What Would Steve Do?

Technology has been a consistent bright spot in the U.S. economy over the past few years, and no company has epitomized that better than Apple. Perhaps that’s why business schools and leadership coaches have been talking in recent months about what management lessons should be taken from Walter Isaacson’s biography of Steve Jobs, which provided an anthropological look at the habits of the most famous CEO since GE’s “Neutron Jack” Welch. In it, Jobs is revealed as both an autocratic bully and a business genius who executed the most successful corporate turnaround so far this century.

Perhaps the book should be required reading for future M.B.A.s, since the management arts associated with Jobs’ story aren’t what you might think. “Business schools often ask me what Steve Jobs teaches us about leadership,” says Isaacson. “It’s not that he parked in the handicapped spot or that he was nasty to people. It’s that he took total responsibility for his products from end to end, that he put products above return on investment and that he wasn’t a slave to focus groups.”

Those are lessons that American business, which has for decades focused more on the bottom line than on real innovation, should heed. While there are plenty of people in Silicon Valley who envy Jobs’ cult of personality, experts like Mike Useem, head of the leadership center at Wharton, say he probably succeeded in spite of it: “Jobs built a good team, but he would have gotten even better people if he’d been less tough on them.” Yes, research shows there are plenty of narcissists in the corner office, but it also finds they tend to be bad managers. In fact, to the extent they succeed, it’s usually because of other qualities, like long-term vision and relentless execution.

Jobs had both, but more important, he had the entrepreneurial impulse to put engineers above bean counters in the corporate hierarchy. As Jobs told Isaacson, “My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. Sure, it was great to make a profit, because that was what allowed you to make great products. But the products, not the profits, were the motivation. It’s a subtle difference, but it ends up meaning everything. The people you hire, who gets promoted, what you discuss in meetings.”

Focusing on product meant taking the long view–another key Jobs leadership lesson. After the dotcom bubble burst in 2000, most of Silicon Valley stopped spending. Apple, meanwhile, started ramping up research and development, hoping to invent a lot of innovative new products that would put it ahead of competitors after the downturn.

It worked. Out of the recession came the iPod, the iTunes store, Apple stores and even a new operating system, OS X. “Steve spent a lot of time stressing to me how the seeds planted during that downturn, sometimes over the skepticism of his board and investors, grew into the products that turned Apple into the world’s most valuable company,” says Isaacson. Jobs didn’t worry, he says, about explaining to the Street “why building a bunch of glass shrines with only 12 products in them was a good return on investment.” He probably also would have shrugged off questions about the company’s business practices in China, as he had in the past.

The truth is that investing during a downturn is almost always good business. Samsung trumped Sony in the 1990s by investing more in R&D China’s solar industry has leaped ahead of competitors by piling on investment since the financial crisis. In the U.S., there is still $2 trillion worth of cash sitting on corporate balance sheets. And there are too few CEOs willing to make the same kind of bold investment choices Jobs did.

That’s the dilemma facing business schools today. Jobs stands out as an exceptional leader not so much because of his in-your-face style but because American business has come to be dominated by bean counters seeking hyperefficiency rather than by innovators focused on real growth. And that, more than anything else, is why schools like Harvard, Wharton and Stanford are distilling what Jobs had to teach business. “We’ve largely tapped out efficiency gains in corporate America,” says Nitin Nohria, dean of Harvard Business School, which is shifting its curriculum to focus more on Apple-like product-driven innovation and less on financial engineering. “We need business leaders who can help answer the big questions of the day–how technology can help us create jobs and what role business should play in society.” While the Apple founder probably wouldn’t have had much to say about the latter, it’s hard to think of a better poster child for the former.