5,000 percent return on your investment in less than eight years!
2010 is destined to be another phenomenal year for Steve Jobs and California-based Apple.
Reaching a low of $12.72 on April 17, 2003, Apple stock split 2:1 on February 28, 2005 with each share closing at $318.27 on November 4, 2010, the last trading day before the writing of this post. If you invested $1,272 in Apple (100 shares) on April 17, 2003 that investment would have brought $63,654 on November 4, 2010. An unbelievable 5,000 percent increase in less than eight years!
For many of us, this whole scenario is a very painful reminder of failing to invest, or not investing more heavily, in Apple back in 2003. The only consolation I can think of is that I don't believe anyone could have envisioned the incredible powerhouse Apple would become. Remember, this is the company that many thought would either be sold or, even worse, go out of business in the early 1990's. I was NOT one of them.
On the way to and far beyond Apple's first $Billion in revenue.
1983 was a milestone year for Apple. Under Steve Jobs' leadership, Apple reached $983M in revenue, shipped 750,000 computers, and held an 11.2 percent market share of global personal computer sales. Steve Jobs' vision, passion, creativeness, and attention to detail contributed to Apple becoming the first personal computer company to achieve a $Billion in revenue.
Apple's board of directors, not having confidence in Jobs' ability to keep the momentum going, hires John Scully as CEO in 1983. Frustrated with the limitations placed on him by his new role and the strategic decisions made under Scully's leadership, Jobs tries to have Scully removed from Apple. The board sides with Scully against Jobs with Jobs leaving Apple in 1985. Scully and Jobs never speak to each other again.
Under Scully's leadership, Apple was reorganized, its marketing streamlined, and, leveraging Jobs' vision, achieved its largest growth, percentage wise, in its history, prior to Jobs returning as CEO in 1997:
In 1993, Scully leaves Apple stating (Chronology of Apple Personal Computers - 1993): "I can see the day when Apple won't be in the personal computer business." and "The personal computer business as we have known it is not very attractive for the Nineties." About the personal computer business he couldn't be more wrong, but predicting Apple would move beyond computers was either very insightful or a good guess.
With Apple quickly losing momentum, Apple's board of directors tries to sell the company before, as some predict, it fails.
Scully candidly shares his perception of Jobs.
With candor and sometimes surprising honesty, Scully recently shared his perception of Steve Jobs (Being Steve Jobs' Boss):
- Everyone around him knows he beats to a different drummer. He sets standards that are entirely different than any other CEO would set.
- He's a minimalist and constantly reducing things to their simplest level. It's not simplistic. It's simplified. Steve is a systems designer. He simplifies complexity.
- Steve's brilliance is his ability to see something and then understand it and then figure out how to put it into the context of his design methodology — everything is design.
- Everyone knows the designers speak for Steve because they have direct reporting to him. It is only at Apple where design reports directly to the CEO.
- Microsoft's philosophy is to get it out there and fix it later. Steve would never do that. He doesn't get anything out there until it is perfected.
The challenge: Keeping ahead of the wolves.
Without any buyers in site, several failed CEO transitions, a 12 year record low stock price, and crippling financial losses, in 1997 Jobs steps in as the interim CEO to begin a critical restructuring of the company's product line. He would eventually become CEO and continues serving in that position to the present day.
Regarding Apple's condition, Scully states:
- We couldn't get anyone who wanted to buy it. They thought it was just too high risk, because Microsoft and Intel were doing well then. But if I had any sense, I would have said, "Why don't we go back to the guy who created the whole thing and understands it? Why don't we go back and hire Steve to come back and run the company?
- It's so obvious, looking back now, that that would have been the right thing to do. We didn't do it, so I blame myself for that one. It would have saved Apple this near-death experience they had.
- I'm actually convinced that if Steve hadn't come back when he did — if they had waited another six months — Apple would have been history. It would have been gone, absolutely gone.
In 1993, when Scully resigned as CEO, Apple had a net income of $86M which dropped to a loss of $816M in 1996, and a loss of $1B in 1997. Under Jobs' leadership, Apple regains the vision, passion, strategic direction, and momentum lost over the years, reigniting its former stellar performance with revenues climbing to $65 Billion:
How important was and is Steve Jobs to Apple's success?
Steve Jobs' contribution to Apple's success, both now and in the past, is huge — but not the only factor determining the company's success. In addition to Jobs, two other high-level factors were critically important. The three overlapping factors are:
- Jobs' vision, passion, creative genius, attention to detail, and the fostering of a culture of innovation
- Clear, competition-busting strategic direction, and the successful planning, execution, and management of strategy
- An organization and marketing plan able to effectively and successfully deliver on the vision
Without a clearly defined and executed strategic direction, an effective organization, and the right marketing plan, Jobs was unable to keep momentum going in the early 1980's — success factors that Scully brought to Apple. Under Scully's leadership, Apple lost its vision, passion, and creative excellence — success factors that Jobs brought to Apple. From the late 1990's to the present, with these success factors receiving the attention they deserve, Apple begins to realize its full potential.
What we learn from all of the above is that Apple was most successful when all three factors were alive and well. An important reminder for all companies on the way to a $Billion in revenue! These factors are reflected in the 7 Dysfunctions of High-Potential Companies discussed in this blog.
My experience at Apple.
Having been fully engaged with Apple during the late 1980's and most of the 1990's, and briefly meeting John Scully on two occasions, this posting brings to mind a whole range of personal memories. Apple was an incredibly creative company to work with in the late 1980's. Here's a few memories, though, about the last few years under Scully's leadership and the four years leading up to Jobs' return:
- I was convinced that some of the changes Scully brought to Apple were needed but, because of a poorly planned and executed strategic change process, the changes Scully initiated (what Scully referred to as "forcing the company to grow up") ended up destroying the culture that was so instrumental to Apple's earlier success
- The insensitive, poorly executed, round after round of layoffs when momentum started to slump killed the desire of many employees to see the company through the hard times, contributing to the downward spiral
- There was a lack of openness to employee input
- Key talent (Apple's most critical asset) left the company during this time
- I was again reminded that compensation doesn't equal competence
The big question.
Since Jobs uniquely delivers one of the key factors of Apple's ongoing success, the question on many people's mind is how will Apple function without Jobs? The company came close to dealing with that question last year. Apple's boom to bust cycles during the 80's and 90's show how critical that answer is to Apple's long-term health.
If Apple fails to deliver on any of the three overlapping factors essential to its success, you will likely be looking back on 2010 as the year you should have dis-invested in Apple.
The discussion of Apple's phenominal growth, the importance of Steve Job's leadership, and the impact of his announced leave of absence continues with: Apple Stock: On the way to a $1,000? — Can it get there without Steve Job's?
The issues addressed in this blog, as well as the supporting examples, are targeted to the leadership of public companies on the way to a $Billion in revenue. These issues, though, are also critical to the strategic success of all profit and non-profit organizations from early stage to mature.
David Seregow, Ed. D. is Founder and President of Attaine Performance Corporation, providing strategic guidance, collaboration, and coaching to high-potential companies. www.attaine.com Copyright 2010 David Seregow, Ed. D. All Rights Reserved. Permission granted to post, print, or email this entire posting if full attribution is included and the post is not edited.