The timing of the interview with Apple Computer Co. Chairman John Sculley in the yesterday's Business section was incorrectly stated. The interview took place at breakfast.
When John Sculley was lured away from the top ranks of beverage and food giant PepsiCo Inc. in April 1983, to take the reins of Silicon Valley's highflying Apple Computer Co., he didn't know what he was in for: a new corporate culture, cut-throat competition in the personal-computer market, a power struggle leading to the departure of Apple cofounder and then-chairman Steven Jobs and the challenge of trying to instill into a young company the maturity to cope with a volatile marketplace.
At a lunch last week with editors and reporters of The Washington Post, Sculley offered some thoughts on his experience. What follows are edited excerpts of his remarks:
One of the big differences when I came [to Apple Computer] was that it was hard to separate fact from fantasy, because there's so much that was written about Silicon Valley and said about Silicon Valley that I had trouble coming in trying to figure out what part of this is revolutionary and what part of it is plain not real. Quite frankly, it took me several years to try to figure it out, and I'm still trying to figure it out, so I don't pretend to be an expert at this. But at least I've got a few battle scars to say that I've gotten some experience from it.
. . . People expect when they go to Silicon Valley to see these glass and steel buildings like Mies van der Rohe or someone like Philip Johnson was designing. In fact, what you see are buildings with walls that move around every couple of weeks, and no one has very fancy offices. . . . And that's sort of expected at a Silicon Valley company, that things will change -- unpredictable change is normal at a Silicon Valley company.
Youth is a very big part of it, because a company like Apple gives young people a chance to do things that they never dreamed they could do at any age, much less do in their 20s -- our average age is still 29. . . .
The other thing is that you see a tremendous willingness to take big risks. I remember when Lee Iacocca came out and spoke to us -- we have something called the "leadership forum" and a number of different people coming out -- when he came out, he said, "You know, when you're living in a life-and-death struggle, it really helps you sort your priorities."
Everybody cheered because they all could identify with that. Betting everything from time to time is one of the excitements of a Silicon Valley company . . . you see people far more interesting, and you figure they bet everything, they want a piece of the action so that, if it happens, they become winners, too. So, consequently, we have no pension program -- I'm the only one old enough to even think about things like that -- but we do have the highest stock-options participation of any company in the Fortune 500. If you walk around the buildings, you'll see the stock prices published hourly. And, fortunately, lately the prices have been good.
I think the other characteristic is this tremendous compression of time and distance. I remember just recently reading a book by [former Citicorp chairman] Walter Wriston called "Risk and Other Four Letter Words." He talked about when he started out as a young banker in 1948 -- that they were still sending letters of credit by sea mail -- and now it's done in microseconds.
In our own industry, it was only last summer that people thought we were lying on the beach with our heart ripped out and they were wondering if we were going to survive to the end of the year. And it was only by the end of the summer that we were back to respectable profits, to the highest profits we've ever had in our history by Christmas time, and tripled our profits of a year ago in the last quarter. So things happen very, very rapidly in Silicon Valley.
The culture, though, is very very different. . . . I honestly didn't know what would happen when a cofounder of the company and, obviously, a very brave, young visionary, Steve Jobs, was no longer in the company. When I removed Steve Jobs from operations, I honestly didn't know the next day whether half the company would walk out, because loyalty is defined very differently in Silicon Valley.
The closest analogy I can give is at a university -- remember most of our people can identify with schools more than they can with large businesses, because that's where they came from -- at a university, kids can be incredibly loyal to their football team on Saturday afternoon, but it doesn't mean they're loyal to the administration Monday morning. What I didn't know was whether these young people were going to be loyal to changes in leadership in the company.
As it turned out, we held on to most of the people, but we did lose some good people, too. It was a traumatic moment; there were people crying in the streets and news reporters covering it, and it wasn't exactly the most pleasant moment in my life. But the changes that we made turned out to be changes that people at Apple could understand.
First of all, their fear was that a sanitized professional management was going to come in and take all the fun out of business. One of the things that distinguishes a company like Apple is that people want a great environment to work in; they came there to have fun as much as do anything else. And, if we took the fun away, then they weren't going to want to be there.
What we had to demonstrate . . . we couldn't just make a proclamation, we had to demonstrate that you could have discipline and accountability and you could have interdependency between groups . . . and you could do this if you had teamwork. And so you had to start rewarding teams, not just rewarding stars, and that if all this happened, that the company could actually be more successful and people could actually have more fun. Because there was less stress, because things got done on time and people felt more gratification, because they saw their work actually being implemented in the marketplace.
. . . One of the things that makes a Silicon Valley company different -- probably especially Apple -- is the informal networking that goes on. Every company has its network behind the organizational chart, but it's even more apparent at a company like Apple.
As an example, I couldn't envision the chairman of a large East Coast corporation going down to the factory floor and having to go through a press-conference environment where the employes would grill them on decisions they were making. In most cases, top management gets whisked through on a golf cart and there's a grand tour that is carefully rehearsed, and no one would dare ask a question that would be controversial.
And that's not the world of Silicon Valley. People feel that they have a right to hear -- and management has to explain to them -- why they are doing the things that they are doing. And they don't care what the organization chart says. Therefore, you see very little emphasis on titles. It doesn't mean very much in Silicon Valley -- just like offices don't mean very much, titles don't mean very much. We only have a handful of vice presidents, and that's only because we need a few legally.
One of the things that struck me when I first visited Apple, as I walked around with Steve Jobs and he was introducing me to people and they proudly handed me their business cards. And I remember one I looked at -- this young fellow who was at the time about 21, had a big smile on his face -- and I looked at his card and I sort of did a double-take. It said "Hardware Wizard." Then I started looking at the cards as I got them, and another one said "Software Evangelist." Another one said "Product Champion." And these names are really more appropriate to the adventure. It's like an adventure game . . .
And I think that what we try to do is now starting to pay off, but we try to hold on to the best features of Apple in terms of its culture, but also recognize that even youth has to grow up and become more mature in other aspects. So far, it seems to be working.
I would say there is little tolerance for arrogance [at Apple now]. There is less singling out of the stars from a technical standpoint, and a lot more appreciation for teams and more appreciation for the implementers as well as the creators. And even the creators are realizing that their creations don't get implemented without the implementers. We have tried to maintain the passion, while trying to abandon the arrogance.
Giving up arrogance means some humility, and, in our case, it means something called listening to the customer. And I'd say that that has changed. . . . On the other hand, we didn't change the dress code. People are more than likely to show up in blue jeans, the hours are relatively informal, but as you get closer and closer to the customer, you'll see people dressing more and more like their customers. For instance, if you go to the regional office here, they'll be dressed the way we are. But, if you go to Cupertino, [Calif.], it'll still look much like a college campus.
. . . There is really no interest to see teams rebel against the rest of the organization [as the original team that created the Macintosh computer did], but there is still just as much support to let teams do things that express the individual characteristics of that team. So, for example, you can still see the beer busts on Friday afternoon. You still see the off-site meetings, with teams. . . . One building will have robots walking around, and another one will have video arcade games, another one will have digital stereo systems. There's still a lot of that sort of stuff, but people realize that there's a lot more interdependency, and they can't just create their own rules, because some of those rules are going to penalize the whole company.
As an example, it used to be that, if you were a technical person . . . you could design the machine any way you want and forget about all the other machines that were out there. You can't do that anymore. So you've got to live within some perimeters.
. . . Some people said: "Gee, that sounds like bureaucracy; that sounds like somebody is going to constrain me and I won't be able to be creative." In actual fact, the morale has never been higher.
On the split in Apple between the people who made the Macintosh and those who supported the Apple II line of personal computers: Yeah, that's true. That's absolutely true. So that we had one group [Macintosh] that was pumped up so they felt they could take on the world. And the rest of the corporation felt like they were a bunch of bozos. And so that was hurting then. The interesting thing is that a lot of the people who worked on the original Macintosh team are now working with Apple indirectly. One of the things we're trying to do is to recognize that Silicon Valley is a place where many people came . . . because they didn't want to be part of a big corporation. Remember, Apple was not then a big corporation. And as it got bigger, regardless how it was run, they weren't going to like it as much. So a number of these people have gone off on their own.
Well, now that we've got the Macintosh turned around and it's selling well, a number of these people have gone off and started up companies that are working Apple, doing either contracting, engineering or third-party products or things of that nature. So we're actually getting the benefits of a lot of those people in an association way.