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A OD IN PRACTICE: STEVE JOBS, APPLE, PIXAR, AND INNOVATION 52 Steve Jobs's career seems stuck on up. At Pixar AniPOD AND ITUNES imation Studio, where he is CEO they have had the music initiative at Apple required Jobs's vi live full-feature animated hits out of five. And at Apple, where he also is the CEO, he was the first in sionaty personality to get the record label over the the computer industry to successfully get the major line Working one-on-one with the executives of five companies' deop fears about distributing music on recording studios to support his version of online music. Consequently. Apple has been reaping the major music labels and scores of independenti profits from its iPod and Tune products bels, Jobs persuaded them to open their vaults, at least partially. They have put around a half million more choices and better products will eventually songs online for 99 cents each. The online iTunes give Apple a reliably profitable and growing busi: Music Store gives customers the ability to down- ness Jobs said in an interview. "Our belief was that load music to computers using the Mac or Window if we kept putting great products in front of cus- operating system. Customers can then store music tomers, they would continue to open their wallets. indefinitely, burn custom CDs, and transfer songs And that's what we've done." For his efforts at to the Apple iPod portable player. But there's a Apple, Jobs was nicely rewarded with a $74,8 mil- catch: iTune songs can only be played on the iPod, lion pay package in 2003. This put him at the top of and the iPod can only download songs from iTune the food-chain for CEO pay. Jobs has a perfectionist approach to product PIXAR development. But this can also be his Achilles heel In 1986, Steve Jobs bought Lucasfilm's computer Business Week points out that Jobs can be so en- division for $10 million and christened it Pixar. For amored of his own vision-and so bull-headed nine years the studio had a rough time, but things about pursuing it that it has blinded him at times changed with its first full-length feature film, Toy His hands-on approach means that Apple can focus Story Finding Nemo was the top-grossing film of on only one or two brand-new projects at a time. 2003 and the top animated hit of all time. The stu- "Apple's problem is that it's just a blip by con- dio has won 16 Academy Awards, primarily for its sumer-electronics measures." says consultant Paul technical innovations Saffo, research director at the Institute for the Fu- ture. The giants of the consumer electronic business BUT ALL IS NOT ROSY are dismissive of Jobs and Apple. "They're a a one- In the first fiscal quarter of 2004, iMac's revenue dent of Sony Electronics trick pony." says Hideki "Dick" Komiyama, presi- plummeted by 29 percent, compared to the same period the preceding year. Apple's financial results One of the most revealing aspects of Jobs's per- have been mediocre, and the company still sells sonality emerged in an interview with Business fewer than 2 percent of the world's PCs. Week Online. When asked what is it about Apple There are many who think Jobs won't be able that enabled it to figure out a way to sell music suc. he's up against companies like Wal-Mart Stores, like Pixar is the most technologically adept creative to hold on to his lead in music. Skeptics note that cessfully online, Jobs said, "First of all, Apple is the most creative technology company out there-just Virgin Entertainment Group, Microsoft Corp. (which provided the software for more than 60 dig company. It's interesting, isn't it?" ital music players), Dell, Samsung, and Sony. "It THE FUTURE doesn't take a genius to see what comes next: lower prices for consumers and lower market share for Con chief executive Steve Jobs provide a permanent Apple." says Chris Gorog, CEO of Roxio Inc. reprieve for Apple Computer? Jobs has brought Apple back from the verge of oblivion, racking up CHARISMATIC LEADERSHIP profits and restoring its image with the innovative In the past, many felt that Steve Jobs's charismatic iMac, iPod, and iTunc And Pixar is running high on Icadership and idiosyncrasies caused some internal success: so much so that it refused to bow to Dis- problems At Apple, he was seen as a leader whose ney's demands in a new animation contract. brilliance and idealistic vision of providing com- puters as a tool to change the world." drew other tal- ented people to him. Yet, by the same token, his management style tended toward throwing tantrums Nnd to berating and humiliating employees who dis- agreed with his ideas His habit of making decisions and then suddenly changing his mind has also been cited as part of the reason he is difficult to work for. But Steve Jobs also has his admirers "Jobs is a real visionary, the kind who can change industries." says Jimmy Iovine, chairman of Interscope Geffen A&M Records, a unit of Universal Music Group, Jobs bridges the marketplace. He is involved in very meaningful ways in the worlds of computing, music, and movies He believes that giving customers even QUESTIONS 1. Do you believe that the manner in which Steve Jobs runs Apple and Pixar allows these two companies to maintain innovative oreintations? 2. Of the four ways for an organization to adapt to its environment (see Figure 2.1), what method do you see Steve Jobs primarily using at Apple and Pixar? 3. In light of recent technological innovations in the music and computer industries, has iPod and iTunes remained competitive? 4. Do you think Steve Jobs is effective at being an innovator or is he more of a promoter of himself and his companies? Why