jobs, the most famous solo businessman of modern times, was partnered at every step along the way with another individual or team, most of them all but unknown to the outside world. Further, when he teamed up with the wrong partners, his career went into a tailspin; and when he found the right partner—an individual or a team—he succeeded beyond anyone’s dreams but his own.
We’ve chosen to directly address the story of Steve Jobs because, for billions of people around the world, he is the very embodiment of the maverick entrepreneur who cast off all ties with those around him to take the unconventional, high-risk path to glory. His solitary, heroic image stands as a role model to uncounted young entrepreneurs in the generations that have followed him. He is the ultimate counterpoint to all of those compromising “team players,” the workaday drudges who must forever make nice to their coworkers; to all those mediocrities who are tied down by chains of professional courtesy, friendship, and partnership.
And yet in real life, Steve Jobs proved to be as dependent—indeed, even more dependent—as most of us on those chains. And, rather than tie him down or hold him back, the partnerships and teams in Jobs’s professional life (and in his personal life as well, but that is another story) were precisely what liberated him to unleash his genius, what empowered him to successfully run Apple, and, not least, what protected him from the excesses in his behavior.
If that is true for Steve Jobs, of all people, why isn’t it also the case for almost every other loner we honor in our culture? Might it be that the lone hero is actually the exception, and the two-or-more-person team the secret rule? Bill Gates? Well, he had Paul Allen, then Steve Ballmer. GE’s Jack Welch? Numerous field generals. Facebook’s Mark Zuckerberg? Sheryl Sandberg. Alibaba’s Jack Ma? Jonathan Lu. Invariably, when you look behind the great man or woman of industry, you find one or more other key players who, for one reason or another, stay in the shadows.
Finally, did Steve Jobs see himself as a lone hero? Perhaps, but it’s hard to ignore what he told 60 Minutes: “My model for business is the Beatles: They were four guys that kept each other’s negative tendencies in check; they balanced each other. And the total was greater than the sum of the parts. Great things in business are never done by one person; they are done by a team of people.”
Excerpted from "Team Genius: The New Science of High-Performing Organizations" by Rich Karlgaard and Michael S. Malone Copyright © 2015 by Rich Karlgaard and Michael S. Malone. Reprinted courtesy of Harper Business, an imprint of HarperCollins Publishers.