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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. business is profitable: ma recent year it was number DIAGNOSIS AND CHANGE two of all manufacturers with over 17 percent mar ket share. Kodak is taking advantage of long-stand The job of making Kodak more effective will re- quire changing a 100-year-old culture that guaran. X-rays with digital images. The health-imaging busi- ing ties with doctors and hospitals eager to replace teed employment but fostered complacency and resistance to change. In the past. Kodak was known ness makes more money than photography, Kodak to favor caution over risk-taking, which was a fea- intends to develop and buy companies in the health and commercial imaging and printing markets. sible strategy when Kodak controlled the market. Will Kodak's diagnosis of the problem and its Kodak's culture has been described as sclerotic, What's so tough about the job of remaking Kodak's managers, after years in the old culture, be vision bring about the desired changes, and will Kodak? First, it is a chemical company that must transform itself, at least in part, into an electronics able to break out of the former ineffective patterns company. The chemical business, silver halide pho- QUESTIONS tography, is mature and slow growing. The elec- tronics business involves translating images into the 1. What data or information would be necessary digital language of computing so that they can be to develop a change program at Kodak? manipulated on computer screens and transported 2. What kind of performance gaps can you iden- electronically. Until the mid-1990s, chemists tradi- tify at Kodak? tionally managed Kodak. The two businesses are 3. Why is it so important to use diagnosis before like an elephant and a mouse implementing a change program? NEW PRODUCTS AND MARKETS Managing its many new ventures will be one of Kodak's greatest challenges, something has