How Steve Jobs Changed the Employee Contract at Apple

Young Steve Jobs

There is a scene in the 2008 animated movie, Kung Fu Panda, which makes me think of Steve Jobs. Most pundits compare him to geniuses or narcissists. Not me. I am going to compare him to a fat panda named Po. In this film, a Kung Fu master nKung Fu Panda Poamed Tigress explains to the jocular Po the nature of a messianic character that will save the people – the “Dragon Warrior.” Po had been selected by a wise turtle to become the Dragon Warrior. Tigress’s exchange with Po goes something like this:

Tigress: “It is said that the Dragon Warrior can survive for months at a time on nothing but the dew of a single gingko leaf and the energy of the universe.”

Po: “I guess my body doesn’t know I’m the Dragon Warrior yet. Gonna take a lot more than dew, and universe… juice.”

So, how is Steve Jobs related to this scene? Well, with Steve’s passing it’s as if Steve has become the Dragon Warrior of business – able to drive billions in revenue with nothing more than his yogi mind and the energy of a glowing apple encased in aluminum.

Download employee engagement survey.

There are a lot of explanations for Steve’s success. Many of them have merit and should be studied. I would like to add another reason to the growing list. My proposition is that Steve’s success was not mystical; it was simple and practical. When he came back for his second tenure at Apple, he changed Apple’s contract. Which contract? Apple has signed thousands of contracts during its lifecycle, and if you consider each consumer sale a contract, then billions. Those are not the contracts I am talking about. I am talking about “the” contract; the one that is written with a capital “C”. I am referring to the tacit three-party Contract between Apple, its employees, and its customers. Some might call it Apple’s psychological contract. Every organization has a Contract, and the parties are usually the same. They consist of the organization, its workforce, and those that buy the organization’s products or services.

Our research suggests that a key driver in an organization’s success is whether the organization’s leaders take the time to build and nurture this ever-important Contract.  Sometimes leaders aren’t even aware they have a Contract, let alone understand what it means. Good leaders, however, take the time to understand, build, and carefully define their Contract. They focus not just on slogans and catch-phrases, but also on culture, value propositions, and whether the terms and exchanges contained in the Contract are fair to all three parties. They grasp the concept that their Contract is like an iceberg. Some of the Contract is explicit (i.e. above the water), like the exchange of compensation for an employee’s time and effort at work. But, the vast majority of the Contract’s terms are implicit – or as is the case with an iceberg – below the water. Successful leaders take the time to make sure the implicit terms (the psychological contract) are aligned with where they want to take the organization.

When Steve took over for the second time, nothing much changed, and yet everything changed too. The employees were the same, the inventory was the same, the sales channels were the same, and the pipeline of future products was set. Nonetheless, the moment Steve’s indomitable personality walked through the door everything was transformed. That’s because Apple’s Steve JobsContract was turned on its head. Steve’s iconoclastic presence made everyone know that the ground-rules for what it means to be an Apple employee were now different. The new requirements were: precision, commitment, love of design and aesthetics, thinking differently, exactness, and a passion for really great products, among other things.

Returning to Kung Fu Panda and the story of Po. Po is able to save the village from the ravages of psychopathic leopard. Not because he became an amazing Kung Fu artist; rather, it was because the people “believed” that, as the Dragon Warrior, Po had the power to save them.  For those that know the movie, that was the “secret ingredient” – the belief that Po was the Dragon warrior. I suppose when you look at it this way, Steve Jobs really is the Dragon Warrior of business. Steve made the most of his second chance at Apple by redefining Apple’s Contract. He made his employees believe they were going to build the very best products and that Apple really would become what is now the world’s most valuable company.
Employee Engagement Survey