There was nothing very surprising about the decision. It was one of those penalties of size that emphasized how fast the company had grown. The change in structure also reflected tacit admission that Michael Scott’s hopes of keeping the company small had been scuttled. His dream of limiting Apple to between fifteen hundred and two thousand employees, and of running an enterprise that made only its latest product (while subcontracting everything else), disappeared. Divisions were formed for all the usual reasons: attempts to keep affairs manageable, to pinpoint profit and loss areas, and to delegate authority.
Before the divisions were announced some of Apple’s managers went on inspection tours and tried to do their home-work. They asked senior members of Hewlett-Packard and Digital Equipment Corporation how decisions were made in their companies and then returned to Cupertino to draw up battle plans. One division was formed as an experiment. Its charter was to take care of disk drives. In the fall of 1980 five others were added: the Personal Computer Systems Division to look after the Apple II and Apple III, the Personal Office Systems Division to design and nurse the Lisa system, Manufacturing, Sales, and Service.
There wasn’t, of course, any particular time when the formation of divisions would have been comfortable. At Apple the formation of divisions occurred when there were plenty of other pressing distractions. The decision was made about the same time the directors decided that the company should make its first public stock offering and also during the weeks when a successor to the Apple II was being introduced.
Though most of Apple’s top managers had worked within a divisional structure, none had managed a company that had divisions. There were scarcely enough middle managers to go around and nowhere near enough people to fill all the empty cubicles. The computer systems weren’t installed and procedures weren’t drawn out. It was hard to escape the impression that the creation of divisions was scarcely a masterstroke of planning.
The grand change and dislocation helped push into the background some of the conflicts that had resulted from mismatched corporate blood types. A growing fund of common experience tended to do the same thing. The divisions presented an entirely new set of tensions. Their physical separation led to a technical isolation. They created fresh allegiances and new lines of reporting. As the divisions started to flex their muscles Apple came to be divided by the pull of fashion and the movable squabbles of fiefdoms. The divisions were allowed, for example, to hire their own technical writers and order their own printed circuit boards, and on occasion, they tried to exercise control over what others were doing. The Peripherals Division, to cite just one case, wanted to set the standard for what should be plugged into peripherals. It didn’t take a translation expert to understand that this amounted to an attempt to dictate corporate product planning.
More important the people working within the different divisions became aware of distinctions. The glamour of the hot divisions, where work proceeded on new computers, cast a pall across areas where the primary task was to support existing machines. The nature of the work appealed to different emotional and intellectual interests and attracted different sorts of people. Many of the engineers and programmers who had been caught up in the success of the Apple II preferred to work in the Personal Computer Systems Division (PCS). Others, who wanted a brighter future, respectability, and the opportunity to work with newer technologies, knocked on the door of the Personal Office Systems Division (POS), which was formed from a core of people developing the Lisa system.
The subtleties were subjected to microscopic inspection. Rick Auricchio was a programmer who worked in PCS. “We felt that the Lisa Division was full of prima donnas. They wanted a thirty-thousand-dollar laser printer and they got it. They went out and hired high-powered people. We didn’t. Their working cubicles were bigger. They had more plants. Even though we were paying all the bills and pumping cash across the street, we were dull and boring and not doing anything. There was a perception that they would be nine feet tall, scowl at you, and turn up their noses. Without the right color badge and an escort, you couldn’t get into the Lisa building. That was an insult. People started thinking that they didn’t want to be cretins for the rest of their lives so they left PCS and joined POS.” The people who worked in the Lisa Division returned the compliment. One said, “We took a look at the Apple III and didn’t take it very seriously. We just took a look and said, ‘They don’t know what they’re doing.’”
As the divisions solidified, a corporate bureaucracy began to emerge. Again, there wasn’t really any way to escape the stultifying drag of growth. Coping with several hundred people (let alone several thousand) requires some codes if only to free managers from having to explain exceptions all day long. Some of this was reflected in companywide memos. Occasional bulletins kept employees posted on budgets “which reflect efficiency and frugality” and registered alarm when the phone bill topped $100,000 a month. Others provided information on FICA taxes, profit-sharing plans, stock programs, official company holidays, a new Xerox reproduction center, and insurance schemes. Performance reviews (scheduled every six months) came complete with a “review information matrix.”
A memo from the legal department asked people not to abbreviate the name of the company to Apple Computer or Apple and stated: “The legal name of the corporation is Apple Computer, Inc. (note the comma) . . . . Please don’t hamstring our efforts by casually misusing the corporate symbols.” Other notices kept people abreast of schedules of shuttle buses that ran between the Apple buildings, urged them to use up stationery supplies, drop by a corporate engineering library, or sign up for television classrooms that were connected to the Stanford instructional television network. There were other announcements that sought to differentiate among some of interoffice memos and in-house publications. “‘Apple Bulletin,’” readers were told, “communicates information that has time value . . . . It is distributed by the mail room and telecommunications people to all Apple locations.”
Even some of Apple’s staunchest boosters, like marketing manager Phil Roybal, were forced to admit, after several years, a difference in tone. “The character has changed because the company has grown. There is more overhead, policies have been created, administrators have been hired, and there are rigidities. There is less whimsy. Now things happen pretty much as expected. It’s more like an organized company.” Others were less complimentary. Publications manager Jef Raskin, who eventually had a falling out with Jobs, said, “At first the company was run by a consensus, where a good idea had a chance of success. Afterward it was like standing beside a freight train and tugging it with a chain. It wouldn’t move off the tracks.” Some, like Roy Mollard, found that divisions, additional layers of management, and increased specialization meant that his influence was circumscribed. “My area of control was narrowed and the job became less interesting.”
For outsiders like Regis McKenna, who had played a crucial part in Apple’s formative stages, the arrival of a vice-president of communications meant that responsibility for public relations and marketing strategy was split. “You have to go through people to get to the very people you used to deal with one on one. You deal with corporate organization that wants to control everything.” And for the newcomers, the presence of men like McKenna with established ties to the founders did not make life any easier. The uneasy truce was made clear by the way in which Apple came to handle some of its public relations internally while the McKenna Agency dealt with the rest.
However, the emergence of a bureaucracy was not a dull blanket that brought equality. There was a distinct and pronounced pecking order that was camouflaged by appearances. The carefully cultivated suggestions of equality were, in many ways, a mirage. On the surface Apple didn’t bear much resemblance to pinstriped America. There were no reserved spaces in the parking lots. Jeans, open collars, and sneakers were an accepted form of dress. (In fact, they almost came to be a uniform.) There were no lavish office suites, just cubicles and shoulder-high partitions. The off
ices became a maze of Herman Miller open landscape furniture. Punching clocks was unheard of even on the assembly lines. Secretaries were called area associates and the head of personnel was known as the director of human resources. Business cards carried offbeat titles. For outsiders these unconventional appearances were deceptive. Insiders saw straight through them. Programmer Dick Huston echoed the sentiments of many of his colleagues when he remarked, “I have never thought of Apple as an egalitarian place to work.”
Many of the ways in which employees came to tell each other apart were entirely conventional and bore more similarities to traditional industries and the industrial crescent than Apple’s leaders were prepared to admit. Except at its Irish factory, Apple was not a unionized company. Jobs had all the ruffled pride of a founder who felt that the arrival of a union would mean that he had failed to care for his employees, and he also thought that unions were responsible for problems in some older industries. He promised to “quit the day we become unionized.” But even if walkouts and pickets weren’t part of the Apple vocabulary, there was still an enormous difference between the shop floor and the executive offices.
Don Bruener, who spent some time working in production, said, “People in production were afraid to deal with any people outside production. And the people outside production didn’t care about production. It was workers against executives.” After a time most of the executives took offices in one building and the senior officials were known as members of the executive staff. Once Apple started holding public stockholder meetings the same executives shared the front-row seats with the company’s directors. Apart from the younger faces in the audience, there wasn’t that much difference between early Apple annual meetings and ones held by Chrysler or Bank of America.
A young company like Apple also developed other signals of rank. The greatest distinction was based on wealth. For the disparities that existed at Apple, especially after it became a public company, were far larger than those that separate the chairman from the janitor in mature companies like General Motors and Exxon. The company also made loans to senior executives to help them buy stock or pay large income-tax bills, and profit-sharing was allocated according to rank.
There was never any mistaking who was the boss. The appearance of Scott or Markkula or Jobs could provoke a tightening in the muscles of underlings. A casual comment, a hint, an upturned eyebrow, a skeptical glance, a rise in the voice were all amplified and produced what one keen observer delightfully called “thunderbolt management.” He explained, “Everybody knows who calls the shots. Somebody says something in a hallway or makes a passing remark and suddenly twenty levels below, it becomes law.”
One of the most important signs of status was the numbers given to employees on the day they joined the company—which had caused Jobs such concern at their first appearance. Printed on the plastic identification badges, these numbers became a corporate version of the big-city social register. As Apple grew, the status of the employees with the lowest numbers rose. Though the badges often didn’t match financial standing, they still provoked admiring glances. Some of the earliest employees could rattle off the names of the first fifty or so of their colleagues and others took to advertising their positions by having their employee numbers stamped on their automobile license tags. Another way in which the old-timers emphasized their difference was the Cross pen decorated with a small Apple that had been distributed to every employee on Apple’s third Christmas. Eventually the pens were made available in the company store.
The social order was also visible in companywide messages. One sonorously proclaimed the difference between a monthly newsletter and a shorter corporate memo: “Recently promoted people deserve applause and recognition . . . ‘Apple Times’ will list newly promoted employees . . . ‘Apple Bulletin’ should not be used to announce promotions and other personnel changes below the level of division manager.”
There was also a debate about the value of the technical writers. Jobs had always placed great importance on Apple’s manuals, and there was a feeling that they formed an important part of what the company was selling. Some argued that if this was so, the technical writers deserved to be on a pay scale similar to that of the top-flight engineers. Eventually, however, Apple buckled to the notion of “replacement value” and paid its writers on the levels that existed outside the computer industry. One publications manager was not allowed to become a principal member of technical staff, according to a formal complaint that he lodged, because “doing an industry-leading job in publications just did not have the stature of ‘designing a power supply or software system.’”
So with all these strains and pronounced stripings it was a dizzying challenge for the old hands, let alone the newcomers, to sort out where they fitted, what tasks to pursue, and precisely what it was that the company stood for. As the divisions were formed in the fall of 1980 those sorts of questions became even more baffling. For in the space of twelve weeks Apple went on a hiring binge and boosted its payroll from six hundred employees to twelve hundred: a period that some came to refer to as The Bozo Explosion. Some employees were snapped up from temporary agencies and squads of as many as sixty were gathered for orientation seminars.
For everyone the growth was unsettling. The rate of change was revealed in odd ways and in little household items like the corporate telephone directories that were kept in looseleaf folders and updated every few weeks. Managers found their schedules were slipping and paperwork was multiplying though the latter was partly due to a proliferation of Apples which spat out charts and graphs and reams of numbers. Some of the focus of the first few years disappeared, and there was a general sense that the company was sliding out of control. Even Markkula, never the corporate disciplinarian, was forced to admit, “We had trouble keeping the car on the track.”
Layers below there was far less insulation from the rush of the new. In an engineering laboratory Chuck Mauro was startled by the speed with which fresh faces appeared. “It made your head reel, hearing about four new guys who were going to start on Monday. It was all you could do to keep up. It was impossible to even remember all their names.”
Apple went to considerable lengths to preserve some sense of continuity, instill a form of community, conceal differences, and give the impression of stability. A large part of the effort was directed toward providing pleasant working conditions, a goal that sprang largely from Jobs and, to a lesser extent, Markkula. Part of the impetus was purely practical, for other companies in the area had gained a reputation for looking after their employees and Apple’s management generally recognized that one way of keeping people, in an industry where companies were sometimes crippled by a sudden exodus, was not to skimp on the trimmings. Part sprang from the long benevolent reputation of Hewlett-Packard. Part was based on the unshakable conviction that people work harder and more efficiently when they are treated well and given decent surroundings. But running through all of this was more than just a gratuitous streak of altruism. Like the founders of many companies, Apple’s were determined to improve on the deficiencies they saw elsewhere.
The picnics, parties, and presents that broke up the work week were larger versions of affairs that had sprinkled every stage of Apple’s development. After the company shipped its first $100,000 worth of computers, the entire fifteen-person work force had gathered for a pool party at Markkula’s house. When the manufacturing department had been spruced up, the rest of Apple was invited to an open house at which children, spouses, and “spouse equivalents” were made welcome. Succeeding milestones had almost always been celebrated with a party, a cake, or a bottle of champagne.
As the months lengthened into years, the parties got grander—extending to marquees and bunting and jazz bands. There were outings to specially arranged sneak screenings of movies like Star Wars and The Empire Strikes Back. A Halloween party that had been held during the first few months (where Jobs arrived as Jesus Christ) developed into an annual ritual and more or less turned in
to an unofficial company holiday. The scale of the celebration grew so large that a couple of blocks in Cupertino had to be cordoned off while employees paraded about in fancy dress.
Entertainment and the provision of creature comforts were taken seriously. Employees could join bowling leagues and aerobic dance classes. They could take out memberships at local health clubs. There were corporate scuba-diving classes and ski weekends in the California Sierras. Offices were provided with what many large companies would have considered expensive furniture and consultants were hired to give advice on topics like “Building Traffic Patterns” and the optimum amount of desk space for programmers. Employees were always given some form of Christmas present. One year most had received a hundred-dollar bill wrapped around a pen, and later, after an important sales goal was achieved, everybody was given an extra week’s paid vacation.
Apple also started a program that gave employees, once they had demonstrated a minimal efficiency, their own Apple computers. There were computer classes for family members, and a company store offered large discounts on purchases of Apple equipment to relatives and close friends of employees. More important the programmers, engineers, and technical writers could work as efficiently at home as in their offices.
Despite these efforts Apple’s identity must have seemed clearer to customers than to employees. By 1980 the company was too large and too scattered for any one manager to cover in a daily stroll to take the air and test the waters. So for most employees the corporate hand was invisible. To combat the uncertainty and provide a corporate manifesto and a coherent ideology, Apple established a committee which, with steadfast earnestness, set about trying to make some sense out of diffuse motives. It tried to reduce the abstract to the concrete and to codify all the conflicting impulses and intentions, the clashes between individual enterprise and teamwork, between autocracy and democracy, that make up a company. It was little wonder that the result, though full of good intentions, sounded banal, self-conscious, and hackneyed.
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