Introduction
Companies are always making hard decisions, some with far reaching effects on the performance and the general good of the company. Major decisions are part of the everyday working of companies as evidenced in the case of Apple. Steve Jobs builds up a successful company, and within no time a major decision is made that sees him out of the job (Elliot and Simon 12). The founder of Apple was only 30 years old, a wild success, wealth and international celebrity. He had changed the world of computing and built up a strong brand. All his work came crumbling down when the decision was made to force him out of the company that he had founded and built up. After firing him, another major decision followed. The decision was to hire him back to the company, making an amazing comeback to the company (Goldman para 7). The decision to fire and rehire him was contributed to by many factors working from within and outside the company. The forces behind his firing, the decision to hire him back and the impact on the company are the focus of analysis.
Background on Steve Jobs’ Firing
In order to gain an understanding of the decision to fire and rehire Steve Jobs, it will help to have a historical analysis of his co-founding of the Apple Company. The entrepreneurial creation story of Apple cannot be complete without a discussion of the role Steve Jobs played in its foundation and success. The leading company in the world of technology was founded in a garage after Steve Jobs dropped out of college and teamed up with Steve Wozniak. The Apple Computer was founded on April 1, 1976. Since its foundation, the company had been successful and became a $1+ billion public company, in a few years. Apple Computer went public in 1981, and only two years down the line the company entered the Fortune 500 (Carlton and Kawasaki 5). As the chief visionary of Apple, Steve Jobs played the leading role in spearheading the development of the Macintosh computer, the next revolutionary product. The team responsible for the creation of the Mac did a good job, leading to the debut of the product in 1984.
Despite of the success in developing the product, the life and success of Steve Jobs was not to last long. The reviews of the Macintosh computer were good, but it disappointed in terms of sales. The new product in the market placed a strain on the financial performance of Apple. It also became the basis for the flawed relationship between Steve Jobs and the rest of the team managing the company. Although he had founded and did a good job leading the company, there came the big decision to oust him in the spring of 1985 (Goldman 2). The controversial decision to let go of Steve Jobs was made in the name of protecting the company from his supercilious leadership. The then management of the company felt the need to oust Steve Jobs, citing his uncontrollable behavior decisions that were considered harmful to the performance of the company. The board of directors of the company voted in favor of firing the founder of the company (Elliot and Simon 38) He was leading arrogantly and in a hard-headed manner. The company was big, but Steve Jobs was running it as a small startup.
According to one of the members of the board, Steve Jobs would get ideas into his head, and it would be impossible to convince him otherwise. He would not take into consideration the opinions and ideas of others. Before the decision was made, John Sculley, a former Pepsi President had come into the company to play the part of babysitting the leader. Working with Steve Jobs was a challenge because of the hardheadedness. He would make decisions and work towards their implementation without consulting any of the other leaders of the company. In fact, all the major decisions affecting the company were made by Steve Jobs, and he did not expect or accept to be challenged. As a result, he conflicted with the other people working for and managing the company, including his appointed leader, John Sculley (Deutschman 37). As a result, it proved difficult to work with Steve Jobs, following his challenging style of leadership.
The team he was leading in the creation of the Macintosh computer was working in a separate building with a pirate flag flying on the top. He claimed to be better working as a pirate than being in the navy. His idea of a company-within-a-company made things worse for the whole as it was pitted against the rest of the company (Carlton and Kawasaki 7). The smaller company within the larger one was made up of a team that also found it hard to work with the domineering leader. He separated the unit from the parts of the company that were making the money and could not listen or reason with any other leader or employee. His arrogance and authoritarian attitude did not go down well with the members of the Mac team as well. He placed major demands on those who were working under him (Belk and Tumbat 206). While the behavior was a part of his success in the business, he drove the employees too hard, making it difficult to work with him.
Whether it was possible to draw management lessons from the leadership of Steve Jobs before his initial departure from the company is a subject that is surrounded by controversy. Steve Jobs was a perfectionist and focused on making products that were beautiful and appealing to the eyes of the customers. While this could have been a good impact on the business, there was another negative side to the leader that led to his firing from the same company he was contributing too much to build. He had a rough edge to his personality which made him act as though the rules of the business and the company did not apply to him (Deutschman 42). He brought to the everyday normal operations of the business a lot of passion, intensity, and tremendous emotionalism. These elements also impacted on the way he did business and in the process of making the products that he created. He was also petulance and impatience, all of which related to his perfectionism. The characteristics made it impossible for him to work with other members of the organization.
Sculley was working as the CEO, appointed by Steve Jobs to lead the company. Due to the working behavior of Steve Jobs, it became difficult for the CEO to work with him, leading to an increasingly unpleasant relationship. The power struggle that emerged between the two became the basis for the removal of Steve Jobs from his own company (Goldman para 5). Evidently, the BOD sided with the CEO and voted in favor of Steve Jobs’ removal. He was removed from the leading role he played in the Macintosh group. He was completely stripped of the responsibilities he played in the company and with the group and was given an office that he called ‘Siberia.’ Steve Jobs felt betrayed which led to his decision to leave the company altogether. Upon leaving the company, the management noticed the challenge that accompanied a life of Apple without Steve Jobs in it. As a result of the poor performance in his absence, Steve Jobs was brought back into the company.
The Decision to Bring Back Steve Jobs to the Company
The decision to fire Steve Jobs from his own company has its soundness questions from then to date. Evidence from the history of the company has indicated the decision was not the right one to make at the time. Despite questions regarding the soundness of the decision, a case study by Goldman indicates that the 30-year-old, Steve Jobs’ incompetence as a leader and the out-of-control disruptive behavior left the management with no other choice but to let him go (para 8). He did not have the business discipline and emotional intelligence to run a big company like Apple. The decision to fire him gave him time to reflect and come back with rare skills and brilliance that played out in the resurrection of Apple, at a time when it needed to be saved. He was prepared to make a greater contribution than just on the product side. The struggle of Apple in the decade after he left revealed the dire need of his idea to move the company forward.
Just like the board did not have any choice but to fire Steve Jobs, a time came when it did not have any other choice but to hire him back. He had to come back, bring back his brilliant mind and revolutionary ideas to save Apple. The company required to be rescued and no one could have done better at the job than its founder, Steve Jobs. The board finally agreed that the business needed the zealot to change its current fate. In August of 1997, Steve Jobs officially came back to the company and became the CEO beginning at the “interim” position (Carlton and Kawasaki 21). Probably because of the experience he had outside his ‘baby’ he became a far much better leader than he was before he was fired. He was determined to make more profitable products as opposed to focusing on designing for the sake of beauty.
Factors Behind the Decision
One year following the return of Steve Jobs to Apple set the company in motion. Apple, in November 1996, was seeking a novel OS for the Macs that would be developed in future. However, it was not possible under the current management for the company to come up with the OS that would drive it to profitability. The Mac OS in use at the time was characterized by outdated technologies, slowness, and did not adapt to contemporary PCs. The company had, for some time, been working on an internal program known as Copland. The project kept on being delayed, and it later became obvious that it would not see the light of day because it was not fitting the bill. The decision to get Steve Jobs back was made after the management realized that a new OS could not be acquired by any other talent in the company (Elliot and Simon 72). Without the leadership of Steve Jobs, the Macintosh division was a mess. Even outside Apple, Steve Jobs was making applications that Apple would benefit from.
Apple Company was running at a loss in the decade of Job’s absence. In fact, things were bad for the company that even Microsoft’s Windows 95 was doing far much better than the technology giant. Before coming back into the company, there were concerns that its financial performance was so bad that it risked becoming bankrupt. Beginning in 1992, the company was feeling the threat of a developing superpower within the technology sector, Microsoft. At the time, the competitor was popular for MS-DOS, and IBM PC and its clones. Apple was only holding 20% of the market share with the remaining 80% being taken up by the competitor. Microsoft was also involved in the creation of applications, and in fact took part in the development of the Macintosh with Steve Jobs at the beginning of 1980s for the purpose of providing Mac software like Multiplan (Carlton and Kawasaki 37). Bill Gates, on seeing the Macintosh’ GUI he became sure that the technology marked the future of computing. He also commenced the work on a Microsoft GUI ending up with the creation of Microsoft Windows.
With the development by Microsoft and the release of the innovative mind of Apple, it became no surprise that Microsoft was surpassing Apple. For a long time, Windows was not performing well, and it was not taken seriously by the actors in the industry. However, Apple started feeling the threat with the Windows becoming better and more like Mac, particularly following the releasing of the Windows 3.0 version in 1990. The launch of Windows 95 created doom for the Apple. In fact, Microsoft was becoming successful at the same time when the company did not have the brain to drive its power to renovate. Apple had lost its monopoly while all the users of PCs were upgrading using the GUI application provided by Microsoft (Elliot and Simon 83). The trend was hurting Apple’ business, and more so, given the reality that the management did not know what to do about the failing business and how to compete with the emerging leader in the market.
Mismanagement became a reality in the period following the firing of Steve Jobs. The company went through a decade of mismanaged mediocrity, which almost led to its complete downfall. At the time Steve Jobs was ousted out of the company, Sculley was the man at the top. He did not achieve success in moving the company forward and instead, the company resulted in a loss of productivity and tended towards loss making operations. In 1993, Sculley was forced to leave the company as a result of a dispute resulting from the licensing of the software for Macintosh, other makers of personal computers (Deutschman 53). The CEO was opposed to allowing other producers to make use of Apple’s software, although the other members of the board were in support of the move. The management turned out to have made a mistake in licensing the software to other producers. The management made major mistakes that led to huge losses.
Between 1986 and1995 the company was making healthy profits primarily because it was holding a monopoly position on the desktop publishing and GUI. Those who needed a user-friendly PC would go for a Macintosh for about $2,000. Almost 50 percent of the cost of the computer was profit for the company. However, things no longer looked great following the departure of Steve Jobs from the company. The profitability of the company was negatively impacted by the poor decisions made by the management after Steve Jobs. The management of the company has become disastrous under the management of Amelio (Belk and Tumbat 209). The leader kept rambling and could not make sense of what was the best for the company that Steve Jobs had spent years building. By 1996, the company was at its lowest in terms of performance and profitability. It experienced one of its worst quarters in history in Q4 1996. The sales made by the company during the period fell 30% below the level in 1996.
The sales of the company started going down considerably because of the series of bad decisions made by the management. The Wintel domination was a major contributor of the failure in the sales revenue and profitability of the company. Mac clone makers’ gaining access to the Mac OS also played the role in the decline in the sales. The clone makers were able to produce cheaper personal computers using the system made by Apple. As a result, there was loss of market share, which the competitors were taking advantage of. Efforts to save the situation by removing successive CEOs did not provide a remedy for the company’s deteriorating performance. Following the leaving of John Sculley from the company in 1993, his replacement, Michael Spindler, took the position for only two years. The third CEO was Gil Amelio, who was replaced by Steve Jobs (The return to Apple, para 11). It was obvious that the company was going down; it was unable to introduce into the market new products and lagged behind in the development of applications.
As in Q1 1997, things did not turn for the better. The company made a loss of $700 million, which rendered the overall losses made under the leadership of Amelio to amount to more than $1 billion. When he was allowed to do so, Steve sold his stock. The decision made the situation worse for the company. After only 500 days working as the CEO, the board passed a vote to fire Amelio (Belk and Tumbat 212). Following the negative performance of the company, a situation that even the change in guard could not deal with, it became obvious that a remedy was necessary that did not involve experimenting with new bosses. To get the company back on track, a decision has to be made that involved getting Steve Jobs back into the company. Steve Jobs was exactly what Apple needed to get the company back on the track.
Impact of the Decision
The company had a complete turnaround following the decision to rehire Steve Jobs. Before leaving the company, his focus was creating products for the beauty they presented. However, he came back with a focus on creating things that looked more than just beauty. He was concerned about making beautiful products that would make money for the company. On coming back, he proved that he was the most important asset that the company had. He was an innovator that Apple could not have done without. Once back to the company, Steve Jobs also designed and announced a new marketing strategy. He focused on leveraging the inconceivable authority of the Apple brand. He would also focus on culture of revolution and artistic creativity on which Apple was founded. This became the basis for the Think Different campaign (The return to Apple, para 13). He contracted the services of Lee Clow at TBWA Chiat/Day to support in reestablishing of the brand image of Apple. The leader was determined to make the company outstanding as it was prior to his departure.
It was evident that the company needed to be revived and only Steve Jobs was in the position to achieve the end. It was time for the company to become more active in introduction of profitable products into the market. The things that were not working for the company setting it on the downward trend were changed and improved. Once back at Apple, Steve Jobs sought to make a deal with Microsoft, which was the market leader at the time. Steve Jobs was determined to resolve the conflicts with the competitor and make other deals that were necessary to make the company to return into the path of profitability (Carlton and Kawasaki 46). While the decision appeared controversial, the leader was determined to make the decisions that would work for the company. To the surprise of many, including customers, the deal between Steve Jobs and Bill Gates went through for the benefits of Apple.
In the last half of 1997, Steve Jobs worked hard to put the company back on track. In a case study under the title ‘Apple in 1996,’ he carried out a survey of all the product teams involved in the production of the different products. The survey was meant to convince the leader that the products being developed were contributing to the strategy of the company and that they were profitable. Sentimentality was not part of the process, and whichever product that was not profitable would be off production and market. Even the products that appeared strategic, but did not make profits at the time had to go. However, he gathered as much information on the product as possible before making the ultimate decision (Belk and Tumbat 213). Gil Amelio had already started the process of cutting down the products, from 350 to 50, but Steve Jobs went further down to only ten. According to him:
What I found when I got here was a zillion and one products. […] It was amazing. And I started to ask people, why would I recommend a 3400 over a 4400? Or when should somebody jump up to a 6500, but not a 7300? And after three weeks, I couldn’t figure this out! And I figured if I can’t figure it out working inside Apple with all these experts telling me into it, how are our customers going to figure this out? (Steve Jobs at WWDC 1998 cited at The return to Apple, para 16).
Upon his return, Steve Jobs became callous about canceling the decisions that he believed would not work for the benefit of the company. One of the changes he made to the company included canceling all the extraneous products. He scaled down the offerings of Apple down to a few which allowed him to supervise their development personally. He also took a lot interest in the remaining products which he could achieve perfect production. As a result of his perfectionism, he ended up producing some of the most appealing products in the market, including the iMac, MacBook, iPhone, iPod, and iPad (Lee 2). The gadgets contributed a great deal to the growing popularity of the company. The market share of the company started to increase and it became possible for it to continue competing profitably with the other leaders in the market. Microsoft could no longer take the leading position against Apple, thanks to the revolutionary and innovative ideas brought back to the company by Steve Jobs.
At the time when Steve Jobs came back to Apple, there was a team that had been working on an NC machine. The so-called “network computer” was founded out of the commonly held belief that PCs were in the path of being phased out and being replaced by “network appliances.” The reality was that the use of the Internet was becoming a reality and that there would be the need to develop appliances that would work well in the networked environment. He maintained the project from within the company, but ended up with an entirely different product from what it was initially meant to be. The final product from the project was the iMac, a novel consumer desktop computer. The “i” was connoting the Internet. He took advantage of the current brains within the company, including Jonathan Ive, Apple’s in-house designer, in the designing of the new products that could appeal to the customers (Edwards 3). As a rule, Steve Jobs understood what was expected in the market from the analysis of the trends and always presented the customers with what they really needed at the time. He also had a good industrial design team to do the job.
Steve Jobs understood the company and the industry a lot and won the hearts of many on coming back to the company as he had done before leaving. He fascinated the customers with the new products that he presented to the market. At the Flint Center auditorium in Cupertino, on May 6, 1998, he launched the iMac. The new product was unveiled in the same room, where 14 years before he had unveiled Macintosh. The choice of the venue meant a lot to Steve Jobs and the customers; it was highly symbolic. The very first words that came on the screen of the computer, “hello (again),” said it all. It was used in reference to the original “hello” of Macintosh (Young 39). Steve Jobs had returned home to where he belonged and at the same time, put the company back on the consumer desktop scene’s front position. This, for the company, was also returning home to a market that it had invented.
When he came back to the company, he made major decisions among them canceling the license given to other producers of personal computers to use Apple’s software. The killing of the Mac clone market had to come to an end. The reason for the killing of the products, according to Steve Jobs was the fact that they were hurting the sales of hardware by Apple. At the same time, they were not playing any role in enhancing the Mac OS market share. It was also the time that the online store for Apple’s applications was launched. The Apple app store became the model for other similar tech companies. Steve Jobs had developed a culture of secrecy while working at NeXT, which he brought with him into Apple. Before he came back into the company, it was a haven of rumors, where news about a new product was circulated long before it was made public. This culture came to an end when Steve Jobs came back into the company. In his office, he had a World War II poster which stated: Loose Lips Might Sink Ships (The return to Apple, para 18). The message under the new policy was that there would be major consequences following leaking of information on a new product to the media.
During the period of his return in the company, Steve Jobs played a key role in revolutionizing seven industries, namely personal computing, music, mobile phones, tablet computing, animated movies, digital publishing and retail stores. The pro products, PowerBook and Pro Mac were the initial lines of production that were renovated by the leader. It was only eleven months following his return, in November 1997 that these products were unveiled. These were the initial Macs to operate the novel Power PC G3 group of processors (Edwards 4). The machines were considerably fast as they were targeted for creative professional performance, outperforming the Pentium-based machines from the competitors. The sales of pro Macs were relatively good, which gave evidence that the leader was right about the customer base of the company. According to the case study titled ‘Apple in 1996,’ the evidence was that between 1995 and 1996, the customers avoided the products created by Apple, not because they were inferior but due to the fear that the company was disappearing (Moritz 26). This was the general feeling among the customers while the company continued to make losses through production of gadgets that did not appeal to the customers.
Following his entry back into the company, major changes were experienced, most of which changed the fate of the company. The acquisition of Beats for $3 billion marked its history as the largest acquisition to ever be made by Apple. It was also the leading deal by a great margin. The deal was more than the previous record holder of 1996, the $400 million acquisition of NeXT computer (Lee 1). The new deal brought Steve Jobs back to his company and at the same time became the basis for the future innovative developments, Mac OS X and iOS. When Steve Jobs entered back into the company, it was already a major company, but it was not running effectively. The management of Apple knew that things had to change and was prepared to allow Steve Jobs to lead it to its past glory (Moritz 48). The decision making power had to be given back to the leader and operated as his actual extension. He worked towards major changes that would bring back Apple’s competitiveness.
Because of making the right decisions for the benefits of the company, Steve Jobs was building trust among the customers about the future of the company. On returning and insufflating Apple with confidence in a future, there was renewed customer loyalty which saw an increase in the sales, revenue, and profitability. On January 8, at Macworld 1998, the sales were so good that an announcement was made by Steve Jobs that the company has come back to profitability. Since 1996, in the final quarter of 1997, for the first time, Apple had made a $45 million profit. However, the company is yet to receive its biggest hit in the market (Lee 2). Before his death, Steve Jobs made major strides in changing the destiny of the company he had nurtured with passion and enthusiasm. The customers were regaining trust with the company’s ability to deliver value and quality products. The evidence was revealed in the rise in the sales revenue of the company.
Behind the scenes, Steve Jobs was equally ruthless. He was committed towards achievement of the core mission of Apple. Hence, any function that did not work towards this end or distracted the achievement of the core mission was shut down. Steve Jobs focused on continued creation of great consumer devices and whatever was outside this core business was not worth the time and resources of the company. In 1997, for example, the corporate philanthropy programs were shuttered (Young 38). The argument behind the decision was that such programs were not contributing towards the main goal at the time, making the company more profitable. It was obvious that the company needed to get back to the profit making path after the decade of struggling and decreased sales. Following the decisions and the efforts put by Steve Jobs, the company was back to the profit making course, but the charitable programs were never reinstated.
Improvement of the fundamental programs was at the core of the decisions made by Steve Jobs, including those which involved mergers and acquisitions. Hence, he assumed an extraordinary hands-on role in the corporate acquisitions of Apple (Moritz 53). His main concern was running the M&A for Apple, which left the mergers and acquisitions function to a sole executive. By Silicon Valley standards, the company only achieved a few deals in terms of merger and acquisitions. The company was at the time focused on the deals that would support improvement of the core products as opposed to expanding the company. He also grew cash that he retained instead of sending it back to the investors. Basically, the growth of the company suggested a growth for Steve Jobs (Young 64). The company also experienced an extremely centralized corporate structure working with the talent held by Steve Jobs at the zenith. During the period after Steve Jobs came back to the company, the focus was on success based on what the leader could achieve for the company.
Major changes were experienced at the Apple in the period after Steve Job returned to the company than ever before in its history. Most of the changes were good for the company as they played an important role in saving it from demise; before rehiring the leader, the company was ended towards the direction. Steve Jobs made hard decisions some of which would not be supported by the rest of the management team because of their short-term ramifications, but at the end, they proved workable and beneficial to the company. Things that really needed to transform had to be transformed and they were. The reality that even Sculley agreed with is that the company would not be where it is now were it not for the decision to hire Steve Jobs back after firing him (Young 73). He was kicked out of the company he spent his youth building and later rehired for a period of invention, moving the company into a direction never thought to be possible before.
Other possible Alternatives
There were other options that the company’s management could have explored that did not include bringing back Steve Jobs. One of the options could have been seeking and employing new CEOs to manage the company. The board of directors of the company has tried to hire other CEOs to take over the company in order to change the negative trend that had come to be following the departure of Steve Jobs. As long as the current CEO was not working to meet the mission of the company, the board would have the option of bringing in a new CEO. The world is not in short of capable leaders who can take over the management of a company. Hence, where the problem is in the leadership, the solution lies in getting another leader. Bringing in new talents and insights into the running of the company would have consequences for the company, either negative or positive depending on the qualities of the leader.
While there were other alternatives to Steve Jobs that would be brought into the company to save it, none would have made such a transformation as he did. He had a better understanding of the needs of the company and even outside the company he had continued to innovate. Following his departure from the company, Steve Jobs had teamed up with other experts to build NeXT. The startup was building software and other systems that could be beneficial to Apple at a time when the company was struggling. News about the creation of NeXTSTEP, the most superior software platform globally reached Apple at a time when the management was seeking a new software platform for the Macs. When Steve Jobs came back to the company after more than a decade, he was prepared to sell the program and also made an offer for NeXT, which Apple agreed to buy for more than $400 million (Edwards 7). Basically, Steve Jobs was what Apple really wanted in order to survive. Getting another manager for the company might not have solved the problems that Steve Jobs came to solve.
Conclusion
As it is evident from the analysis, in 1985, the board of directors of Apple made one of the most controversial decisions. The decision to fire Steve Jobs from a company he had founded was met with mixed reactions within and outside the company. Regardless of the controversy, the decision had to be made because at the time the leadership style applied by Steve Jobs was doing the company more harm than good. His hardheadedness and arrogance in dealing with people and making decisions that affected the company made it hard for others, including his own appointed CEO, Sculley. In fact, it was the then CEO who spearheaded the decision by the board to fire Steve Jobs from the company. Only a decade following the decision to fire the founder, the management agreed that things were not going the right direction. Hence, even though the management had other alternatives to Steve Jobs, he was rehired. It appears as though Steve Jobs had learned his lessons because he came back a changed man who worked relentlessly to change the fate of the company. His entry into the company brought about major positive changes, most of which are evident even after his death.
Works Cited
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Edwards, Benj. Steve Jobs’s seven key decisions, MacWorld, Sep 18, 2012. Available at http://www.macworld.com/article/2009941/steve-jobss-seven-key-decisions.html
Elliot, Jay, and William Simon. The Steve Jobs way: iLeadership for a new generation. Vol. 33. No. 9. Vanguard, 2011.
Goldman, David. Apple CEO who fired Steve Jobs: ‘I wish I had hired him back’, CNN Tech. February 6, 2015. Available at http://money.cnn.com/2015/02/06/technology/john-sculley/index.html
Lee, Timothy B. Steve Jobs never would have bought Beats. Here’s why Tim Cook did it, Vox, May 28, 2014. Available at https://www.vox.com/2014/5/28/5759330/tim-cook-is-turning-apple-into-a-normal-company
Moritz, Michael. Return to the Little Kingdom: Steve Jobs, the creation of Apple, and how it changed the world. Gerald Duckworth & Co, 2010.
The return to Apple, 2016. Available at http://allaboutstevejobs.com/bio/longbio/longbio_08.php
Young, Jeffrey S., and William L. Simon. iCon Steve Jobs. John Wiley & Sons, 2006.
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