Steve Jobs and Ed Catmull – a backstage look at the mechanics of culture, decision making and innovation in Apple and Pixar.
Steve Jobs’ description of Apple’s culture as that of a startup gives an important insight into the company’s ongoing success. At the recent All Things D conference, Steve Jobs described Apple’s (AAPL) culture as “that of a startup.” Why? Nilofer Merchant recently reports in Bloomberg re Apple’s Startup Culture.
Is it because he is nostalgic, yearning to rebuild the company he founded nearly 35 years ago? Is he reflecting a passion for the innovation and entrepreneurship so often inherent in startups? Or is he saying that a startup drives better products, velocity, and growth?
Guess what: all of the above. But what’s perhaps more interesting is that by sharing this idea, Jobs also gave up a secret of what makes Apple successful. The essence of what causes Apple to win is the same thing that causes startups to innovate, the same thing that is at the root of all high-performance cultures. His description encapsulates the smart collaboration that underlies the creative acts of innovation throughout Apple and that exemplifies the company’s culture.
CULTURE DRIVES INNOVATION
Culture is a shared set of norms. David Caldwell, professor of management at Santa Clara University, talks about “culture as a shared understanding of assumptions and expectations among an organization’s members, and it is reflected in the policies, vision, and goals of that organization.”
In other words, culture informs success, not the other way around. Leadership drives a culture. Stephen Sadove, chairman and chief executive of Saks, says culture drives numbers: “Culture drives innovation and whatever else you are trying to accomplish within a company—innovation, execution, whatever it’s going to be. And that then drives results,” he said in a recent New York Times article. “When I talk to Wall Street, people really want to know your results, what are your strategies, what are the issues, what it is that you’re doing to drive your business. Never do you get people asking about the culture, about leadership, about the people in the organization. Yet it’s the reverse, because it’s the people, the leadership, and the ideas that are ultimately driving the numbers and the results.”
So culture might feel like a soft idea, but it’s the stuff that formulates how you get things done. Thus it’s a key driver of results and its importance should never be underestimated.
APPLE AS A STARTUP
Recently, Apple’s market cap surpassed Microsoft’s (MSFT) to make Apple the most valuable technology company in the world. Yet as Jobs said at All Things D, Apple was near the brink of death only 10 years ago. It had $150 million in the bank, and its stock was trading at a few bucks a share.
Jobs could have focused on near-term fixes. Instead, he focused on building a high-performance culture by doing three things well.
1. He refocused the strategy to be about one thing. That meant he killed off even good things. I led server channel management at Apple when Jobs returned to the company in 1997, and I was there when he made the decision to shut down big portions of revenue-generating businesses (including my division) because they didn’t fit with his vision for the company. Some people thought he was crazy. But he was being extremely clear, and in doing so, he “MurderBoarded”—eliminated many options to get one cohesive strategy—his way to greatness.
2. He eliminated passive aggressiveness and encouraged debate when new ideas were forming. When you are thinking about difficult problems together with exceptionally bright people, there are going to be disagreements. But it is through the tension of that creative conflict that new ideas get born, new angles get explored, and risks get mitigated. Thinking together means you deal with conflict up front, rather than have to counter passive aggressiveness on the back end.
3. He set up a cross-disciplinary view of how the company would succeed. This holistic vision means there is cohesion throughout the company, from concept to product to sales. For example, the retail strategy could have been a separate or disparate part of the whole, but Apple has made its retail strategy part and parcel of its overall promise of ease of use.
None of these three things is easy to do. It would be easy to count any revenue as good revenue, to allow a few people to stay even though they were rotting the culture, or to allow the different parts of a business to act in their silos. Apple’s leadership doesn’t accept easy. Executives believe that when the company wins, everyone wins. That belief drives the necessary behavior and tradeoffs necessary to achieve success. That’s why Jobs has earned the respect of his peers. He has recreated a culture in which the company acts like all the best parts of a startup.
In the end, people create the culture of a company. And corporate culture ultimately separates the winners from the pack. Through culture, leaders can drive up the level of innovation, outcompete the market, and attract the best employees. Or not.
So here’s a code-of-conduct question you can ask yourself: If yours were a startup culture, would you make a particular call the same way? If not, think about Steve Jobs and all he has achieved at Apple, and do what you need to do.
Success at Pixar
At Pixar success is based on open collaboration among extremely talented people from multiple disciplines. But ironically the leadership team have learnt that even in one of the most creative company on the planet collaboration flourishes most successfully within a defined process and organizational structure. In order to maintain this structure, leadership are focused on fostering and continually enhancing three key inter-related facets of the business, namely:
Leadership – Process – Accountability
“Clear values, constant communication, routine postmortems, and the regular injection of outsiders who will challenge the status quo aren’t enough. Strong leadership is also essential—to make sure people don’t pay lip service to the values, tune out the communications, game the processes, and automatically discount newcomers’ observations and suggestions”.
In other words, people walk the Pixar walk. Approach to corporate leadership values vision and process over the ability to come up with lots of ‘ideas’.
A recent article in HBR by Roberto Verganti gets at this point. Verganti claims that companies are too focused on ideas and that there are not enough visionary thinkers out there. Read about Ed Catmull President at Pixar and you might reach a slightly different conclusion. It’s not that there’s a lack of people with vision, it’s that too many bright people are locked up in corporate cultures that either reject or discourage visionary thinking.
Catmull is determined that all employees at Pixar are set free to express their vision and ideas without fear. He understands that corporate culture is defined by those at the very top of the company, and is clear about the role of a leader plays in setting the tone.
It’s one thing to hire great talent. It’s quite another to persuade them to work together effectively. Pixar has managed this by introducing and mandating a number of steps in the creative and movie-making process that redefine the meaning and purpose of collaboration.
In other companies people collaborate to advance or improve specific projects. At Pixar, everyone feels they have a stake in the success of everyone else. Collaboration is used to make sure that others in the company succeeds. This is the benefit of the ‘all for one, one for all’ team spirit that sets Pixar apart.
Part of the Pixar process is that work is shown in-progress in daily and other regular meetings with a large, revolving number of team members present. The purpose is to get people over the ‘hump’ of embarrassment about showing work that’s not finished or at least buttoned-up. The process helps to nip potential mistakes in the bud, open up work to better suggestions or ideas, increase cross-discipline knowledge, and make people less defensive or protective to their own particular contribution.
The result is that old hands and new hires alike develop healthy respect for each other – the foundation of credibility and trust.
Collaboration at Pixar is hardly free-form. It occurs in a highly defined creative and production process. This doesn’t mean that the company is static however. Leaders and managers are constantly seeking ways to improve and evolve.
Key to this is the establishment of clear lines of accountability. Each project is led by a Director/Producer duo, and all project members are accountable to them.
The Director and Producer in turn are accountable to the company’s leadership but also have the opportunity to utilize the company “brain trust” made up of senior film-makers. The brain trust deliberately has no executive power. They are there to advise and ideate only – executive authority is held by those who are on the hook for the production of another successful Pixar product delivered on-time and on-budget.
The ultimate take-away from Pixar is that they succeed by combining a passionately cherished vision with a highly structured process designed to foster meaningful collaboration. And all this is wrapped in a culture that is unified and that values both the ability and contribution of others.
Sounds simple. Much harder to pull off. But what’s surprising is that so few companies seem to be paying attention to how such an amazing product is being produced over and over again. It’s perhaps tempting to look at a company like Pixar – in a unique industry like the movie business – and dismiss any lessons as irrelevant to a different industry. That’s unwise. The Pixar approach of mission, leadership, process and accountability is agnostic.
Five ways Pixar executives make better decisions
Its managers give its directors a lot of autonomy. The studio prides itself on being “director led” and gives them a high degree of autonomy. “Managers like to be in control,” but Pixar fights it, according to an interview with Ed Catmull at an event The Economist put on in March. [Click here.]
Even though directors have autonomy, they get feedback from others. “Dailies,” or movies in progress, are shown for feedback to the entire animation crew. In The Economist interview, Catmull also describes a more extensive periodic peer review process:
“We have a structure so they get their feedback from their peers…. Every two or three months they present the film to the other filmmakers…and they will go through, and they will tear the film apart. Directors aren’t forced to respond to the feedback, but they generally do — and the films are generally better for it.”
Pixar uses a process for “postmortems” on the major aspects of movies after they’re completed. Ed Catmull described it as “like taking cod liver oil,” but the company insists on it anyway. During the postmortems, the team involved in the film is asked to come up with five things they’d do again and five things they wouldn’t do again. Postmortems not only surface the information but also help to prevent the problems from festering among team members. Catmull comments that because people are starting to game that postmortem process, Pixar is thinking of alternative approaches.
Pixar admits mistakes in other ways. Sometimes, when a movie project isn’t going well, Pixar will “restart” it. Toy Story 2, for example, wasn’t going well and had to be restarted. Catmull points to that restart as a catalyst for the articulation of several key values at the company.
Pixar has an extensive education program at Pixar University, with more than 110 different courses. That’s got to improve organizational judgment. And even there, employees are encouraged to make and admit mistakes. Randy Nelson, the director of Pixar University, says, in the book Mavericks at Work: “It’s the heart of our model…giving people opportunities to fail together and to recover from mistakes together.”