Rock in a hard place

Rock in a hard place
By Alex Lash
Staff Writer, CNET NEWS.COM

No personal questions.

That's the stipulation for an interview with Ellen Hancock. The Apple Computer executive vice president wants to talk business. She also wants to be a CEO, but not badly enough to walk away from Apple, at least not yet. But that's not the business at hand.The former IBM exec casts a wary eye on personal profiles and intimate questions, distractions that won't bring Apple back into the black.

Hancock joined the company last July with the mission of lining up the company's software strategy. She immediately served notice that a new sheriff was in town by canceling the Copland operating system project and looking for outside technology help. By some estimates, Copland had chewed up four years and half a billion dollars; the just-completed merger with Steve Jobs's Next Software will ultimately cost Apple well over $400 million. That's almost a billion dollars of decision-making in less than six months. That's serious business.

Hancock put plenty of experience behind those decisions. In her 28 years at IBM, she worked her way from programmer to lead the networking hardware, networking software, and software solutions divisions, ultimately becoming senior vice president in 1992. In the world she came from, experience plus loyalty equaled rewards. She had paid her dues.

When the top spot opened in 1993, however, Big Blue brought in Lou Gerstner from RJR Nabisco, not exactly a high-tech choice. Hancock resigned soon after. The same scenario played itself out early in 1996 after Gil Amelio left National Semiconductor. Thought to be Amelio's hand-picked successor, Hancock was again passed over and again left the company.

Now at Apple, she's part of one the highest profile high-tech stories of the year, a story that she feels is obscured by journalists' fixation on personality and in-house politics. She's also immersed in an environment that flies in the face of her values. "The Silicon Valley model," as Hancock calls it, is one where job-jumping is encouraged and where brash young CEOs are the flavor of the day.

By most accounts, the new Apple OS strategy is a smart, judicious blueprint, and the cross-platform Next technology at the heart of the next-generation Rhapsody operating system gives Apple intriguing opportunities to sell its software on a variety of platforms besides its own. The Copland experience has developers and customers alike wary about timetables and delivery dates, but the OS team passed its first test in January by delivering on time a minor update of the current System 7 software.

Ironically, Hancock's move to bring in outside help in the form of Steve Jobs has brought the contrasts between the new Amelio-Hancock team and the old Apple guard into sharp focus. Under Jobs, the Apple of old was iconoclastic, if not downright anticorporate. Hancock strives to bring what she calls "professionalism" to the ranks. (Others have called it "adult supervision.") Hancock is waging a war against what she calls the entrenched "not-invented-here" snobbery that has made Apple turn up its collective nose at outside technologies. And the greatest irony of all? Jobs, initially brought back as a part-time consultant, has his Next people in charge of hardware and software.

The recent round of shakeups at Apple have knocked "chief technology officer" from Hancock's title. She still runs the technology office but is now simply "executive vice president," a move that some reports have labeled a demotion and sparked rumors late last week of her imminent departure, rumors Hancock and Apple decisively dismissed. Hancock explains the shift with careful words. Hardware, now under the auspices of Jon Rubinstein, was never Hancock's domain in the first place. Avie Tevanian, who ran Next's software efforts as chief engineer, was an obvious choice to take over the software development. Those two departments now report directly to CEO Amelio.

Both men also worked for Steve Jobs, which kickstarts whispers of a "palace coup." But this is not what Ellen Hancock wants to discuss. This is journalistic horsetrading.

She also does not want to discuss religion or family, although the photo in her office of her presenting the Pope with an IBM ThinkPad makes one wonder aloud if she'll give John Paul II a discount on a PowerBook. She laughs politely and looks anxious to get back to what matters. Back to work.

NEWS.COM discussed business, life at Apple, and a women's place in the corporate world with Hancock in Apple's Cupertino, California, offices.

NEWS.COM: You left IBM and National Semiconductor after being considered and not chosen for the top spot. Will you be a CEO one day?
Hancock: I would like to think so. It is certainly something I've aspired to. On the other hand I have to say that I certainly have done more than I ever expected. I don't wake up every morning worrying about becoming a CEO--if it happens, it happens; if it doesn't, I think I've still had a very nice career.

One Apple employee said that Apple executives have to realize that they are akin to movie stars. That's not something you feel comfortable with. How much have you had to compromise?
I'd say we've all compromised a little bit. It's not like we were unfamiliar with dealing with the press or unfamiliar with giving keynote speeches. Several of us have had years of doing that. I would say that most of us have tried to go along a little bit with the flow and spend more time externally. There are more interviews like this than perhaps other places. So I think we've compromised a little bit.

But we are also attempting to make this much more of a business and deal with it as a business. We are trying to establish more professional management here at Apple. I mean that in every sense: better information systems, better data, we need to make decisions with facts vs. pure instinct. There's a whole underlying nature here at Apple that some of us feel that we need to improve.

NEXT: Apple in the press

Apple in the press

Is Apple treated unfairly by the press?
Apple certainly at the moment is generating some negative press, and I would say the burden is on Apple to improve its own performance. But I think it would be better if the press dealt with the performance issues and a little bit less with the politics issues.

What is Apple, as it stands right now?
Apple is a platform company. It's a systems company, so it's a company that has hardware, software, and service. And it is a company that responds to their customers' needs relative to computing.

Your title now is executive vice president. Can you run through what you're in charge of?
Sure. I'm responsible for the group that does quality and assurance for the company, for the group that does research and interface design for Apple, and for the chief scientist area in AppleNet. As part of that, I'm responsible for assessing and working on the technical strategies across both our hardware and software.

Could you clarify "technical strategies?"
It means the technologies that we're going to work on, what are the OpenStep APIs, how we are doing with Java, what are the technologies that our hardware should be offering, how we relate to things like DVD. Also, what are the advancements that we need to make in multimedia, what are the advancements that we need to make in networking--those kinds of issues.

The press viewed this reorg in your case as a demotion.
There are various mixtures of accuracy in some of those reports. One said I gave up all the hardware, which is interesting because I never had the hardware!

How do you view this shift?
I think that the company is going through a dramatic restructure. There were some very difficult tasks for all of us. I think many of us have had our jobs changed one way or another because of the restructure, of flattening the company, and having the CEO more involved in the different aspects of the firm. And so it's important for all of us to work as a team, to continue to contribute. And I did have several discussions with Gil. I basically said that if there's still a role for me, I want to help out, that's why I came here.

People applauded you for your decision to stop Copland and to look for outside help.
Right. I got an award for stopping Copland!

Internally?
No, externally, at Macworld.

So you came in and you played the heavy.
I'd prefer another word besides "heavy," but go ahead.

It's not necessarily a bad thing. Do you like playing that role?
I don't think you enjoy making that decision; I think you face making that decision. When I came here, I thought my job was to bring that product to market faster, until I discovered some of the design flaws in the product itself. And then it wasn't true--it wasn't worth bringing it in faster because it had the wrong design point. I also felt that a year and a half with no technology in your operating system is a mistake. And Gil had already started to work on that. So hopefully we made some positive decisions about improving the Mac OS. We've already shipped the first release in January. I think the reaction of the team has been very positive that some of the technologies were getting out of our laboratory and into customers' hands in 1997, where that was not the plan when I came here.

In a systems company, which is essentially a single-product family, it is an awesome decision. But even the engineers working on Copland were beginning to get uncomfortable that what they were delivering was not compelling. If they looked to see whether it was competitive at the time frame they were going to ship it, I think there was general concern among our developers that it was not compelling. And so I think I got buy-in from the team: "Yes this was the right thing to do. Let's go back."

What's the hardest decision you've ever had to make in your 30 years in this business?
I think that stopping products is about the hardest. When you realize that quite a few good people have spent time working on a product and it's clearly not going to be successful. So stopping products was difficult.

Maybe I should have listed this first: Any time you have to deal with moving people out of a company, it becomes a very personal matter, both for you and for them. Sometimes it's hard to figure out who is hurt more in the process, but I would say moving people out of a company is probably the hardest.

NEXT: Women, loyalty, and power

Women, loyalty, and power

The tech industry feels very much like a men's club. Is there still a glass ceiling?
Yeah, I've been on several glass ceiling panels! I'm usually the one that thinks the glass is half full. [Laughs.] I think that some companies, Apple and IBM included, have done a very nice job of promoting women from within their ranks. I do know that for example at IBM there were specific programs aimed at promoting and improving the role of women in the organization. So I think that's one indicator.

The second is the number of boards women are on. I'm on the Colgate-Palmolive board and I'm on the Aetna board. I think those boards and others are showing that women are having a place in corporate America.

Having said that, when you look at the numbers of female CEOs, there still is a gap. But I think all of these things take time, and I think it is wrong to move women into positions where in fact they haven't been trained or are not ready for them and the like. I do not go along with that notion. But I do think we are getting to the point where we should be seeing more CEOs on the list, as women keep rising.

I do have to say that [the high-tech industry] and in particular the software industry has been very supportive of women. If you look at the data processing side, if you ignore telecom and you ignore semiconductor, you will see a fair number of women in reasonably responsible positions. And so I think that the industry is not an inhibitor to women. But clearly, we do need to see some more visible women in the CEO slot.

You say the software industry in particular. Why is that?
I'd say it goes back to the education women have had. You don't find a lot of women in chemical or mechanical engineering, having tried to hire some. Women have taken much more to math, which is what I did, and then later on to comp sci. Women are coming into the workforce with more software training than they ever did on the engineering side.

You're active with the Committee of 200. Can you talk about that a little bit?
It's a group of women who are either head of their own businesses or have a significant role in a large company. There is a selection process to be a member of the organization. It's an organization that spends a fair amount of time dealing with issues related to business, politics, and women's issues. And I have found it to be reasonably supportive. [A friend] at MCI encouraged me to join because he thought it was important that some of the women in the IT field took a more assertive role. At his advice I joined the group and I've attended several of their meetings. I have in fact participated in some panels. One of the panels was how to maintain your privacy in a public position--as you can see, my responses match my views on that subject. But it is a very supportive group for women.

You have two degrees in mathematics, then you started [at IBM] as a programmer. Did you see yourself then where you are now?
I saw myself more involved in science and would never have guessed that I'd be doing what I'm doing. When I was a college senior I was asked to write an essay on what my future life would be like 25 years out. There's no correlation whatsoever between what I thought I would do and what I'm doing! And so I feel a little bit like Alice in Wonderland. I'm having a wonderful time.

28 years at IBM. How does spending that much time in one place form your thinking?
At the time I went to IBM, a lot of people were making lifetime career decisions. At that point in time--it is quite awhile ago--jumping from job to job was considered a negative on a resume rather than a positive. It was somebody who couldn't keep a job very well.

There was a loyalty factor and a family factor that were extremely important. And that was true until the end of the '80s and into the '90s, when a lot of companies, IBM included, changed its own thinking relative to the relationship between the employer and the employee. IBM in the past had very seldom brought anyone in from the outside at very high levels. It was very unusual--you could almost name the names. They went from that to bringing in quite a few people with different experiences into the company.

Certainly out here in Silicon Valley there's a positive notion of going from company to company and learning from that experience. I would say that industry has shifted and now we're much more aligned along the Silicon Valley model: employees feeling free to go from one company to another, and employers feeling they can change the mix and change the environment by bringing in people at significant levels. It will take us several years to figure out the impact of the change, but I think that the bond that occurred between the employer and employee doesn't exist in the same way today as it did years ago.

Sounds like you miss that to a certain extent.
Well, I think it was an easier life. We all have to recognize the fact that it has changed. I think there was a bond that's currently missing. And now that we have these options as an employer, we have to acknowledge the fact that employees have more options than they used to have. So we have to do something to make up for that bond that's now missing--whether it's incentives, or however else we do it.

Here in Silicon Valley, because there's so much access to different companies, I think the workforce is more mobile. You don't have to move from your home--you just change which parking lot you pull into. But I think it's more than just the proximity. From what I'm seeing, the notion of lifetime employment is one that's not as obvious today as it was 30 years ago when I joined the workforce.

Was there something that has socially or politically driven this shift?
I'm not sure I've done enough research to understand what it is. But take the case of IBM, when rather than promoting from within, you bring a CEO from outside. Right at the top you already have someone who has made a career move, and it generates down to the employees who say, "Well, if the CEOs are moving around, shouldn't we also be exercising some of our rights?" And the answer is yes.

I think there were a series of trends. This notion of benchmarking has caused a lot of people to look at different companies. It is much more popular today to take people from one industry, and to move them to another industry if their skill base transfers over and you've done enough benchmarking to know it. Downsizing by itself caused some of this; outsourcing by itself caused some of this. I remember some of the early outsourcing decisions. They were traumatic at the time. Today a lot of companies have outsourcing discussions and it's not considered the same way.

NEXT: Mac fanatics, waxing Rhapsodic

Mac fanatics, waxing Rhapsodic

Right now you've got 26 million Mac users, often classified as fanatics. What are the pros and cons of having such a fanatical customer base?
First of all, having a large customer base is an asset, particularly if you pay attention to that customer base and respond to their needs--you understand that customer base. Another reason that I came to Apple was I was impressed with the goodwill that Apple enjoys with its customers. And the customers don't just say "I enjoy this system," they say "I love my Mac." And it's a different statement.

On the negative side, you must pay attention to that base. They understand your systems very well and you have to perform.

You've also said that it's not necessarily healthy to be one big happy family with all of your customers. That's what I mean in terms of having this fanatical base.
I think that response [was taken] a bit out of context. It was in reference to the amount of press--personal press--that we get in this company. The press doesn't just deal with the company, its customers, its market, or its technology, but pays much more attention to the people and executives in the company. And it's not clear to me that that's healthy. So it was in that context, where everyone feels they're a part of the group, sort of an extended family.

It seems that part of Apple's future success depends upon playing to that culture, at least in marketing. It sounds like you're saying, "We also have to pull in the other direction."
I think too many people place an emphasis on culture. I do think that it's extremely important to understand your customer set. If that's what you mean by "culture," then I'm OK with that notion, that we for example focus very much on K-12, we focus on the publishing market, we focus on the enterprise, we focus on the consumer, and we are spending more and more time focusing on who bought our products, why, and being able to respond to that.

But again, to go back to the statement, I think that we have tremendous goodwill with our customers. We need to respond to that, to what they like about their system, they've said the new system must be Mac-like. And again, we're spending time to really make sure we understand what we even mean when we say "Mac-like."

A Mac user wrote us in email recently, "What Apple needs to do is fire all the dealers and hire people to answer the phones. Apple needs to act more like Dell and less like the old IBM." Do you see any truth in that statement?
Ignoring the companies they referenced, I do believe that we need to understand the different channels. With the Next acquisition we in fact now have a sales force that is very much an enterprise-based sales force, as well as a consulting group that assists primarily enterprise customers. We go to the K-12 market a different way and we go to the customer a different way. We are doing a better job now for example of keeping track of who our customers are by name, by location, by geography. And we intend to become more proactive ourselves relative to those customers.

I've heard that among the divisions within the QuickTime media layer group there's a lot of confusion as to who is doing what. Will this reorg help in multimedia and publishing, two of your core markets?
Well I think the reorg is going to get us more focused on the two areas. One, the customer segments that we're addressing, and certainly the publishing or what we call "pen market" is one that we intend to address.

What does the focus entail exactly?
We're still in the process of going through the restructuring, so we haven't resolved all of that. But I do think it's clear that we will address publishing, we will address learning. For example, K-12 and higher education. And we do intend to have a very focused effort on all of our current customer base so that we can respond to their needs in the future.

So far you're presenting the new operating system Rhapsody as something for everyone, from corporations down to the end user. When and how will you start to articulate some of those different positions?
I think we'll be articulating that over time, but I think right now the early deliveries of Rhapsody, which is the operating system we're addressing here, will be aimed at the high end, will be aimed at publishing, and will be aimed at the enterprise market. It is only later on that we'd be getting to other segments of the market, including support of the Performa and support of the PowerBook. Those would come later, but if we could roll out this operating-system strategy correctly, over time, you are right--it will be our answer in all of our markets. But we'll start at the high end and then later on get to the other markets.

How would licensing Windows NT fit in when you have Rhapsody as your enterprise solution?
Rhapsody is the support of PowerPC, it is support of the OpenStep APIs and it is support of compatibility. With the Next acquisition, we also have OpenStep available on NT on Intel today. It is our intent over time to keep the programming interfaces consistent between the OpenStep on NT and the OpenStep we will have on the PowerPC. So developers who develop to those OpenStep APIs have access not only to the PowerPC products, but also have access to providing the same support on top of NT.

So if this happened you would license NT to developers?
No, the developers can get NT from Microsoft. We would provide them with OpenStep on top of NT and then we will make the APIs consistent so that an app that runs on Rhapsody on the OpenStep APIs can also run on Intel on the NT system. We also have an OpenStep implementation that in fact runs on Pentium without NT. So we have support of Intel, both native through the next offering, as well as on NT.

Underlying Rhapsody is Unix. Is this going to pose a problem when you start to market Rhapsody to the common user?
We'll be very successful if they don't know it's Unix; if they think it's a Mac and it has the ease of use of a Mac. It's very much our intent to expose the Mac features, make it easy to use, which is what the Macintosh is known for. We have received requests from some people to not block some of the Unix nature if people wanted to have access to it. And I think we can do that. But even today, when Next ships the OpenStep system, in many cases it's not obvious that it's running on a Unix base.

Can Apple afford to resist the economy of scale that Intel represents?
To some extent, the software strategy we have--where [our strategy] spans across or will span across the PowerPC platform as well as the Intel platform--gives us some advantages as it relates to those volumes. Prior to the [Next] acquisition, developers told us it would be very important if our strategy allowed our software and programming interfaces to span not only the Apple volumes with the PowerPC, but also to have access into the Intel volumes. And the OpenStep APIs in fact give us that capability today.

What are the defining traits that you feel have brought you where you are now, today?
One, I care a fair amount about people. I really believe in some type of consensus management, a consensus management where one person always has one more vote than anybody else so you can make decisions and go on. I think this is an aspect that females can bring to the business. Some of the female skills in fact are extremely important as we go through some of these changes.

I also don't like failure at almost anything, personal or public. So I do try very hard to make sure that what I'm working at can be successful. And then on top of that I really do enjoy having fun. We probably need a little bit more of that at Apple.