An Examination of Executive Power at Apple, Part I

Each day, we are exposed to the effects of Executive Power. We feel it in the workplace or we read about it in the news. At times, we are tempted to draw rather simple conclusions about the events weire subjected to. Sometimes, we are able to draw deep insights into human behavior. In this column, I want to examine the elements of executive power and how they relate to Apple and the computer industry.

Power in the Corporate World

When we think about the success of Apple, we think about the unique brilliance of Steve Jobs, how his executive team, guiding all the employees, converted Apple from a failing company to a very successful company, and occasionally, about Steveis well-known emotional fits. But all that, it seems to me, is pretty much surface effect. What Iim really interested in, from a personal and professional standpoint, is the personal use of power, either in government or the private sector.

In order to explore that idea, one must analyze the components of power in terms of:

• Administrative authority
• Delegation
• Privilege
• Judgment and restraint
• Money and influence

How do Appleis most senior executives fare on these metrics?

Administrative Authority

Any moderately large company is like an organism. It has needs. It subsists in an ecosphere that places pressures on it. To survive, a company must have degrees of freedom, bring in nourishment (funds), and fight off attacks. Of course, we all know this. Whatis interesting from a management point of view is that the employees of a company, and their families, also have these needs. When young employees first start out, theyire interested in their own needs. But as they get more involved with a company, the needs of the company can often trump the personal needs. In a typical company, keen managers observe these employees and watch their reactions as the company priorities often interfere with personal needs. Those employees who gripe a lot and stubbornly refuse to embrace the needs of the company will never reach management positions. Those who can subjugate their personal needs for the good of the company will, in any company but Apple, move up.

The reward for this kind of behavior is power. Administrative authority is bestowed on those managers who put the company first. They find themselves in a position to prioritize spending, decide who gets laid off, and who gets promoted below them. Some people seek this kind of power simply for the security it affords. Others, if fortunate, get good business and management training and exercise their authority justly.

Unfortunately, the pace of current business, the personnel flux between companies, and the Internet induced immediacy of competition leave little time for the slow maturation of the business manageris judgment. The instant gratification of power is often more expedient. Regrettably, too many people who ascend to these levels of power are all too willing to let some special benefits rub off on themselves -- benefits that reflect poor judgment and create friction with the staff. Moreover, anguished decisions that are made for the good of the company are often at ethical or moral odds with how our society demands that we treat individuals or comply with basic law. A case in point would be the recent events at Hewlett-Packard.

As a typical company grows, senior executives buoyed with the prospect of a larger empire, and wanting to bestow favors, will often allow these middle level management positions to blossom. Thatis when the trouble starts because the company is blighted with mid-level managers who hoard information, abuse their staff, grant themselves special favors, and start turf wars. If the survival of the organization is not at stake, say in the government, the blight can seldom be removed.

Apple is a company that, despite its size, is fairly lightly loaded on the management side. There arenit a lot of positions to move up to, and Apple employees tend to stay in the roles they were hired for. Occasionally, through attrition, people must be moved up, like Tony Fadell. But the trend is generally to hire from the outside those who have already demonstrated skills rather than promote from within and ask someone to step up to management skills they have not yet acquired and proven.

The net result of this is that you can work your butt off for Apple for years and the chances are that your group will be disbanded due to business conditions long before you ever get a promotion. Power remains concentrated very high within Apple, and very little of it percolates downwards. Open positions ("head counts") are strictly managed from above so that despite Appleis enormous profits, none of the money gets rolled into head-count and org chart bloat. Consequently, very few mainstream Apple employees are able to abuse their power. Junior engineers simply remain focused on their technical work and their managers cannot set a bad example through excess or engage in turf wars. This is one reason for Appleis success.

Delegation

In a sense, the opposite of authority is delegation. Both in the military and in the private sector, senior executives are, or they ought to be, taught that one can delegate authority but not responsibility. Granting a subordinate the authority to get the job done is a typical requirement in a large company with complex tasks. But the manager who confers the authority must retain sole responsibility for sake of accountability, honor and morale.

It is amazing how often I see managers misunderstand this and try to force sole responsibility on their subordinates, micromanage them, and fail to grant them the authority they need to get the job done.

Despite what you think about Apple, there is a lot of delegation. Tim Cook, the COO, retains significant authority in the area of production and sales. While Steve Jobs likes to show up at gala openings like the Cube in New York and has significant say in the design of the stores, Tim Cook and Ron Johnson exert solid control over the operational details. If a supplier in Taiwan fails to deliver or violates a contractual term, Tim Cook doesnit need Steveis approval to bounce them. Very quietly, behind the scenes, as the Wall Street Journal described last week, Tim Cook exerts his authority to make things work on the production and sales side.

In other technical ways, Steve stays out of the way. No one knows more about Apple finances than Peter Oppenheimer. No one knows more about rotating storage and RAID than Appleis Director of Servers and Storage. No one knows more about 1U rack server design than a certain fellow who works for him named Doug. Steve doesnit know a whole lot about these complex servers, and he doesnit need to. If the industrial design, inside and out, is elegant, thereis no need to get involved in the detailed design specifications of Xserve or Xserve/RAID. From time to time, in a Keynote, Iive even see Steve admit his ignorance of a complex term like NTLMv2.

While Apple senior executives tend to stay out of the details of hardware and software engineering, at the deepest levels, they do tend to be rather miserly with the delegation of authority. Often this hurts Apple because it slows things down and damages morale amongst highly talented employees who are accustomed to making decisions. One example I can think of is that Steve, I was told, had dictated what kinds of shirts we would wear in the booth at a professional conference in D.C. called FOSE a few years ago. While the other companies dressed their staff in professional looking polo shirts, we were forced to wear collarless T-shirts -- which while youthful in appearance, damaged our street cred with the federal crowd. We thought decisions like this should be left to the executive in charge of Federal Sales. Or, for goodness sake, the booth manager.

There is a fine line between delegating authority and constraining those with authority so that they donit create problems, especially with public perception. Apple is a high profile company, so Apple errors on the side of restricting authority. Essentially, only those at Apple who are VPs or higher have any significant decision authority, and in many cases, they donit have the authority they need. This can grate on energetic, talented, and capable people brought in at the Senior Manager or Director level who are accustomed to 1) making decisions, 2) being high profile, and 3) moving up. Many people like that have spent a year or so at Apple and then moved on, disillusioned and disgusted.

If asked, Steve would probably say, itis not about one manager Itis about the success of Apple. And nothing succeeds like success. End of discussion. And yet, I have seen many occasions when severe constraints on delegated authority have damaged Apple and its ability to compete. Apple somehow survives, indeed thrives, despite those kinds of mistakes thanks to employee and customer loyalty and enthusiasm and the overall vision of Apple.

Privilege

One of the things implicit in power is privilege. One cannot exercise power, based on a solid understanding of the company, its business model, its elements of cost, and the market challenges if one is constantly barraged by minutiae. Thatis why senior executives often have their own driver -- so they can work in the back seat while a professional driver whisks them to work. Or they fly in a company jet instead of wasting their time in long airport lines and TSA security procedures.

In general, except for Appleis CEO, one doesnit see a lot of conspicuous privilege at Apple. One of Appleis senior VPs tells his staff, "Everyone sweeps the floor." That means that if youire a senior person and you see a junior staff member straining to carry a heavy item into his van or into a computer show, you dig in and help. You pull off your tie, roll up your sleeves, and you help others. No one is too important to arrogantly walk away from good-old fashioned grunt work for Appleis good cause.

Again, because authority is constrained and money is constrained even tighter, you wonit see senior managers at Apple granting themselves too many conspicuous favors. Everyone gets a MacBook Pro or desktop system for company business. Sales executives get a company car, but only if they travel around so much, a car is cheaper than paying them mileage for a personal car. Iive been in Directoris offices that are hardly bigger than a small bedroom, 3 x 3 meters. Of course, if youire a VP, youire guaranteed a window view. Only VPs get executive assistants, and there arenit that many VPs. You need something done? You do it yourself.

The Balance of Power

Apple is a company that has a cult following. Every move made by employees is observed by analysts, competitors, and the public. Working for Apple can be a real high, especially when they are very prosperous as they are now. As a result, Appleis executive team places healthy constraints on employees in terms of the exercise of power. Probably more so than most other companies. Because Apple is the kind of company it is, this tends to work in favor of their overall success. Localized problems tend to get smoothed over because just working for Apple can often outweigh the frustrations.

If Appleis executive team is consciously fine tuning this infinite complexity of authority, delegation, employee morale, and avoidance of typical business headaches due to undisciplined power, itis one of the finest balancing acts in the history of American business.

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In Part II, Iill cover the remaining components of power I listed at the beginning, how they relate to Steve Jobs in particular, and some examples where Apple has faced challenges in its internal exercise of power.