Throughout its history until the day Steve left, Apple had been a company organized around product groups—highly independent economic profit centers that operated almost like stand-alone companies.
With Steve gone, John Sculley didn’t waste any time reorganizing Apple according to the way that The Navy companies are always organized. His mantra was captured by an old business adage, “Expect what you inspect.” His approach was about control.
In almost any other company in the world, John’s approach might have been a rousing success. But Steve knew that at Apple, only a culture organized around product groups would be successful. Once Apple was reorganized to become a traditional function-oriented organization, John and the two CEOs who followed him presided over a company that had run off its tracks. The magic was gone.
Months after Steve had left the company, Apple had to lay off over 1,300 employees, shut down four manufacturing facilities, and reorganize to focus on improving and marketing the Macintosh. If Steve’s vision for the company had been listened to, all of that hardship, all of those setbacks, could have been avoided.
Another of the CEOs went a big step further in organizing the company by functions, with only a few high-level executives reporting directly to the CEO. As a result, there was even less connection between the leaders and the product. The people who should have been giving product guidance were just administering a plan. The company ...