The real Apple environment

I recently read John Martellaro's Leopard's Delay is a Leadership Failure and many of the comments that have been made since he wrote the article.  I also just read the Wall Street Journal article, "Ex-Finance Chief Says Jobs Misled Him on Options." (Subscription required)

In a rather unique way both articles talk to the real environment at Apple.  It is one that churns out the products we all love so much and yet ends up with so few people who have worked at Apple having positive feelings about the company.

John Martellaro worked on my team when I was director of federal sales for Apple.  I also had the opportunity of making sales calls with Fred Anderson in Washington, DC and participating with him in a number of executive briefings in Cupertino.

It is important to understand that Fred's office was just a few steps down the hall from Steve's.  Fred was also the only executive who survived when Steve came back to Apple. 

Fred was one of the most honest people that I met in my time at Apple.  In a world of people who often would back out of commitments at a drop of the hat, Fred was one executive that you could count on to follow through with whatever he promised.

That type of follow through from an executive was a rare commodity when I was at Apple.

It is an interesting time when the multi-millionaire former Apple executives start pointing fingers.  I have maintained in many posts that I would find it impossible to believe that Steve did not know what was going on with the options.  Having said that I am not certain what that really means for him.

The whole incident does offer a fascinating insight into Apple especially if you consider some of the lean and mean thoughts from John Martellaro's article.

It was probably 2002 when I first heard the senior executives at Apple talk about the impact of zero sum budgeting.  In fact it was almost all that they talked about in a meeting where they were supposed to listening to others.  Because zero-sum budgeting was the mantra of the day, it was a badge of honor to  have made some decisions that cut programs.

I am not going to argue the wisdom of Apple running lean and mean, I am going to tell you that it keeps Apple from doing a good job on many projects.  At the time, one of the projects cut was a single extra programmer to make Active-Directory work with OS X.  Avie was of the mindset that it already worked, but we had ample testimony from customers to the contrary.  In the same time frame I attended a number of meetings regarding the Common Criteria Certification for OS X.  The continual refrain that I heard was that the required deadlines would be met but some other features or projects would have to slide.

I do not think most people realize how resource constrained you can be in company with as much money as Apple.  The impact on testing is real.  We once had a large customer who wanted to netboot systems.  I was assured by the engineers that this had been fully tested.  My customer wanted to netboot a couple of hundred systems.  When I pressed, I found out that "fully tested" meant that netbooting had been tested by booting three systems.

I managed to arrange for us to borrow Virginia Tech's Math Emporium where there are hundreds of Macs in one room.  Not only did we manage to netboot a lot of systems, but we uncovered a number of problems with netbooting that were resolved in future releases.  Unfortunately it wasn't quick enough to matter to the sale that we were working.

On the one hand at Apple you have resource constraints and the other you have pressure to produce whatever Steve and his vice presidents decree no matter what. 

Lots of people believe that it is the recipe for success, I look at it as the recipe for problems whether it is in quality control, software development or putting together the correct documentation for Apple's financial operations.

I can remember writing email after email trying to get Apple to meet some of the legal requirements needed for doing business with the federal government. Often the case was that the legal staff, which I knew well, was overwhelmed or had something else on its plate that had been prioritized like iPod licensing.

We once had "a financial mistake" for our team which resulted in $12M worth of revenue not being counted for the purposes of commissions. Mistakes like that, and there were a number of them, were always blamed on a lack of resources or software that was in development.  In reality there was too much work for the people doing the job. On top of that some of the financial managers were as bad a set of managers as I ever saw.  One Apple commission analyst actually committed suicide.  How much his job had to do with that, we never knew.  We did always know that no one would stay in that position for long.

I think the area of Apple where the pressure to please the executives and the lack of resources hit home the most was human resources which could easily have been called inhuman resources in Apple's case.  I once had an employee who was in the hospital for very serious heart problems.  A senior human resources person who happened to live in the area which was in southern California called and offered to check on the employee for me since I was based on the east coast.

Immediately after the human resources person visited, I got a call from the employee.  The HR person had really wanted to visit to convince the sick person to vote against a proposed change to the compensation plan that would have solved a huge problem for the rest of the members on team.  It is a complex story, but the employee followed my advice and went against the advice of the HR person whose goal had been to make sure the company paid out as little money as possible to its sales people. It didn't matter to the HR person that paying the money was the right thing to do.

Any serious sales person who could get a glimpse of Apple's compensation system would likely die laughing.  I was also in a meeting when the same senior HR person when confronted with potential violations of federal equal compensation laws decided that the best response was to try to prove that people doing a more complex and challenging job were actually doing a less complex and easier job.

On some very primal level, Apple is an ends justify the means company.  I am not going to argue whether that is good or evil for Apple, it is just a fact that I believe few Apple employees will deny.

In the end, I doubt that it serves we customers particularly well in that products like the MacBook sometimes take a while to get right.  The other funny thing about Apple is that there is this train of thought among Apple users that no one cares a lot about what Apple does as long as Apple keeps producing great products.

I find that a little amusing given that many are quick to point out the evil of Microsoft.  It is funny that the people I know who work at Microsoft say good things about working there.  Maybe good companies produce bad products.  Of course not all of Microsoft's products are "bad" just as not all of Apple's products are "great."

Perhaps it is all less of an indictment of Apple and/or its users than a measure of how poor designed other products are. Now we're back to where we started- lean and mean equals great products.  Still I don't believe you have to burn people to have a great company or great products.  I know you don't have to do that to have a great team of people.  It is just that even a great team might have a hard time surviving at Apple unless they can fit into the ends justify the means environment.

I am just happy to be living in a Coastal Paradise doing a job that has no Apple executives in the chain of command.  Certainly the clarity of my vision has been improved by the less stressful environment.  There are many of us who are thankful to have escaped Apple with our moral compasses intact.

Comments

[Jim]

"I do not think most people realize how resource constrained you can be in company with as much money as Apple."

Well, I'm not surprised. It really is the same at a lot of rich companies. I work for a big tech company that just posted big quarterly numbers and invests very heavily in development in general...but it's astounding how little budget there is for good testing or for certain hardware. No one should think that just because a company has money in the bank, that they necessarily reinvest it in the quality of their products or the happiness of their employees.

[Nick]

"I find that a little amusing given that many are quick to point out the evil of Microsoft. It is funny that the people I know who work at Microsoft say good things about working there. Maybe good companies produce bad products."

It's interesting to learn that Microsoft is a good employer. But most people don't work there. What people tend to be aware of is how badly Microsoft has behaved to industry rivals and even, on occasion, to those it calls its "partners". Is it necessary to mention the plots against Netscape and Sun and Apple and others? Does one even need to allude to the attitudes revealed in the "Halloween Documents"? And how about the "partners" who were led up the garden path with PlaysForSure and then unceremoniously dumped? There's a vast amount of documentary evidence of wrongdoing, including, of course, the Comes case documents. Bill Gates now apparently employs someone to destroy his email on a weekly basis, having learnt nothing about ethics but everything about the value of destroying evidence.

As well as behaving in a predatory and illegal manner towards rivals, Microsoft also tends to mistreat end-users - and, of course, the average person once he begins to suspect this is slow to forgive. The PlaysForSure business also meant members of the public were left with content that _didn't_ play "for sure". And, in general, I'm thinking now of the various strategies Microsoft employs to get vendor lock-in, and in particular the way it games the public on formats. The other area is, of course, DRM. There's a frightening amount of this built right into Vista at the deepest level, as readers of Peter Guttman's study will know. This is almost certainly one reason why Vista took so long to emerge, and it's probably one reason why it runs so slowly and has certain compatibility problems.

When Steve Jobs published his "Thought on Music" an unholy alliance of Microsoft-friendly journalists and EFF people were quick to say he didn't mean what he said. But, of course, he did. And this wasn't the first time he'd expressed similar thoughts.

Microsoft's interests lie with the record labels in tying the public up with "protected" content in subscription schemes. The labels get regular income from rental of content; Microsoft gets to have non-interoperable content in its own proprietary formats, thereby tying the public to its software.

Apple is fortunate enough that its interests coincide with the public's. The public wants to buy music not rent it, and the public wants interoperability through open formats, such as the MPEG standards. All this suits Apple, because the more content in an attractive form that's around the more likely it is that people will buy Apple's well-designed devices to play it on. Microsoft knows this darn well, which explains the recent outburst from a Microsoft lawyer:

"'I'm not a big believer in just blaming the music industry for Apple's inability to sell every conceivable iPod,' said Brad Smith, senior vice-president and general counsel at [Microsoft]"

Now, is it any surprise that the public dislikes Microsoft but rather likes Apple? It's down to the simple fact that Microsoft's interests diverge from those of the public; but, in many cases, Apple's interests and the interests of the public coincide.

Perhaps it's just as well Apple hasn't taken everyone's advice to follow the Microsoft model and license OS X. Apple wants to sell hardware - more accurately complete solutions. This means it gets a good profit on each sale. Microsoft has to sell so much software, so many copies of Windows and Office, to continue to make as much money as it does, that's it's forced to try to try to hold customers through lock-in. And once people realize they're being locked-in, they resent it. People are also begining to resent paying for software at all now that Linux is becoming better on the desktop. That's hardly reasonable, since it takes work to make software. But when someone like Mark Shuttleworth at Canonical is handing out Ubuntu, which is a usable desktop operating system, for nothing, it's probably inevitable.

I think it's Microsoft's fate to be resented.

Apple escapes this, because after all when you buy your Mac you do get hardware, and it's obvious to people that hardware costs to make.

[ocracokewaves]

I wouldn't exactly say that Apple has done much better with it's partners.

As to the public liking Apple over Microsoft, I continue to find people who don't like Apple in spite of the success of the iPod.

However,it makes more sense to look at the results from Fortune Magazine's most admired companies.

http://money.cnn.com/magazines/fortune/mostadmired/top20/

As you can see even after the great success of the iPod and Microsoft's evil ways, Microsoft still nudges out Apple. Perhaps that will change after Vista, but most people learned long ago never to write off Microsoft.

The last two companies where I worked had a majority of Windows users who surprisingly are still all Windows users in spite of everything. I don't think they really care, they just get their work done and don't think an operating system is something to worry about in the long run.

Even at the 6M units level per year that Apple has just reached, the real increase in number of users is going to be minimal when compared to the number of computer users in the world.

I would argue that Apple's interests coincide with the public interest mostly when it is convenient for Apple. I don't see the Apple model as one which has caring for its customers at the top of the list. Apple is a profit machine.

Also Apple's complete solution is only complete for a small number of people. Anyone that needs a printer or access to a website or software that doesn't support Macs does not get a very complete solution.

As to being locked in by Microsoft, I find Apple's lock in to its hardware just as obnoxious if not more so.

I would agree that Ubuntu is usable desktop software, but it has a ways to go before it is a complete solution at least when it comes to using multifunction printers. If they can churn it out for free, keep making it better, and make money on something else, I am all for it. I don't think there is a law that says operating systems have to cost money. I get very good value out of Google Apps for my domain. They're free and Google is making a pile of money.

One of these days people might start looking at the huge profit margins that Apple rakes in and wonder just what Apple is giving back to the world besides expensive music players and a few million computers a year.

[John Muir]

When Apple's profits exceed Microsoft's: that is when Microsoft's long term reputation as the giant of the computer industry will be pulled into inescapable doubt. Google are more likely to be the ones to make this happen. But I think Apple are positioned as the necessary third point in an entertaining triangle come a few years down the line.

Microsoft's success is all about one word: Default. Once that is undermined, they have only Zunes and Xboxes to rely on.

Anyway, back on topic I'd have to say that I can see your point. Apple is not all its immaculate public sheen. The problem when it comes to addressing that however, is that the Darwinian instinct which makes and breaks companies is based firmly on the numbers where Apple in its current form is doing so well. In some ways there really is a vicious circle, which to Apple's credit is at least one where they prosper financially and grow their brands.

As for selling OS X to OEM's, let's not stray onto that one again. Once Linux is making money and BeOS and Amiga OS are risen from the dead, perhaps it will be time. That or hell freezing over. OpenSTEP pretty much made up Steve's mind, and I must say I agree. There's no proof that OS/2 wouldn't repeat itself all over again.

[science news]

You can get free access to these Wall Street Journal articles from http://www.congoo.com

I saw this on TV and thought it was a excellent tip!

[running idiot]

you know what I find quite funny? There are so many "apple rumors" blogs, but actually, there is no blog from anyone actually really from Apple, but there are many blogs from Adobe or microsoft.

I think it's more or less what you are talking about.