Steve Jobs – the man was fallible

As a student, at Reed College, Steve Jobs came to believe that if he ate only fruits he would eliminate all mucus and not need to shower anymore. It didn’t work. He didn’t smell good. When he got a job at Atari, given his odor, he was swiftly moved into the night shift, where he would be less disruptive to the nostrils of his fellow colleagues.

The job at Atari exposed him to the earliest generation of video games. It also exposed him to the world business and what it meant build up and run a company. Some years later, with Steve Wozniak, he founded Apple in Silicon Valley (of course in a garage) and quite quickly, although just in his late twenties, grew to be a management phenomenon, featuring in the legendary business book by Tom Peters and Bob Waterman “In Search of Excellence”.

But, in fact, shortly after the book became a bestseller, by the mid 1980s, Apple was in trouble. Although their computers were far ahead of their time in terms of usability – mostly thanks to the Graphical User Interface (based on an idea he had cunningly copied from Xerox) – they were just bloody expensive. Too expensive for most people. For example, the so-called Lisa retailed for no less than $10,000 (and that is 1982 dollars!). John Sculley – CEO – recalled “We were so insular, that we could not manufacture a product to sell for under $3,000.” Steve Jobs was fantastically able to assemble and motivate a team op people that managed to invent a truly revolutionary product, but he also was unable to turn it into profit.

When Jobs was fired from Apple – in 1985 – CEO John Sculley took control. Sculley is often described as a bit of a failure, because “nothing revolutionary came out of Apple under his watch”, “he could have done so much more with the company” and especially for “being stupid enough to boot out a genius like Steve Jobs”. However, the years after Sculley took over were some of Apple’s most profitable. The man did something right, and that was focus on exploiting the competitive advantage that Apple had built up.

In management research, following terminology cornered by the legendary Stanford professor Jim March, we often say that firms have to balance exploration with exploitation. Exploration refers to developing new sources of competitive advantage and growth. Exploitation refers to making money out of them. Steve Jobs was “insanely great” at exploration, but not – at the time – at exploitation. Sculley was.

Now Steve Jobs is a legend. And rightly so; our world literally would have looked different without him. However, what Steve Jobs’ legendary status also tells me is that we – mere mortals – are inclined to overestimate the omnipotence of CEOs. We overdo it when we ascribe the failure of an entire company to just one man or woman (e.g. Enron’s Jeff Skilling) but also when we ascribe the entire success of a company to one individual.

Steve Jobs wasn’t omnipotent (John Sculley had qualities Jobs didn’t) and he wasn’t always right (eating only fruits does not eliminate the need for an occasional shower). His day-to-day influence on Apple over the last years must have been limited, given his rapidly and severely deteriorating health. If anything, he simply would not have been able to be around enough to control and take care of everything. Nevertheless, the company did well in spite of his absence. And of course that is his laudable achievement too; he managed to build a company that could do well without him. And perhaps that may prove to be his best business lesson after all: how a great leader eventually makes himself superfluous.

The Business October 26th 2011, "Maximum Fun" Edition

The Business returns triumphantly from Los Angeles this week, and welcomes a special guest - comedian and broadcaster Jordan Morris! Jordan is the co-host of MaximumFun.org's "Jordan, Jesse, Go!" and was an original co-host of "The Sound of Young America." You can also see him on Fuel TV's "The Daily Habit" and at the UCB Theatre in Los Angeles. See the face attached to the voice you love!

We've also got all of your favorite regular Businessmen, making this a veritable "Jordan, Alex, Bucky, Chris, Sean, Go!" event. Tickets are still just five dollars, and we enable, nay, encourage the bringing of one's own burrito.

China searches for its soul

If you are a Sinophile, this is old news and you don't want to read about this anymore; if you are not, this may be new to you. Little Wang Yue, affectionately called Yueyue is dead. She was only 2.

Yueyue, a toddler, wandered on to a road in Foshan, a southern Chinese city and was hit by a vehicle. A security camera filmed the whole scene. 18 passerbys saw her lying in a pool of blood, but walked on and did nothing to help her. The driver who hit her, drove on. Yet another vehicle hit her as she was lying injured. Finally a noble lady, a rag picker, Chen Xianmei, came to help her. Yueyue was taken to hospital. But she slipped into a coma and died.

China is going through a bout of soul searching. The security video that filmed the whole grisly thing has gone on the Net. Weibo, the Chinese equivalent of Twitter (Twitter is still banned in China), has millions of messages bemoaning what happened. China is asking itself the question - has materialism and money become so domineering that human values have taken a backseat ?

The driver of the first vehicle who hit her, has allegedly said (not entirely corroborated) that if the victim dies, he would only have to pay 20,000 yuan, whereas if she had survived, he would have to pay her medical costs for life.What about the 18 passerbys who looked and walked on and did nothing to help a 2 year old lying critically injured. What makes a human being do that ?

Part of it is the so called Peng Yu effect. In a famous case in Nanjing, a good samaritan called Peng Yu helped an old woman who had been injured in a bus stop. He even took her to hospital. For his labours, he was sued by the woman and a stupid judge ordered that Peng Yu must pay 40% of her medical bills (the learned idiot ruled that Peng Yu would not have stopped to help unless he caused her to be injured). Similar cases have happened. People have faked injuries in order to be able to sue the person who came to help. 

Money is God and undoubtedly the dominant religion in China. But that does not mean that the society has lost its human values. Far from it. Chinese can be the most affectionate and friendly of people. I know it from personal experience. One case does not typify Chinese society. But it certainly must trigger, as it has, a bout of soul searching.

Not just in China, but everywhere else in the world. Alas what happened to Yueyue would happen in many countries in the world. Including my own. People will turn their faces and keep going and do nothing to help.  But there will also be a Chen Xianmei, who will stop and assist. Usually it is the poorer sections of the society who will be more ready to help. If somebody is lying injured on the road, the BMW will slow down to look, but is more than likely to drive off. It is the pavement dweller or the homeless, happening to be around, who will rush to help.

Sorry Yueyue. The world did not care for you. Your family  may not believe in religion, but I do hope there is a God somewhere who has taken you in His arms.

Storm in an ice cream cup

Schweddy Balls ice cream is brewing up a storm. It has caught the ire of One Million Moms, who are protesting about it. Wow !

Ben & Jerry's seems to be the flavour of the month on this blog. They are the lot who are churning our a limited edition Schweddy Balls ice cream, which they claim has risen to the top of the charts - presumably charts exist for ice cream flavours too.  Apparently it is "fudge covered rum balls" , whatever that means. Schweddy Balls is a take on a Saturday Night Live skit (a television show in the US). An innuendo laced old skit aired on that programme has the "memorable" tag line - no one can resist my Schweddy Balls.

On Million Moms is some obscure conservative organisation based in Mississippi of all places. They are up in arms. They say the language is unsuitable for children. They have forced some supermarket chains not to carry Schweddy Balls and are petitioning the company to stop the production. Little wonder Ben & Jerry's is revelling in the publicity and refusing to do anything of the sort. I thought motherhood was a pretty taxing full time job - are One Million Moms having enough idle time to be protesting about some trivial stuff ?

B&J of course has a long history of quirky names. The initial lot were simply just that; quirky  - Chunky Monkey, Cherry Garcia and the like. They seem to happily coexist with the more prosaic Banana Split and Chocolate Fudge Brownie. Presumably uncolourful lot like me would prefer Chocolate, but a breezy sulo would want Bonnaroo Buzz !  But then they graduated to Karamel Sutra, which was apparently lapped up by the kilo litre. They had a Chubby Hubby flavour, which was fair enough considering that most hubbies in real life are fairly chubby, if not downright tubby. But when same sex marriages were sort of in the news, out came  Hubby Hubby. 

Perhaps Hopfrog or J or Deepa, who have access to the miracles of modern day indulgences can pronounce on the relative merits of Schweddy Balls vs Karamel Sutra vs Hubby Hubby !

Ah ; what a storm in an ice cream cup.

Corporate Japan at its worst

In the good old days when I was in business school, Japan could do no wrong. A million books were written on the Japanese style of management. America was bust, Japan was everything. Case after case taught at business school was on how gloriously managed Japanese businesses were. At that time the two words we were thoroughly sick of was Japan and Walmart ! Time has since proved that there is a fair bit to admire about Japanese management, but a lot that is thoroughly rotten.

A great example is what happened at Olympus last week. This is the company that makes cameras.They just fired Michael Woodford, their CEO, and a 30 year company veteran, two weeks after elevating him. They were brave enough to appoint a non Japanese as their CEO, one of a handful of Japanese companies to do so and foolish enough to sack him immediately. His crime - he didn't listen to the Chairman Kikukawa san and started probing into the financial skulduggery that seems to have gone on.

The skulduggery relates to the acquisition of Gyrus, made in 2008. The acquisition was for $2 bn. Olympus then made payments for advisory fees of $687 m to two virtually unknown firms. Nobody can trace who the owners of these two companies are. One of them, registered in the Cayman islands has since disappeared off the registry 3 months after receiving the last payment from Olympus. These payments were not disclosed to shareholders - instead they were hidden in goodwill by adding to the acquisition price. Now, who on earth pays advisers fees of $687 million for a $2 bn acquisition ?? Not even Wall Street is that greedy.

KPMG, their auditors disagreed with all this accounting wizardy and were promptly sacked for their endeavours.

Woodford started to enquire into this and was told to shut up and look elsewhere. His crime was that he did not listen.

Woodford was summoned to a Board meeting were he was told to zip his mouth and not speak. The solemn directors then proceeded to fire him. The function of the board, alas all too often in Japan, is to bow one inch lower than the Chairman. So much for corporate governance.

The rigidity of hierarchy in Japanese corporate life survives to this day, Grovel and obey without question. I am still amazed how they managed innovation with that culture. I am sometimes inclined to credit some divine providence for all the wonderful innovation in product and quality systems that came out of Japan. How else can you explain  that coming out of a Stalinist corporate culture.

The only lot who are thoroughly unimpressed by all this is the Japanese investor. He has cheerily driven down Olympus' share price by 24%. Kikukawa san and his deputy Mori san may still have to fall on their sword soon.

I'll Never Do It Again

Does INDIA stand for I'll Never Do It Again ?? I cringed and held my head in shame as I listened to this podcast - this series is one of my personal favourites and represents some of the best of the BBC. It ends with a quote from a guy who did something Indians were very proud about - run the opening ceremony of the Commonwealth Games . But he says,  "I'll be very happy to ignore India. There are plenty of other places where they pay their bills ". Listen to the podcast if you can - it is only some 5 minutes or so.

Is India one of the most difficult places in the world to do business ? In a recent World Bank survey, India came in at a staggering 134th out of 183 countries in the ranking of the places easiest to do business in. It is easy to dismiss such rankings, as indeed the podcast, as biased and taken out of context. For after all, doesn't  India have a vibrant and surging economy. Surely it can't be a bad place to do business and still be growing like it is. Alas the sad fact is that it is growing like it is despite the fact that it is one of the difficult places to do business in.

Take the instance of the Commonwealth Games contractors which is the subject mater of the above podcast. There has been allegations of corruption over the Games. So what do we do - jail the head of the organising committee without a trial and stop all payments to all contractors associated with the games. And let this meander along for years. It is appalling conduct. Every contractor is not corrupt. Just freezing all payments is no different from piracy. And we are supposed to be a country where there is rule of law. Try taking the government to court. You may get a judgement after you are dead. India ranks second last in the list of countries where you can enforce a contract - bested only by East Timor. 

For a start, we have to abolish the Indian Standard Time. Every decision cannot take years. Government cannot take years to allow an investment or set a policy. Courts cannot grant a stay for years to some aggrieved party. They cannot take years to enforce a contract. Contractors cannot take years to finish a job. We cannot accept being late in completing anything as a national characteristic. 

Unfortunately, given the spate of corruption scandals that have infected the country, all decision making has come to a standstill. Nobody is deciding anything for fear of being labelled as corrupt . You see, you cannot be accused of corruption if you never decide anything. There are no penalties for absolute inaction.

This is an awful state of affairs crying out for leadership, with a capital L. A leader who can stand tall and do the right thing.A leader with a clean conscience, who can motor ahead and act without fear. Being terrified and standing still is downright cowardice. But alas, such a leader is not visible even on the distant horizon.

I cringe and cringe when I see "I'll Never Do it Again" as an acronym for India. But I am afraid, there is an element of truth in it.

The curious case of Ben & Jerry's

Do you like Ben & Jerry's ice cream? Most probably a resounding yes.  But this post is not about its ice cream. Its about what it has done on Tuesday.

What it did on Tuesday was to go to New York's Zuccotti Park where the Occupy Wall Street protesters are camped and dole out free ice cream to all of them. Nothing spectacular about that, except that it went on to publicly declare its support for the protesters. It also published a statement from its Board of Directors that the company has the deepest admiration for the protesters and is standing with them. You can read what the Board said here.

Ben & Jerry's has long been a left leaning company promoting a variety of causes. Its founders Ben Cohen and Jerry Greenfield started the company with a clear social and sometimes political agenda. So should this latest action be surprising. Yes, because, Ben & Jerry's is no longer an independent company. It's a subsidiary of Unilever, a global multinational company, perhaps the very sort that the Occupy Wall Street protesters are agitated against (that is, if somebody can decipher what exactly they are protesting about).

Was Unilever ambushed by the act of Ben & Jerry's ? Tough to believe so - for the Board of Ben & Jerry's has Unilever representatives, including an ex Director of Unilever itself. Unilever has issued a statement that it is neutral to social campaigns and has no comment to make, but that is a blithe remark considering that  its subsidiary is indeed making a very loud statement.

How far do you let your subsidiary act on its own ? Usually subsidairies are simply legal shells and the parent runs them as one corporate whole, unless there are external shareholders. But Ben & Jerry's is different. Perhaps because of its historical brand image. Perhaps because of covenants agreed with the founders at the time of acquisition to allow the company to have a social agenda. But still, the latest action seems a step too far. I won't be surprised if the upstart is reined in.

What of the protestors ? They are objecting to evil corporations; right ? Do they want the support of one ? Some of them expressed mixed feelings. They said they were uneasy about corporations muscling in on their patch. But they also said, they could not turn down a free ice cream !

Very curious.