Apple's Startup CultureNilofer Merchant
At the recent All Things D conference, Steve Jobs described Apple's (AAPL) culture as "that of a startup." Why?
Is it because he is nostalgic, yearning to rebuild the company he founded nearly 35 years ago? Is he reflecting a passion for the innovation and entrepreneurship so often inherent in startups? Or is he saying that a startup drives better products, velocity, and growth?
Guess what: all of the above. But what's perhaps more interesting is that by sharing this idea, Jobs also gave up a secret of what makes Apple successful. The essence of what causes Apple to win is the same thing that causes startups to innovate, the same thing that is at the root of all high-performance cultures. His description encapsulates the smart collaboration that underlies the creative acts of innovation throughout Apple and that exemplifies the company's culture.
Culture Drives Innovation
Culture is a shared set of norms. David Caldwell, professor of management at Santa Clara University, talks about "culture as a shared understanding of assumptions and expectations among an organization's members, and it is reflected in the policies, vision, and goals of that organization."
In other words, culture informs success, not the other way around. Leadership drives a culture. Stephen Sadove, chairman and chief executive of Saks, says culture drives numbers: "Culture drives innovation and whatever else you are trying to accomplish within a company—innovation, execution, whatever it's going to be. And that then drives results," he said in a recent New York Times article. "When I talk to Wall Street, people really want to know your results, what are your strategies, what are the issues, what it is that you're doing to drive your business. Never do you get people asking about the culture, about leadership, about the people in the organization. Yet it's the reverse, because it's the people, the leadership, and the ideas that are ultimately driving the numbers and the results."
So culture might feel like a soft idea, but it's the stuff that formulates how you get things done. Thus it's a key driver of results and its importance should never be underestimated.
Apple as a Startup
Recently, Apple's market cap surpassed Microsoft's (MSFT) to make Apple the most valuable technology company in the world. Yet as Jobs said at All Things D, Apple was near the brink of death only 10 years ago. It had $150 million in the bank, and its stock was trading at a few bucks a share.
Jobs could have focused on near-term fixes. Instead, he focused on building a high-performance culture by doing three things well.
1. He refocused the strategy to be about one thing. That meant he killed off even good things. I led server channel management at Apple when Jobs returned to the company in 1997, and I was there when he made the decision to shut down big portions of revenue-generating businesses (including my division) because they didn't fit with his vision for the company. Some people thought he was crazy. But he was being extremely clear, and in doing so, he "MurderBoarded"—eliminated many options to get one cohesive strategy—his way to greatness.
2. He eliminated passive aggressiveness and encouraged debate when new ideas were forming. When you are thinking about difficult problems together with exceptionally bright people, there are going to be disagreements. But it is through the tension of that creative conflict that new ideas get born, new angles get explored, and risks get mitigated. Thinking together means you deal with conflict up front, rather than have to counter passive aggressiveness on the back end.
3. He set up a cross-disciplinary view of how the company would succeed. This holistic vision means there is cohesion throughout the company, from concept to product to sales. For example, the retail strategy could have been a separate or disparate part of the whole, but Apple has made its retail strategy part and parcel of its overall promise of ease of use.
None of these three things is easy to do. It would be easy to count any revenue as good revenue, to allow a few people to stay even though they were rotting the culture, or to allow the different parts of a business to act in their silos. Apple's leadership doesn't accept easy. Executives believe that when the company wins, everyone wins. That belief drives the necessary behavior and tradeoffs necessary to achieve success. That's why Jobs has earned the respect of his peers. He has recreated a culture in which the company acts like all the best parts of a startup.
In the end, people create the culture of a company. And corporate culture ultimately separates the winners from the pack. Through culture, leaders can drive up the level of innovation, outcompete the market, and attract the best employees. Or not.
So here's a code-of-conduct question you can ask yourself: If yours were a startup culture, would you make a particular call the same way? If not, think about Steve Jobs and all he has achieved at Apple, and do what you need to do.