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"Apple \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\taapl\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t doesn\u2019t often fail, and when it does, it isn\u2019t a pretty sight at 1 Infinite Loop. In the summer of 2008, when Apple launched the first version of its iPhone that worked on third-generation mobile networks, it also debuted MobileMe, an e-mail system that was supposed to provide the seamless synchronization features that corporate users love about their BlackBerry smartphones. MobileMe was a dud. Users complained about lost e-mails, and syncing was spotty at best. Though reviewers gushed over the new iPhone, they panned the MobileMe service. Steve Jobs doesn\u2019t tolerate duds. Shortly after the launch event, he summoned the MobileMe team, gathering them in the Town Hall auditorium in Building 4 of Apple\u2019s campus, the venue the company uses for intimate product unveilings for journalists. According to a participant in the meeting, Jobs walked in, clad in his trademark black mock turtleneck and blue jeans, clasped his hands together, and asked a simple question: \u201CCan anyone tell me what MobileMe is supposed to do?\u201D Having received a satisfactory answer, he continued, \u201CSo why the fuck doesn\u2019t it do that?\u201D\nFor the next half-hour Jobs berated the group. \u201CYou\u2019ve tarnished Apple\u2019s reputation,\u201D he told them. \u201CYou should hate each other for having let each other down.\u201D The public humiliation particularly infuriated Jobs. Walt Mossberg, the influential Wall Street Journal gadget columnist, had panned MobileMe. \u201CMossberg, our friend, is no longer writing good things about us,\u201D Jobs said. On the spot, Jobs named a new executive to run the group.\nJobs\u2019 handling of the MobileMe debacle offers a rare glimpse of how Apple really operates. To Apple\u2019s legion of admirers, the company is like a tech version of Wonka\u2019s factory, an enigmatic but enchanted place that produces wonderful items they can\u2019t get enough of. That characterization is true, but Apple also is a brutal and unforgiving place, where accountability is strictly enforced, decisions are swift, and communication is articulated clearly from the top. (After Jobs\u2019 tirade, much of the MobileMe team disbanded, and those left behind eventually turned MobileMe into the service Jobs demanded.)\nFor more on Apple, watch this: \n\t\t\t\t\n\t\t\t\n\t\t\t\nRead More: Apple&amp;#8217;s core: Who does what (2011)\n\nApple\u2019s ruthless corporate culture is just one piece of a mystery that virtually every business executive in the world would love to understand: How does Apple do it? How does a company with more than 50,000 employees and with annual revenue approaching $100 billion grow 60% a year? How does it churn out hit after hit? Those are questions Apple has no desire to answer. This past January, when a Wall Street analyst asked Tim Cook, Apple\u2019s low-key chief operating officer, how far out the company conducts long-term planning, Cook replied with an artful brushoff. \u201CWell, that is a part of the magic of Apple,\u201D he said. \u201CAnd I don\u2019t want to let anybody know our magic because I don\u2019t want anybody copying it.\u201D\nJust because a magician doesn\u2019t want to reveal his tricks doesn\u2019t mean it\u2019s impossible to figure them out. Fortune conducted dozens of interviews over several months with former Apple employees and others in the Apple orbit to try to explain the phenomenon of life inside Apple. Few agreed to speak on the record; the fear of retribution persists for years. Once they get talking, however, the former Appleites paint a picture of a company that time and again thumbs its nose at modern corporate conventions in ways that let it behave more like a cutting-edge startup than the consumer-electronics behemoth it is.\n Apple CEO and co-founder Steve Jobs on March 2, 2012, emerged from a medical leave of absence to introduce the second generation of the iPad.Kimihiro Hoshino/AFP/Getty Images\nWhether Apple\u2019s startup ways are sustainable or the result of the sheer will of Steve Jobs is the great unknown in explaining how Apple works. Every conversation with insiders about Apple, even if it doesn\u2019t start out being about Jobs, eventually comes around to him. The creative process at Apple is one of constantly preparing someone \u2014 be it one\u2019s boss, one\u2019s boss\u2019s boss, or oneself \u2014 for a presentation to Jobs. He\u2019s a corporate dictator who makes every critical decision \u2014 and oodles of seemingly noncritical calls too, from the design of the shuttle buses that ferry employees to and from San Francisco to what food will be served in the cafeteria.\nBut just as Jobs sees everything going on at the company, he\u2019s not blind to the fact that things will be radically different without him at the top. Jobs currently is on his third medical leave in seven years \u2014 he survived a rare form of pancreatic cancer and later received a liver transplant \u2014 and his absence has only fueled the fascination with him. Jobs is still heavily involved in Apple, of course. He personally took charge of Apple\u2019s response to the recent Locationgate, for example, granting interviews to several news outlets to answer accusations that Apple is tracking the whereabouts of iPhone users. On a more strategic level, these days he\u2019s especially focused on institutionalizing his ways of doing business. His mission: to turn the traits that people most closely associate with Jobs \u2014 the attention to detail, the secrecy, the constant feedback \u2014 into processes that can ensure Apple\u2019s excellence far into the future.\nRead More: Why More Than 80% of iPhone Owners Don&amp;#8217;t Want the Next Apple Watch\nAccountability from Jobs on down\nSo exalted is Steve Jobs that often he is compared, metaphorically at least, to Jesus Christ. (Exhibit A: Alan Deutschman\u2019s revealing 11-year-old book, The Second Coming of Steve Jobs.) True to form, the shepherd to his Apple flock often teaches in parables. One such lesson could be called the \u201CDifference Between the Janitor and the Vice President,\u201D and it\u2019s a sermon Jobs delivers every time an executive reaches the VP level. Jobs imagines his garbage regularly not being emptied in his office, and when he asks the janitor why, he gets an excuse: The locks have been changed, and the janitor doesn\u2019t have a key. This is an acceptable excuse coming from someone who empties trash bins for a living. The janitor gets to explain why something went wrong. Senior people do not. \u201CWhen you\u2019re the janitor,\u201D Jobs has repeatedly told incoming VPs, \u201Creasons matter.\u201D He continues: \u201CSomewhere between the janitor and the CEO, reasons stop mattering.\u201D That \u201CRubicon,\u201D he has said, \u201Cis crossed when you become a VP.\u201D (Apple has about 70 vice presidents out of more than 25,000 non-retail-store employees.)\n\n\nJobs indoctrinates a culture of responsibility by hosting a series of weekly meetings that are the metronome that sets the beat for the entire company. On Mondays he meets with his executive management team to discuss results and strategy as well as to review nearly every important project in the company. On Wednesdays he holds a marketing and communications meeting. Simplicity breeds clarity, as Jobs himself explained in a 2008 interview with Fortune. \u201CEvery Monday we review the whole business,\u201D he said. \u201CWe look at every single product under development. I put out an agenda. Eighty percent is the same as it was the last week, and we just walk down it every single week. We don\u2019t have a lot of process at Apple, but that\u2019s one of the few things we do just to all stay on the same page.\u201D It\u2019s one thing when the leader describes the process. It\u2019s another thing altogether when the troops candidly parrot back the impact it has on them. \u201CFrom a design perspective, having every junior-level designer getting direct executive-level feedback is killer,\u201D says Andrew Borovsky, a former Apple designer who now runs 80/20, a New York design shop. \u201COn a regular basis you either get positive feedback or are told to stop doing stupid shit.\u201D\nThe accountability mindset extends down the ranks. At Apple there is never any confusion as to who is responsible for what. Internal Applespeak even has a name for it, the \u201CDRI,\u201D or directly responsible individual. Often the DRI\u2019s name will appear on an agenda for a meeting, so everybody knows who is responsible. \u201CAny effective meeting at Apple will have an action list,\u201D says a former employee. \u201CNext to each action item will be the DRI.\u201D A common phrase heard around Apple when someone is trying to learn the right contact on a project: \u201CWho\u2019s the DRI on that?\u201D\nSimplicity also is key to Apple\u2019s organizational structure. The org chart is deceptively straightforward (see link above), with none of the dotted-line or matrixed responsibilities popular elsewhere in the corporate world. There aren\u2019t any committees at Apple, the concept of general management is frowned on, and only one person, the chief financial officer, has a \u201CP&amp;amp;L,\u201D or responsibility for costs and expenses that lead to profits or losses. It\u2019s a radical example of Apple\u2019s different course: Most companies view the P&amp;amp;L as the ultimate proof of a manager\u2019s accountability; Apple turns that dictum on its head by labeling P&amp;amp;L a distraction only the finance chief needs to consider. The result is a command-and-control structure where ideas are shared at the top \u2014 if not below. Jobs often contrasts Apple\u2019s approach with its competitors\u2019. Sony \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tSNE\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t, he has said, had too many divisions to create the iPod. Apple instead has functions. \u201CIt\u2019s not synergy that makes it work\u201D is how one observer paraphrases Jobs\u2019 explanation of Apple\u2019s approach. \u201CIt\u2019s that we\u2019re a unified team.\u201D\nFor Apple the result is an ability to move nimbly, despite its size. \u201CConstant course correction\u201D is how one former executive refers to the approach. \u201CIf the executive team decides to change direction, it\u2019s instantaneous,\u201D this ex-Apple honcho says. \u201CEverybody thinks it\u2019s a grand strategy. It\u2019s not.\u201D As an example, Apple\u2019s management has been known to change its pricing 48 hours before a product launch. When it misses a seemingly obvious idea \u2014 such as not anticipating the need for an App Store to satisfy the third-party developers who wanted to create programs for the iPhone \u2014 it shifts gears quickly to grab the opportunity.\n\nOne of Apple\u2019s greatest strengths is its ability to focus on just a few things at a time, an entrepreneurial trait difficult to imagine at a corporation with a market value of $320 billion. Saying no at Apple is as important as saying yes. \u201COver and over Steve talks about the power of picking the things you don\u2019t do,\u201D says one recently departed executive. Obvious? Perhaps. Yet few companies Apple\u2019s size \u2014 and very few of any size \u2014 are able to focus so well and for so long.\nJobs himself is the glue that holds this unique approach together. Yet his methods have produced an organization that mirrors his thoughts when \u2014 and this is important \u2014 Jobs isn\u2019t specifically involved. Says one former insider: \u201CYou can ask anyone in the company what Steve wants and you\u2019ll get an answer, even if 90% of them have never met Steve.\u201D\nRead More: Power Sheet: Apple&amp;#8217;s EU Fine Is an International Relations Problem\nApple&amp;#8217;s elite: The Top 100\nThere is a small group at Apple that most certainly has met Steve Jobs. It\u2019s called the Top 100, and every year or so Jobs gathers these select few for an intense three-day strategy session at a proverbially secure, undisclosed location. Everything about this Top 100 meeting is shrouded in secrecy, starting with its very existence. Those tapped to attend are encouraged not to put the meeting on their calendars. Discussing their participation is a no-no, even internally. Attendees aren\u2019t allowed to drive themselves to the gathering. Instead they ride buses that depart from Apple\u2019s Cupertino, Calif., headquarters to places like the sumptuous Chaminade Resort &amp;amp; Spa in Santa Cruz, Calif., which satisfies two Jobs requirements: good food and no golf course. Apple goes so far as to have the meeting rooms swept for electronic bugs to stymie snooping competitors.\n\nThe Top 100 meeting is an important managerial tool for Jobs. He and his chief lieutenants use it to inform a supremely influential group about where Apple is headed. The elaborately staged event also gives Jobs an opportunity to share his grand vision with Apple\u2019s next generation of leaders. The Top 100 meeting is part strategic offsite, part legacy-building exercise.\nJobs generally kicks things off personally. Each session is as well crafted as the public product debuts for which the CEO is so famous. For presenters the career stakes are high, and the pressure is nerve-racking. \u201CThe Top 100 was a horrifying experience for 10 or so people,\u201D recalls one former vice president, who took the stage some years ago. \u201CFor the other 90 it\u2019s the best few days of their life.\u201D Jobs sometimes uses the occasion to unveil important initiatives. \u201CI was at a Top 100 when Steve showed us the iPod,\u201D says Mike Janes, who worked at Apple from 1998 to 2003 and remains close to Apple executives. \u201CApart from a tiny group, no one knew anything about it.\u201D\n Illustration: ilovedust\nTo be selected for the Top 100 is to be anointed by Jobs, an honor not necessarily based on rank. Jobs referred to the group, but not the conclave, in an interview several years ago with Fortune. \u201CMy job is to work with sort of the Top 100 people,\u201D he said. \u201CThat doesn\u2019t mean they\u2019re all vice presidents. Some of them are just key individual contributors. So when a good idea comes \u2026 part of my job is to move it around [and] \u2026 get ideas moving among that group of 100 people.\u201D Privately Jobs has spoken even more strongly about the Top 100\u2019s importance. \u201CIf he had to recreate the company, these are the 100 people he\u2019d bring along\u201D is how one former Apple executive describes Jobs\u2019 characterization.\nThough its name isn\u2019t to be uttered, the blessed nature of the gathering creates a caste system at Apple. Inclusion is by no means permanent. According to Jobs\u2019 whims, attendees can be bumped from one year to the next, and being kicked out of this exclusive club is humiliating. For those left behind in Cupertino, chattering begins as soon the chosen few have departed. \u201CWe\u2019d tongue-and-cheek have a Bottom 100 lunch after we were done preparing the people who\u2019d left,\u201D recalls one nonparticipant. Says another: \u201CWe weren\u2019t supposed to know where they were. But we all knew.\u201D\nRead More: What the heck is Angela Ahrendts doing at Apple?\nStill a startup at heart\nApple is now 35 years old, an extremely mature company by Silicon Valley standards, and there\u2019s a grownup atmosphere at headquarters: You won\u2019t find a lot of people dressed in board shorts and flip-flops, or zanily decorated cubicles. The vibe is the opposite of the jocularity that Google \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tGOOG\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t \u2014with its wear-your-pajamas-to-work day and all-you-can-eat cafeterias\u2014has fostered. There literally is no free lunch at Apple\u2014though meals are subsidized and generally quite good.\nYet Apple also consciously tries to behave like a startup, most notably by putting small teams on crucial projects. To wit: Just two engineers wrote the code for converting Apple\u2019s Safari browser for the iPad, a massive undertaking. In a 2010 interview at a technology conference, Jobs verbalized Apple\u2019s do-more-with-less mentality. \u201CApple is a company that doesn\u2019t have the most resources,\u201D he said, referring to Apple\u2019s response to a technical debate raging at the time. \u201CAnd the way we\u2019ve succeeded is by choosing which horses to ride very carefully.\u201D On the face of it, the statement is absurd. Times certainly once were tough at Apple, breeding an underdog culture. Today, with $66 billion in the bank, nothing could be further from the truth, yet Apple continues to behave like a scrappy upstart. \u201CWe\u2019ve always fought for resources,\u201D says a former executive. \u201CSteve and Tim in general want to be sure you need what you\u2019re asking for.\u201D\nApple insiders say the notion of scarce resources has less to do with money than it does with finding enough people to perform critical tasks. Once Apple moves, though, it spends whatever it takes. It contracted the London Symphony Orchestra to record trailer soundtracks for its latest iMovie software. Years ago it sent a camera crew to Hawaii to film a wedding for a demo video; then, to get a different take, it staged fake nuptials in a San Francisco church, with Apple employees playing both guests and the betrothed.\nLearning to work at Apple takes time. To echo its own famous ad campaign, Apple thinks differently about business. Often as not it simply ignores traditional notions of business opportunities. An executive who has worked at Apple and Microsoft describes the differences this way: \u201CMicrosoft \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tMSFT\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t tries to find pockets of unrealized revenue and then figures out what to make. Apple is just the opposite: It thinks of great products, then sells them. Prototypes and demos always come before spreadsheets.\u201D\nSpecialization is the norm at Apple, and as a result, Apple employees aren\u2019t exposed to functions outside their area of expertise. Jennifer Bailey, the executive who runs Apple\u2019s online store, for example, has no authority over the photographs on the site. Photographic images are handled companywide by Apple\u2019s graphic arts department. Apple\u2019s powerful retail chief, Ron Johnson, doesn\u2019t control the inventory in his stores. Tim Cook, whose background is in supply-chain management, handles inventory across the company. (Johnson has plenty left to do, including site selection, in-store service, and store layout.)\nJobs sees such specialization as a process of having best-in-class employees in every role, and he has no patience for building managers for the sake of managing. \u201CSteve would say the general manager structure is bullshit,\u201D says Mike Janes, the former Apple executive. \u201CIt creates fiefdoms.\u201D Instead, rising stars are invited to attend executive team meetings as guests to expose them to the decision-making process. It is the polar opposite of the General Electric-like \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tGE\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t notion of creating well-rounded executives.\nSuch rigidity\u2014coupled with the threat of being called on the carpet by Jobs\u2014would seem to make Apple an impossibly difficult workplace, yet recruiters say turnover at Apple is exceedingly low. \u201CIt is a happy place in that it has true believers,\u201D says a headhunter who has worked extensively with Apple to hire engineers. \u201CPeople join and stay because they believe in the mission of the company, even if they aren\u2019t personally happy.\u201D Many of Apple\u2019s rank-and-file technical employees have dreamed of working at Apple since they got their first Macs as children. \u201CAt Apple you work on Apple products. If you\u2019re a diehard Apple geek, it\u2019s magical,\u201D says Andrew Borovsky, the former designer. \u201CBut it\u2019s also a really tough place to work.\u201D In short, it is an environment that shuns coddling. \u201CApple\u2019s attitude is, \u2018You have the privilege of working for the company that\u2019s making the fucking coolest products in the world,\u2019 \u201D says one former product management executive. \u201C \u2018Shut up and do your job, and you might get to stay.\u2019 \u201D\n\nFor years Steve Jobs was uninterested in the human resources department at Apple. Then, three years ago, just before his second medical leave, he hired Joel Podolny, dean of the Yale School of Management, to head something called Apple University. Podolny had been a widely quoted management guru. Yet when he joined Apple, typically, he vanished from sight. No one even seemed to notice when he was named vice president of human resources a couple of years later.\nIt turns out that Podolny has been busy working on a project that speaks directly to the delicate topic of life at Apple after Jobs. At Jobs\u2019 instruction, Podolny hired a team of business professors, including the renowned Harvard veteran and Andy Grove biographer Richard Tedlow. This band of eggheads is writing a series of internal case studies about significant decisions in Apple\u2019s recent history. It\u2019s exactly the sort of thing the major business schools do, except Apple\u2019s case studies are for an Apple-only audience. Top executives, including Tim Cook and Ron Johnson, teach the cases, which have covered subjects including the decision to consolidate iPhone manufacturing around a single factory in China and the establishment of Apple\u2019s stores. The goal is to expose the next layer of management to the executive team\u2019s thought process.\nAll this raises the question of whether Jobs has adequately prepared Apple for the day he isn\u2019t around anymore. It\u2019s an impossible question to answer. According to one person who knows Jobs, he acknowledges his dictatorial powers but insists he\u2019s not the only one who can wield them. \u201CSingle-cell organisms aren\u2019t interesting,\u201D he told this person. \u201CApple is a complex, multicellular organism.\u201D\nThose who believe Apple can\u2019t survive Jobs\u2019 departure\u2014and there are many\u2014would call this wishful thinking. Apple may be a multicellular organism, but its life source is Jobs. For now this is all in the realm of opinion. Jobs himself believes he has set Apple on a course to survive in his absence. He has created a culture that, while not particularly jolly, has internalized his ways. Jobs even is ensuring that his teachings are being collected, curated, and preserved so that future generations of Apple\u2019s leaders can consult and interpret them. It\u2019s about all a savior could possibly ask for.\nFor more on Apple, watch this: \n\t\t\t\t\n\t\t\t\n\t\t\t\n\u2014Reporting by Doris Burke\nEditor&amp;#8217;s note: This article appeared in the May 23, 2011 issue of Fortune magazine. A shorter version of it originally appeared on Fortune.com on May 9, 2011."^^<http://www.w3.org/2001/XMLSchema#string>
<http://fortune.com/2011/08/25/how-apple-works-inside-the-worlds-biggest-startup/>