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OD IN PRACTICE: STEVE JOBS, APPLE, PIXAR, AND INNOVATION32 Steve Jobs's career seems stuck on up. At Pixar An- iPOD AND ITUNES imation Studio, where he is CEO, they have had The music initiative at Apple required Jobs's vi- five full-feature animated hits out of five. And at Apple, where he also is the CEO, he was the first in sionary personality to get the record labels over the the computer industry to successfully get the major companies' deep fears about distributing music on- line. Working one-on-one with the executives of five recording studios to support his version of online music. Consequently, Apple has been reaping the major music labels and scores of independent la- bels, Jobs persuaded them to open their vaults, at profits from its iPod and iTune products. 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 itthat 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 one- In the first fiscal quarter of 2004, iMac's revenue trick pony," says Hideki "Dick" Komiyama, presi- plummeted by 29 percent, compared to the same dent of Sony Electronics: One of the most revealing aspects of Jobs's per- period the preceding year. Apple's financial results sonality emerged in an interview with Business have been mediocre, and the company still sells Week Online. When asked what is it about Apple fewer than 2 percent of the world's PCs. that enabled it to figure out a way to sell music suc- There are many who think Jobs won't be able cessfully online, Jobs said, First of all. Apple is the to hold on to his lead in music. Skeptics note that he's up against companies like Wal-Mart Stores, most creative technology company out therejust like Pixar is the most technologically adept creative 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 Can 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 iMac, iPod, and iTune. And Pixar is running high on In the past, many felt that Steve Jobs's charismatic success: so much so that it refused to bow to Dis- leadership and idiosyncrasies caused some internal ney's demands in a new animation contract. problems. At Apple, he was seen as a leader whose brilliance and idealistic vision of providing com- QUESTIONS puters as a tool to change the world," drew other tal- ented people to him. Yet, by the same token, his 1. Do you believe that the manner in which Steve management style tended toward throwing tantrums Jobs runs Apple and Pixar allows these two and to berating and humiliating employees who dis- companies to maintain innovative oreintations? agreed with his ideas. His habit of making decisions 2. Of the four ways for an organization to adapt and then suddenly changing his mind has also been to its environment (see Figure 2.1), what cited as part of the reason he is difficult to work for. method do you see Steve Jobs primarily using But Steve Jobs also has his admirers. "Jobs is a at Apple and Pixar? real visionary, the kind who can change industries," 3. In light of recent technological innovations in says Jimmy Iovine, chairman of Interscope Geffen the music and computer industries, has iPod A&M Records, a unit of Universal Music Group. and iTunes remained competitive? Jobs bridges the marketplace. He is involved in very 4. Do you think Steve Jobs is effective at being meaningful ways in the worlds of computing, music, an innovator or is he more of a promoter of and movies. He believes that giving customers even himself and his companies? Why