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CIEE Study Center in Palma de Mallorca Entrepreneurship and Innovation Course

Pere Joan Ribas Barceló perejoanribas@gmail.com

Apple: Management mistakes

In  1979,  Steve  Jobs  went  to  visit  the  Xerox  Palo  Alto  Research  Center  (PARC)  situated  in  Silicon  Valley.  At  that  Dme  they  were  developing  several  products  that  could  have  turn  Xerox  into  the  IBM  of  the  80s  or  the  MicrosoM  of  the  90s.  1.  Network  of  Computers  (100  computers)  connected  sending  emails.  2.  Graphic  user  interface  (No  code,  no  type).  3.  Prototype  mouse  (They  did  not  invented,  it  had  been  there  for  15  years.  PARC  only  improve  it).  

 §  In  1981,  one  year  a-er  Apple  went  public,  IBM  launched  the  IBM  PC.  §  IBM  was  40  Ames  bigger  than  Apple  when  they  decided  to  come  into  the  personal  computers  

market.  §  The  first  IBM  PC  was  not  good.  §  However,  they  managed  to  survive  because  they  have  involved  many  stakeholders  in  the  process.  §  Many  companies  were  interested  in  the  success  of  IBM  products  but  at  the  same  Ame,  many  

companies  were  working  in  parallel  and  therefore,  the  innovaAon  product  cycle  was  faster  than  Apple’s  which  was  doing  almost  everything  in-­‐house.  

     §  Apple  (Steve  Jobs)  wanted  to  keep  control  over  all  so-ware  developed  for  Mac  (in-­‐house  

development).  §  Microso-  (Bill  Gates)  wanted  to  develop  so-ware  for  both  IBM  PC  and  Apple.  §  When  developing  the  Macintosh,  Jobs  wanted  to  be  the  first  PC  with  icons  on  the  screen.  §  However,  Gates  announced  the  Windows  One  for  PC  one  year  earlier.  

CompeAtors  

Management:  PepsiCo  CEO  

§  Steve  Jobs  was  30  years  old  and  had  no  skills  or  experience  to  become  Apple’s  CEO.  He  lacked  the  discipline  and  temperament  needed  to  run  Apple  on  a  daily  basis.  

§  Apple  hired  PepsiCo  CEO,  John  Scuelly,  President  of  PepsiCo  (1977-­‐1983).  Jobs  wanted  Sculley  to  apply  his  markeDng  skills  to  the  personal  computer  market.    

§  Steve  Jobs  successfully  sealed  the  deal  aMer  he  made  his  legendary  pitch  to  John:  "Do  you  want  to  sell  sugared  water  for  the  rest  of  your  life?  Or  do  you  want  to  come  with  me  and  change  the  world?  

Market  Mistakes  

MARKET  RESEARCH  -­‐  PRICING:  Apple’s  computer  Lisa  was  a  market  disaster.  The  product  was  not   overpriced,   but   the   selling   price   was   clearly   above   of   what   potenDal   customers   where  willing  to  pay   for  a  computer.   In  that  Dme  they  were  not  too  many  compeDtors,  not  to  many  opDons  in  the  market  but  customers  preferred  to  buy  less  expensive  computers.  

Complementary  products  Desktop  printers  

INNOVATION:   Xerox  was  working   on   a   printer   device.   Apple   also   had   an   internal   project   but   the   device  produced  in  that  garage  was  far  beaer  than  both  companies  were  producing.  Apple  decided  to  invest  in  that  company  and  produced  the  first  Laser  printer  of  the  market.  The  printer  was  expensive  (7000$)  however,  it  was  a  network  printer.  Meaning  that  for  the  first  Dme  it  was  possible  to  share  the  printer  in  the  office.  A  a  first  entrant  Apple  become  the  market  leader  in  this  segment.  

Leadership:  Macintosh  

LEADERSHIP:  Jobs  took  the  leadership  to  lead  a  small  team,  within  apple,  to  build  the  Macintosh.  He  reinvented  manufacture  process  (in  Japan),  the  markeDng  approach  and  the  distribuDon  system.  CUSTOMER  ORIENTED:  The  Macintosh  was  the  first  computer  that  was  intuiDve.      PROJECT  MANAGEMENT:  Steve  Jobs  thought  that  it  would  take  a  year  to  built  it.  In  fact  it  took  3  years.  Macintosh  cost  $2.500,  $1.000  dollars  more  than  an  average  PC.  

Internal  problems  

§  John  Scuelly,  joined  Apple  in  1983,  from  Pepsi-­‐Co  where  he  was  the  CEO.    §  At  Apple,  Scuelly  focused  on  MarkeDng  and  sales  (as  in  the  sodas  industry)  while  the  most  important  factor  at  that  

Dme  was  the  improvement  of  the  product.    §  Steve  Jobs  had  a  completely  opposite  vision.  Jobs  wanted  to  focus  on  the  product  characterisDcs  and  therefore,  

internal  fricDons  aroused  from  these  two  different  strategic  approaches.    

§  The  company  had  grown  and  was  divided  in  several  divisions  with  no  or  low  communicaDon.  §  At  the  same  Dme,  in  the  late  84  the  computers  industry  felt  into  recession.  Macintosh  sales  did  not  match  with  the  

expected  sales.  §  In  1985,  the  company  started  to  have  loses.  Apple  had  a  lack  of  Leadership.  §  Due  to  internal  problems,  John  Scuelly  asked  the  BoD  to  fire  Steve  Jobs.  

Steve  Jobs  leaves  apple  

End  of  chapter  two    

Bibliography  Inside  Apple,  Adam  Lashinsky  (2012)  Steve  Jobs,  Karen  Blumenthal  (2012)  The  Apple  Experience,  Carmine  Gallo  (2012)  Steve  Jobs:  Ten  Lessons  in  Leadership  (2012)  Steve  Jobs,  Walter  Isaacson,  (2011)  Steve  Jobs:  RevoluDonary,  Chris  Anderson  (2011)  The  innovaDon  Secrets  of  Steve  Jobs  (2010)  Apple  ConfidenDal  2.0,  Owen  Linzmayer  (2004)  Jony  Ive:  The  Genius  Behind  Apple's  Greatest  Products  (2014)        

Videos  

•  Steve  Jobs:  How  to  live  before  you  die  •  Entrepreneurs  (1986),  TV  Documentary  •  Steve  Jobs  The  Lost  Interview  (2012),  Documentary  •  Steve  Jobs:  One  Last  Thing  (2011),  Documentary  •  Steve  Jobs:  Billion  Dollar  Hippy,  BBC  Documentary  •  Steve  Jobs  and  Bill  Gates  Together  in  2007  at  D5  •  Interview:  Steve  Jobs  in  2010  at  D8  

Internet companies series!