The Steve Jobs Pivot

After Steve Jobs was exiled from Apple, he learned a valuable lesson. He learned how to pivot. The 9th in our series.

Over the course of Fast Company’s Pivot series I’ve covered ad firms, media startups, retailers, search engines, dating sites and even musicians that have been forced to either change direction or face dire consequences. This week, though, I want to focus on just one man: Steve Jobs. Because like virtually everything else Jobs did, he turned pivoting into an art form.

One of the fundamental tenets of pivoting comes out of Eric Ries' Lean Startup methodology. The founder of a startup doesn’t simply tear up a business plan if things aren’t going well. Pivoting is borne out of data, of looking at what is working and what isn’t. The idea is to base pivoting on a specific testable hypothesis. You can, for example, do it by concentrating on a single feature in a product (Ries, the man who coined the term pivot, identifies that as a “zoom-in pivot”), attracting a different set of customers (a “customer segment pivot”), introducing a different monetization scheme (a “value capture pivot”), or changing the kind of technology you use (a “technology pivot”), and others. Steve Jobs, between the 11 years he was exiled from Apple and his return, tested all of these.

All of this is marvelously chronicled in “The Lost Steve Jobs Tapes” by Brent Schlender, who recently dug up a trove of recorded interviews he had conducted with Jobs over the years. It’s a fascinating collection that shows that in failure greatness can spring. As Schlender put it, “Steve Jobs did not wander aimlessly into the wilderness after being ousted from Apple in 1985.” Angry with those he believed had wronged him he set off to build a great computer to revolutionize education, and to do that he wanted to completely revamp the way a corporation would run. After raising $100 million in venture capital he started NeXT and, as it would turn out, he got a lot wrong.

His “Open Corporation,” an attempt at imposing uniform salary structure and transparency so that employees would know one another’s salaries, was, as Schlender described it, “a dismal failure,” with prized employees able to cut side deals. Worse, Jobs completely misread the market. While the NeXTcube was beautiful, it cost too much. Chastened, Jobs laid off staff and altered course, moving from an emphasis hardware on and turning to software, ordering a complete rewrite of NeXT’s operating system and the creation of a development environment called WebObjects. Both were key to Jobs’s future success.

In essence, Jobs performed a “zoom-in pivot” by retooling NeXT to focus on its operating system—the same OS that eventually led Apple back to him. WebObjects, which qualifies as a “customer segment pivot,” brought the company enough revenue to stay afloat. Meanwhile, by the mid 1990s Apple was in dire straits after a spate of failed product launches. As it so happened it needed a new operating system, which would have taken it years to build—time it didn’t have. Tail tucked between their legs, Apple executives turned to Jobs because he had a good one with NeXT.

During this same period in Jobs’s life he bought Pixar, initially with the idea that the company would build and sell high performance computer hardware to two highly specialized niche markets—Hollywood special effects and medical imaging. In some ways, it was NeXT redux, except worse, since Pixar ended up selling only a few machines. So Jobs cleaned house, fired most of his employees, and turned to content. That was a technology pivot; Jobs applied the underlying skills of his team with the technology Pixar had developed to create a completely new product. A partnership with Disney saved the company and Toy Story, Pixar’s first full-length animated movie, released in 1995, was a huge hit. The rest, as they say, is history.

Schlender credits Apple’s ultimate rebirth to a combination of Jobs’s characteristics: “adaptability and intuition,” which he coupled with the methodical approach he took to problem solving. “This kind of nature suited an autodidact with eclectic tastes, empowering him either to obsess impatiently about a pressing problem that had to be dealt with immediately—much like an engineer—or else to let an idea steep and incubate until he got it right.” This was why, Schlender continues, “Jobs was so often right on the big picture, even when he got the details wrong.” Initially Jobs was against Apple making handheld devices (the first thing he nixed when he came back to Apple was the ill-fated Newton). He was also against other jack-of-all-trades, master-of-none devices like phones, and famously claimed that "people don't read anymore" as his rationale never to sell ebooks. But when it suited him—and the companies he ran—he evolved.  

Like most entrepreneurs Steve Jobs didn’t have a crystal ball. But he had mastered the art of the pivot.

Adam L. Penenberg is a contributing writer to Fast Company and a journalism professor at New York University. Follow him on Twitter: @penenberg

Add New Comment

4 Comments

  • Etch

    Actually, Steve DID have a crystal ball. I was in his office at NeXT talking about a business problem and noticed he had a fairly large crystal ball on his desk. When I asked about it, he told me a CEO and potential partner had given it to him as a joke. His expresssion was rather disdainful, as I recall.

  • Yipe!

    What’s enlightening about this article is
    that Steve Jobs wasn’t too proud to admit when a strategy was wrong.

  • Adam

    Definitely true. He had a vision, and when that vision didn't pan out he was able to redirect it to one that did. What he accomplished is astounding.