Inside Apple: How America's Most Admired--and Secretive--Company Really Works

by Adam Lashinsky

  The weekly top-level product review also serves as a kind of graduate seminar for executives below the level of the executive team. As executives added more responsibility, Jobs would invite them to attend portions of the ET meetings, then more and then more still.

  The speediness of Apple’s decision making also is aided by how judiciously information is communicated outside the executive team. Typically, more information goes in than goes out. Apple teams are given swift feedback—but only the feedback they are deemed to need. The need-to-know mentality explains all the cordoned-off secret rooms with restrictive badge access. By selectively keeping some employees from concerning themselves with colleagues elsewhere in a giant company, Apple creates the illusion that these employees in fact don’t work for a giant company. They work for a start-up. “Some of it is theater, some of it is paranoia,” said a former Apple engineer. But it’s also done with a purpose. “They are isolating themselves from everything that is bad about a big company.”

  The original iPhone team, for example, didn’t interact with the people working on the iPod, then the dominant and fastest-growing product at Apple. The iPhone organization was allowed to raid the iPod group and other areas of the company for engineering talent. That’s because the iPhone was a corporate priority, driven from the top. “A big company would have worried about cannibalizing the iPod,” said an observeThed an obr who knew executives in both groups. “There would have been cultural and technical tension.” Effects of any tension were minimized at Apple because the two groups didn’t talk. The start-up team could pretend it didn’t have the baggage of a big corporation.

  Put these corporate attributes together—clear direction, individual accountability, a sense of urgency, constant feedback, clarity of mission—and you begin to have a sense of Apple’s values. Values may be a squishy topic in the corporate world, a term that’s interchangeable with culture or core beliefs. In the case of Apple, however, being able to assess how deeply ingrained its values are informs the question of how the company will fare without Steve Jobs. After all, Jobs himself agonized over the drift in Apple’s values during the ten-plus years he was in the wilderness at NeXT and Pixar. “What ruined Apple wasn’t growth,” he said in a 1995 interview with the Smithsonian Institution, as he watched his beloved brainchild flailing. “What ruined Apple was values. John Sculley ruined Apple and he ruined it by bringing a set of values to the top of Apple which were corrupt and corrupted some of the top people who were there, drove out some of the ones who were not corruptible, and brought in more corrupt ones and paid themselves collectively tens of millions of dollars and cared more about their own glory and wealth than they did about what built Apple in the first place, which was making great computers for people to use.” (In 2011, Sculley first declined to comment on Jobs’s decade-old comments, and then followed up to cite his accomplishments at Apple, including helping to usher in the Macintosh. It’s worth noting that corrupt was a favorite pejorative for Jobs. He generally used it to describe his opinion of the wrong way of doing things, as opposed to implying illegal wrongdoing.)

  If Jobs thought the leadership during the interregnum obsessed about money, the modern obsession with user experience has created a kind of shorthand for how Apple employees communicate. “There’s a passion about the place,” said a former top engineering executive. “You interact with people at other companies who just aren’t connected. They are floating above the strategy. You try explaining to them what not to do, and it’s like talking to people in a language they don’t understand. At Apple, thirteen of fifteen topics get cut off after a sentence of discussion. That’s all that’s needed.”

  The Apple way is direct and deadline-oriented. “Dates are set well in advance,” said Mike Janes, who ran Apple’s online store in the early 2000s. “Things get accomplished. There are no questions. The ‘Innovator’s Dilemma’ doesn’t exist at Apple,” he said, referring to Clay Christensen’s popular book about how big companies fail to anticipate the next wave because they are unwilling to sacrifice existing sales. “There’s no dilemma.” As for urgency, “If you want to get something done, the meeting is this afternoon. Or tomorrow. You don’t wait to get something on the calendar.”

  For such a sprawling organization, Apple also is a headquarters-centric company. Sure, there are sales offices and retail stores throughout the world. And Apple has established China as its base of manufacturing. But its entire management team is based in Cupertino and talks to one another, frequently and in person. The small number of vice presidents, typically reporting directly to members of the executive team, means that the CEO can see the entire company with one degree of separation. Apple people board airplanes at the drop of a hat, but the compegnbut theany does not have a videoconferencing or conference-call culture. Meetings generally happen in Cupertino.

  Moreover, there’s a sense that only people in Cupertino are truly to be trusted. Bob Borchers, the former iPhone product marketing executive, recalled the decision to fly more than forty people from headquarters to Europe for the iPhone launch in the United Kingdom and Germany. “It was Cupertino staff, the folks who’d been part of the launch at Macworld, who had already been through it,” he said, referring to the iPhone’s debut in 2007 at the Moscone Center in San Francisco. “So rather than trying to train somebody, even somebody in the regional office, we said, ‘No, let’s take the people who have done this before. Let’s fly them over.’ We essentially shut down all of product marketing for a week.”

  In a company organized along functional rather than divisional lines, scouting must be a core competency of its leader. Steve Jobs long considered the issue of spotting and grooming talent to be one of the most important aspects of being an entrepreneur and a CEO. It was particularly on his mind in 1995, a decade after being pushed aside at Apple and two years before his return. Listen to how, in the Smithsonian interview, he discussed the relative numerical value of people in the way a hedge-fund manager might discuss leverage.

  I always considered part of my job was to keep the quality level of people in the organizations I work with very high. That’s what I consider one of the few things I actually can contribute individually—to really try to instill in the organization the goal of only having “A” players. Because in this field, like in a lot of fields, the difference between the worst taxicab driver and the best taxicab driver to get you cross-town Manhattan might be two to one. The best one will get you there in fifteen minutes, the worst one will get you there in a half an hour. Or the best cook and the worst cook, maybe it’s three to one. Pick something like that. In the field that I’m in the difference between the best person and the worst person is about a hundred to one or more. The difference between a good software person and a great software person is fifty to one, twenty-five to fifty to one, huge dynamic range. Therefore, I have found, not just in software, but in everything I’ve done it really pays to go after the best people in the world.

  Mike Janes, a former Apple executive, remembered a more concise Steve-ism on the subject of talent: “A players hire A players, and B players hire C players. We want only A players here.”

  Once hired, people stay at Apple for years, assuming they have learned to accept the literal and the unspoken terms of employment. At the time Steve Jobs resigned as CEO, every member of the executive team except for the general counsel and chief financial officer had been in their jobs since at least 2000. The same was true in the middle ranks, especially among engineers, who’d dreamed of working at Apple since they were old enough to buy their first Mac. Rival recruiters say it is difficult to hire people out of Apple, particularly engineers. Successful employees do leave, of course. Asked why, a typical cup-half-full response revolves around a desire to pursue one’s own dreams instead of Apple’s. “At Apple you work on Apple products,” said former Apple designer Borovsky. He left to start his own design consultancy.

  Apple people u tpple peundoubtedly are world-class, but being excellent at your job is not
enough. It takes a certain kind of egoless and fanatical person to thrive at Apple. First, Apple employees, whether extremely senior or entry-level, must have the ability to “check their identities at the door,” in the words of one former executive. “At Apple you are hired for a specialty, and it’s good for the company.” Jobs once bragged about having the best metallurgists in the world at Apple. On the flip side, there is little movement internally, and more recently a bias toward hiring from the outside has become apparent, what one recruiter calls “a replacement culture versus a development culture.” Said an executive who worked at Apple twice: “I have way more examples of people being demoted than promoted. They’d be banished from one group, left to find a lesser position elsewhere in Apple and continue [waiting for their stock options to] vest.” The frequent quip from an Apple employee who accepts demotion calls to mind how you refer to the last-ranked graduate of medical school (a doctor): “I still work at Apple.”

  Apple is not for everyone. “Apple runs so fast and so lean, it requires people to really work hard and take on a lot of tasks and do them in a short period of time,” said a recruiter who is close to Apple employees. “There’s a mystique about Apple that is intriguing to people, so they want to check it out. They want to be part of something cool, but then they get in there and they’re like, Oh, this really isn’t the hip company that I thought it was.” In fact, there’s a popular expression at Apple: Everybody at Apple wants out, and everybody outside Apple wants in.

  There are downsides to the Apple way. Charles O’Reilly, a professor at Stanford’s Graduate School of Business who studies leadership, organizational culture, and demography, believes there’s only one reason Apple has been able to stave off a traditional organizational structure in favor of a functional one. “Apple has been able to avoid being a big, market-driven organization because Jobs made all the decisions,” he said. “We tend to worship at the altar of success,” he added, guessing that without Jobs the lack of general management will change from an oddity to a liability. Indeed, around the time Jobs stepped down, Apple was conducting multiple searches for top-level executives, including a new head of retail, a number two for product marketing, and a new sales chief, because sales had reported to Cook. Apple’s organization chart is so tight—approximately seventy VPs for a company with just over twenty-four thousand non-retail employees—that its bench is relatively shallow.

  The ability to maintain a low profile is often hard for the go-getter overachievers whom Apple recruits. For years, the only executive Jobs allowed to serve on an outside board of directors was Tim Cook, who is on the board of Nike. Other employees have been warned not to attach their names to the causes of nonprofit organizations, at least not in a way that would identify them as employees of Apple. Clearly the company didn’t want individual employees “speaking” for Apple. Jobs suggested his biggest concern was one of distraction. Andy Miller, who joined Apple as a vice president after Apple bought his mobile advertising company in 2009, asked Jobs if he could join the board of an independent company in a different business than Apple. “What?” Jobs responded. “You’re barely cutting it here,” Jobs said, which Miller understood to be relatively high praise, “and you want to go spend your time helping someone else’s company? I don’t even let Forstall out of the office,” Jobs added, referring to Scott Forstall, Apple’s mobile software chief, a high-ranking and considerabonad consily more influential executive than Miller. Needless to say, Miller declined the board membership offer.

  Lack of extracurricular activities breeds focus, but it also fosters insularity. Macintosh-era Apple executives in particular may have gone their entire tenures at Apple without meaningfully interacting with outsiders other than a handful of close suppliers. After all, they built their careers before iTunes and the iPhone thrust Apple into so many new industry conversations. “I fundamentally believe that people who stay too long can’t work anywhere else,” said one executive who has gone to work elsewhere. “It doesn’t translate into real life.” Another departed executive likened a recently retired colleague to a newly freed convict. “It’s as if he’d been in jail for two decades when he got out. He knows no one.”

  Typical Apple employees, in fact, don’t need to know many people at all—just a handful of colleagues in their immediate group. The anthropologist Robin Dunbar theorized in 1992 that humans are capable of maintaining meaningful relationships with no more than an average of 150 people simultaneously. He came to this conclusion after scientifically observing primates in the wild and their “self-grooming” habits—in other words, the way they nurtured and supported one another in the pursuit of life-sustaining tasks. Steve Jobs observed a different group of creatures—engineers working on the first Macintosh computer in the 1980s—and came to a similar conclusion. He declared during his first tour at Apple that he never wanted the Macintosh division to be larger than one hundred people.

  Small group sizes, and the number one hundred in particular, have been integral to the Apple culture ever since. Apple isn’t alone in this. Companies are forever trying to figure out how to foster separate “skunk works” projects or commit discrete SWAT teams to important assignments. Amazon.com had a “two-pizza” rule: Teams couldn’t be bigger than the number of people that could be fed by two pizzas in the (likely) event they were working late and got the munchies.

  Apple frequently assigns major projects to small groups. For example, just two engineers wrote the code for converting Apple’s Safari browser for the iPad, a massive undertaking. It is, after all, how a start-up would approach something important, though in the start-up’s case it would be because there aren’t a lot of people around—a necessity rather than a conscious management decision. “If two to four people can get it done, you don’t need twenty to thirty, which is how so many other companies do it,” said Andrew Borovsky, the former Apple designer. “At Apple, really small teams work on really important projects. That is one of the advantages of being in a start-up.”

  Jobs enshrined the importance of a small group in an ultra-secret gathering called the “Top 100.” The expression refers to both the group and the meeting, which was held more or less annually when Jobs was well and less consistently when he wasn’t. Jobs described the group alternatively as those he would choose if he were to start the company over again and the people he’d want with him in the proverbial life raft should the good ship Apple sink. Attendance at a Top 100 was a highly coveted and emotionally charged moment in an executive’s career because Jobs doled out invites based on his opinion of the individuals in question rather than their rank. Relatively low-level engineers would attend, because Jobs wanted them there, while certain vice presidents would be excluded. o ie excluHurt feelings over exclusion were the norm, which is what Jobs expected and even relished.

  Everything about the Top 100 was shrouded in secrecy. For years it was held at the Chaminade Resort & Spa in Santa Cruz, California, and later at the Carmel Valley Ranch, on the opposite side of the Monterey Bay. Attendees were prohibited from driving themselves to the meeting. Instead these essential and wealthy executives boarded a bus in Cupertino for the drive south. Participants were told not to put the meeting on their calendars and not to discuss it internally. That was folly, of course, because senior executives needed help from their subordinates to get ready for their roles in the meeting. “We would prepare materials for people who would attend the Top 100,” remembered Michael Hailey, a manager who was not among the elect to be invited. “Then we’d tongue-in-cheek have a Bottom 100 lunch after they were gone.”

  So secretive were the details of the Top 100 meeting that Apple had the meeting rooms swept for bugs beforehand. Jobs was known to forbid food servers from entering the room while products were being shown. He once encouraged attendees to introduce themselves to the person sitting next to them to ensure that no one had snuck into the room.

  Once ensconced at their exclusive off-site, the Top 100 were treated to a thorough review of Apple’s pr
oduct plans for the next eighteen months or so. Jobs sat at the front of the room, kicking things off with a presentation that described his vision for the company and then presiding over presentations by other executives. Executives who attended said the presentations were of the caliber of a Steve Jobs keynote, meaning that tremendous effort went into them. “There would be half a dozen presentations a day, each only an hour long,” recalled an executive who attended many Top 100s. “You could really talk about anything in those meetings. You didn’t have to worry about secrecy. You could put everything out on the table: the pros, the cons, all that kind of stuff.”

  The meetings were intended to allow the level of leadership below the executive team—people who in such a siloed and segregated company wouldn’t ordinarily interact with one another—to bond. They were also a venue for sneak peeks at upcoming products. The store concept was revealed at a Top 100. So was the first iPod.

  At the last Top 100 Steve Jobs attended, in November 2010, he showed off the iPad 2 and its colorful new magnetic cover—four months before the public got to see it. A highlight for attendees was an extended Q&A between Jobs and his executives. One asked why Jobs himself wasn’t more philanthropic. He responded that he thought giving away money was a waste of time. The San Francisco Giants won the World Series during a dinner session of that last Top 100—a distraction to the many Giants fans in the room, and an irritant to Jobs, who was completely uninterested in sports.

  The Top 100 was a mostly internal affair, though the rare external guest made an appearance. Intel chief executive Paul Otellini presented the year Apple and Intel began a partnership to place Intel chips in Macs. As Apple prepared to enter the phone business, its key contacts at AT&T, Glenn Lurie and Paul Roth, briefed the computer-industry executives on the wireless world and its history. Lurie remembered the meeting for having exposed him to Apple executives beyond the narrow group with whom he’d been dealing on the iPhone. “I walked away incredibly impressed with the individuals,” he said. (Lurie’s role with Appto ole witle is so important to him that his official AT&T bio states that he has “responsibilities for AT&T’s ongoing operations and relationship with Apple Inc., having led negotiations to bring the iPhone to AT&T.” It notes his brief career as a professional soccer player but doesn’t mention the name of any other AT&T partner.)