A Fireside Chat with John Sculley, Apple's former CEO

I sat in on a great session at SIG today, where SIG’s CEO Dawn Tiura had a “fireside chat” with John Sculley.  Sculley was the legendary CEO of Pepsi Cola Co who was recruited by Steve Jobs to Apple. John served as Apple CEO for 10 years increasing sales over 1000%. Under his leadership the Macintosh became the largest selling personal computer in the world in December 1992.

John recounted an interesting story that he recalls from those days.

“It’s 1978 and I’m CEO of Pepsi and we have been wildly successful in our marketing campaign.  The Pepsi Challenge has allowed us to pass Coke in sales and market share. I was speaking at Harvard University, and at the end of the class -a student comes up to me, and says ‘I created something knowing you were coming here that I want you to look at, that I developed specifically for you.”

“So we go over to the other building and I see for the first time in my life – what looked like an Apple II personal computer. This was something this kid had put together, before Steve Jobs and Wozniak – and it has rows and columns on the screen.”

“What do you call it? I asked him. ‘I call it an Interactive Spreadsheet.’  The kid’s name was Dan Bricklin and he joined with Bob Frankson to start a company called Visicorp that became Visicalc …and what he had just showed me was the first spreadsheet in the world, which eventually became the foundation for Excel, one of the most applied tools in the world.”

“I was also there at the beginning of Power Point and Hypercard. I’ve watched small teams create tools that change the way we work – companies like People Ticker. We create tools that improve productivity that improve the workforce. These are tools that improve productivity. Slack went from 0 to $4B in sales in three years –because it is a great tool that improves productivity.”

“I’m a huge fan of tools for people.  The most important development is that we need to equip our workforce with better and better tools. Humans still have judgment and they can do things that are repetitive and they can process things quickly. But give our talent out there the tools, especially in contingent skilled labor, and they will double their productivity. Get the people who recruit that talent and benchmark that talent better tool to use, and the organization will be that much more productive now that they have radar.”

A question came from the audience:

“Fundamentally – procurement is measured on cost savings as the primary metric. But this can be destructive on the business. You set the requirements and set the solution that results in the requirements. Other metrics are whether you agree off of purchasing agreements in the company, and some customer satisfaction metrics – and are internal stakeholders satisfied. If we are going to be truly strategic and not just drive towards cost mitigation – what are the things we should look for in terms of tools and sensory capabilities to help us evaluate more strategically what we are buying to drive customer retention and top line metrics? How do you see strategic sourcing leaders to do that?”

Sculley replied with a very insightful comment:

“Here is how I think about it. I believe all technology commoditizes. What is unique and valuable today will become affordable at different price points tomorrow. The way I think about those various points I brought up – is you have to judge how you are recruiting talent  in the context of domain expertise – and can’t focus just on the costs in isolation of the domain expertise issue.  Strategically when you are looking to staff a project, almost all work will be done with project teams, inside of organizations and outside with contingent teams.”

“Let’s imagine we are back in 2007 – and Kodak was focused on a project which sought how to compete with Walmart in a single use camera taking market share away from their camera. They made a decision based on their expertise (and their business was film cameras) to double down and spend billions on additional vertical integration on film processing to compete on a cost basis better with Wal Mart. (And remember – Kodak were the ones who invented the digital camera!”

“At the same time, Steve Jobs introduced the iPod and began to make the connections around what was happening in the market around the development of digital components for consumer products. And he also understood another domain, which was wireless operators, were moving from 2G (text sending) to emails and photos (3G). Apple understood that there were these other domains that would impact consumer electronics, in terms of how to take a photo from software to another mobile device. In 2007, Apple launched the I-Phone. Three years later – Kodak files for bankruptcy.”

“Strategically when you look at recruiting talent, you need to look at domain expertise beyond the domains that you have in your company, and a wider scope of things you are looking at. We are all vulnerable and we have seen that in the last 15 years. And at the same time one can get into a new domain by procuring talent that may not already be in your organization.”

Sculley made an important point: Innovation takes place on the fringes. We can draw a circle around domains and they are in motion – and as they touch, they start to collide and change things. Which means that procurement can adopt change to drive innovation and create new technologies by working on the edges of different technologies, where things touch. Innovation in procurement has to be done in the context of different domains, which means developing talent in domains that you don’t currently have and recruiting talent that is not on your full time payroll.  And in many cases, that domain involves working with suppliers that we haven’t worked with before.  And this means working with more contingent labor as well, as the economy continues to shrink, and more people are working on their own.

I even got my picture taken with Sculley later that day….Wow!  I’ll be sure to be back for the next SIG Summit next year!