Small wonder that many people who were in a meeting with Steve Jobs said that being in the meeting was like going on a magical mystery tour. The brilliant Apple leader was indeed magical, with his ability to entrance, enthrall and simply bring others around to his way of thinking. Jobs was also hardly an open book and many, from employees to competitors wondered just where those amazing ideas came from. This author says that Jobs’ magic and mystery was informed by what he calls re-framing, a talent that only a very few leaders have.

Steve Jobs was known to have created a “reality distortion field.” I can verify this because I experienced it.  About 29 years ago, within 10 minutes of meeting Steve Jobs, I changed my mind. From a seemingly rational decision to buy the then-available Osborne1 computer, I decided to wait 6 months to buy a yet-to-be released vaporware called “Macintosh.”

Bud Tribble, one of the key hardware brains behind the Macintosh, is said to have been the person who apparently used the phrase “reality distortion field.” He used the term to describe the impact that Steve Jobs had on people. In Jobs’ presence, Tribble said, “reality was malleable. He could convince anyone of practically anything. It wears off when he’s not around[i].”

Jobs was able to get people to produce results that they themselves had believed impossible. This magical, almost-mystical ability did not affect just employees but the media and customers as well. Andy Hertzfeld, one of the key software engineers who worked closely with Jobs, says, in his folklore site[ii], “The reality distortion field was a confounding melange of a charismatic rhetorical style, an indomitable will, and an eagerness to bend any fact to fit the purpose at hand. If one line of argument failed to persuade, he would deftly switch to another. Sometimes, he would throw you off balance by suddenly adopting your position as his own, without acknowledging that he ever thought differently. Amazingly, the reality distortion field seemed to be effective even if you were acutely aware of it, although the effects would fade after Steve departed.”

I have been a student of Apple and Jobs for a long time. Though I saw and talked to him only a few times, his impact on me has not worn off. As a student as well of leadership, I have been researching and thinking about how others can learn to have similar impact on others. In other words, I wanted to learn and teach others what was in the secret sauce of Steve Jobs!

Jobs was very, very good at reframing issues. He helped people change their beliefs, convictions about what is good and bad, what works and what doesn’t, and what helps people to buy into his mental model. In other words, Steve Jobs does mental model innovation better than anybody I have ever seen. In the minds of listeners, the result is reframing. Over time, many people who worked with Jobs learned how to create that kind of impact on others, though to a lesser degree. Nevertheless, they were able to reframe the issues and help bring about mental model innovation.

What is mental model innovation? In short, it is creating a reality distortion field, namely the ability to reframe a problem in a way that convinces others to buy into your way of thinking and doing. They may not be convinced of your logic when you describe a problem, but if they act on the problem with the new mental model– that is if they frame the problem differently – they might gain new insights and new approaches which could enable them to come up with a solution. The solution itself might not be innovative, but reframing the problem allows people to see old reality with new set of eyes – and that is an important innovation.

For example, think of the famous “I have a dream” speech by Dr. Martin Luther King, Jr. It became a defining moment in the American civil rights movement as it put pressure on the Kennedy administration to move the civil rights legislation forward in Congress. Dr. King reframed the up-to-then political battle for civil rights as a dream that could be realized. Another reframing address was given around the same time by President Kennedy. He issued a challenge to Congress to put a man on the moon within a decade. After the after the Bay of Pigs fiasco with Cuba and after several successes by Soviets in the space race, the address could have been a strategic move by President Kennedy intended to overtake Soviets. But framed as a vision call, the address captured the imagination of the nation and reframed the problem with Soviets. Eight years later, Neil Armstrong became the first human being to step on the moon. Many wise leaders, no matter which field they operate in, seem to rely on reframing to bring about major changes in others’ thinking.

Coming back to Jobs, he first gets you to buy into his mental model – whether it is writing a software program in an impossibly short time frame or convincing customers that it is worth waiting for products like the iPhone, even though Apple had no history of designing telecommunications products and even though the product was still vaporware. Once you are convinced of his mental model, it is easy for you to buy into his business model and the product. You might not know it, but unconsciously and subconsciously you begin to think like Jobs and have very soon fallen in love with everything Apple sells!

What is the connection between mental model innovation and business model innovation? Think of the iPhone that Jobs introduced in 2007. It was an excellent example of reframing what a phone could be. In fact, in 2005, Apple experimented by collaborating with Motorola on the Moto Rokr phone. The idea of a single device — convergence between iPod, phone, camera and a touch screen — was thought about in Apple in the form of a tablet, but Jobs directed the focus towards the iPhone. In fact, when the iPhone was announced in January 2007, Steve Balmer of Microsoft said the folllowing:

“500 dollars?  Fully subsidized? With a plan?  I said that is the most expensive phone in the world.  And it doesn’t appeal to business customers because it doesn’t have a keyboard.  Which makes it not a very good email machine… Let’s take phones first. Right now, we’re selling millions and millions and millions of phones a year.  Apple is selling zero phones a year.  In six months, they’ll have the most expensive phone by far ever in the marketplace”[iii]

Within 5 years though, iPhone became the most successful smart phone and greatest profit maker ever for Apple. Microsoft has failed twice to launch a competitive product and is trying again with Windows 8 and the Nokia partnership.

The mental model innovation that powered the popularity of the iPhone also resulted in significant changes in phone carriers’ business models. Apple started getting a percentage of monthly revenues in addition to being paid for the hardware itself. Jobs wanted all the applications to run on a version of Safari on the iPhone, but when critics and customers revolted, Jobs relented and reframed, creating the App Store. That became another successful business model innovation, as the store now has  over 500,000 applications written by third-party developers. Apple gets a 30-percent royalty of anything that is sold through iPhone – Apps, subscriptions, renewals and ads. Over 3 billion dollars has exchanged hands in the past couple of years between Apple and developers! Finally, product and solution innovation is critical if the Apps are to sell and for the business model to be successful! In that respect, mental model innovation is connected with business model innovation and product innovation. Reframing is the underlying secret sauce for them to become radically successful.

Job did fail a few times in reframing his customers – like with the NeXT computer, the Macintosh Cube and Apple TV. These products did not live up to the expectations set by business model and mental model. Jobs, though, never stopped learning from his failures.

Steve Jobs: the master reframer

When Steve Jobs returned to Apple as the CEO in 1997, the company was reportedly very close to bankruptcy. Jobs strongly believed that innovation was the way to make Apple successful and he did say so in one of his interviews: “The cure for Apple is to innovate its way out of its predicament, not cost cutting.” With that mental model – innovation – always in his mind, he started reframing the rest, inside and outside of Apple. He convinced Bill Gates to invest $150 million in Apple and to make a five-year commitment to develop Mac Office. He came out with “Think Different” branding messages with the likes of Gandhi, Einstein and Disney, and created “Get a Mac” (Mac vs. PC) commercial in which he convinced new customers to buy a Mac instead of a PC.

Understandably, Jobs did not try to create or support “me too” products. In fact, the first thing he did when he became CEO was to stop the licensing of Mac clones. He worked with Jonathan Ive, the genius in industrial design, to come up with thelolly-pop coloured iMacs and applied value-creation logic that supports premium positioning for Apple products.

The foundation of Apple’s turnaround was the fact that Jobs came up with a different mental model for success (innovating instead of cost cutting), and applied that mental model to create innovative business models (like iTunes, App Store, revenue sharing for iPhone etc) and radical product offerings (iMac, iPad and iPhone). In July 1997, two months before Jobs returned to the company, Apple had a market cap of $1.6 billion dollars; in August of 2011, it had skyrocketed to approximately $360 billion.

Can others learn the secret sauce of Steve Jobs? It is possible that nobody else can do it as well as Jobs but it but it won’t be due to a lack of effort. Jobs’ successor, Tim Cook, is being closely watched to see how well he communicates, inspires and keeps the Apple brand value intact. So far, Cook has passed with flying colors. Though his approach to reframing is very different from that of Jobs, the magic of Apple continues to charm one and all. Cook is calmer and more thoughtful than inspiring when he communicates his messages. But the quiet confidence that Cook brings and the empathy that he demonstrates connect well with customers and the media. He has been able to build Apple from $360 billion market capitalization to $600 billion – the highest in the world.

Most leaders invest large sums of money in R & D and hope that some of that investment pays off in the creation of innovative products and solutions that compete well in the marketplace. Traditionally, companies prepare huge R & D budgets to develop the innovative products and solutions that they hope will grow their revenues and profit. Still, the real success of such innovations is always uncertain. Yet according to an Economist Intelligence Unit white paper, more than half of 4000 senior global managers prefer business-model innovation to product/solution innovation as the way to establish competitive advantage.[iv] Not surprisingly, Jobs was equally adept at business model innovation, though his secret sauce still was mental model innovation.

Business model innovation is coming up with a different model for how you actually do business, not just what you do in terms of products and services. In other words, apply your mental model to connect your products and services with providing a service or adding value for the customer.

Before Apple/Jobs introduced iPhone, no other device supplier (Motorola, Nokia or HTC) had linked services to end-customer usage after the device had been sold and demanded a share of monthly revenues from carriers like AT&T or Verizon. This became a very successful business model not only because carriers gave up a share of monthly revenues, but also because they gave up control of their customers to Apple by allowing all the service-and-repair questions related to the iPhone to be managed by Apple.

Similarly, the success of the iPod could be attributed to another business model innovation, iTunes, which delivered value to the end customer by streamlining how music could be bought — one song at-a-time instead of one album at-a-time. Music companies resisted that model for a long time till Jobs convinced them through his reality distortion field, or reframing. And for any business model to succeed, reframing must be effective. Otherwise, people just don’t buy into a new business model. Till now, no other company that we know of shares revenues with wireless carriers.

My proposition is that without reframing, product innovation could get lost in the market place, since most technology products are commodities these days. Mental model innovation is the first stage – re-conceptualization or reframing allows people to pay attention to what you have introduced. Business-model innovation is the second stage – coming up with a framework for making money using the reframed context. And product innovation is the third stage – coming up with a product or solution that stands out in the market place and attracts new customers. Thus, reframing is a key to successful business model innovation. Reframing has an added advantage in that mental models reside in our subconscious.  We observe behavior but it is difficult to appreciate the underlying driver of that behavior. This underlying driver, in most cases, is ingenuity. Jobs understood that ingenuity cannot be easily copied and used it effectively to make Apple the most valuable company on the planet today.

Let us take the iPad. Its success exemplifies Jobs’ mental model innovation the best because it really reframed the computer industry and created a new category of products – tablets — that competitors are still unable to compete with, two years after it was launched.

When Apple introduced the first iPad in 2010, many critics expected it to fail big. iPad was ridiculed as a glorified iPhone. The name was mocked as too similar to feminine hygiene products. iPad did not use a stylus (to make drawing easier) or have a keyboard (to make typing easier) and there was no camera or phone capability. Without having many features that consumers were used to, conventional wisdom predicted that no one would buy such a device.

Two years and 50 million iPads later, Jobs/Apple is credited with having created a new market. Despite attempts by rivals to compete with the iPad, Apple has captured a 70- percent share of the tablet market. The iPad is so successful that HP recently announced that the entire PC sector is being negatively affected, because instead of buying a new PC, new consumers are buying an iPad instead.  

The iPad was not the first tablet computer. In fact, tablets have been around for 20 years (Go Corporation pioneered pen-based computing in late 80’s) and there have been many other attempts to come up with a successful tablet. But no one made a tablet like Apple’s. One of the iPad’s most compelling innovations captured the imagination of customers by offering them something they didn’t even know they needed, a media-consumption tablet. The iPad was not competing with NetBooks on the market or laptops. It was a new kind of device that allowed airline pilots, mechanics and even physicians to carry just an iPad — instead of heavy manuals or charts. Jobs mentally modeled a new market – media consumption, and the iPad was the manifestation of how he reframed it. The iPad was not intended to replace the laptop or phone. It was to fill a new need in a new market. Steve Jobs had changed the game on his competitors and created a new segment. While Jobs is not the first leader who used reframing to succeed in a market, he is certainly the most successful, considering the seven industries he has transformed: personal computing, music publishing, animated films, digital publishing, tablet computing, mobile phones, and retail.

The innovation imperative

To be a leader in the midst of 21^st century complexity, one has to be an effective innovator. Product innovation is the most common strategy for growing the top line but the success rate is unpredictable. Business model innovation is what leaders from emerging economies are using to succeed and compete with large established businesses in the west. This is a smart choice.

Very few people recognize that a leader’s job begins and ends with reframing. Without continually reframing oneself and others in the ecosystem with new mental models one cannot compete successfully in the global market place. For now, only A few wise leaders, like Steve Jobs, mastered mental model innovation and are able to use it repeatedly to build success upon success.

By learning how to reframe, one might not become as successful as Steve Jobs. But there are other leaders, like Mark Benioff, the founder of SalesForce, who learned to use mental model innovation to create billion-dollar business. He reframed software as a service and pretty much invented cloud computing. Now SAP, Oracle and everybody else is following his lead. Entrepreneurs routinely attempt to reframe established products everyday and the buzz they build in the ecosystem gives them an indication of how successful their reframing is. Their success then depends on coming up with the right business model and following through with innovative products/solutions.

Reframing is not limited to business leaders, as we saw in the examples of John Kennedy and Dr. King examples above. Successful political leaders have been using mental model innovation as an effective tool for a long time. Gandhi reframed Indian minds to not just share power with the English rulers through “home rule” but to ask for total freedom. India got it in 1947. On the other hand, President Mikhael Gorbachev introduced Perestroika and Glasnost to citizens of the USSR, and that led to the fall of the USSR, the rise of democracy, and the fall of Gorbachev himself. The lesson is that, when you reframe people’s mental models, results can be unpredictable; a leader should be prepared to lose control. It will be interesting to see how President Obama’s support for gay rights, reframed as new “civil rights’,” helps him in the presidential election in November.

Reframing is the new job for most leaders today. Without dropping mental model innovation into the organizational ecosystem, change will not take place and the culture will stagnate and become non-competitive. Smart leaders focus on business model innovation, whereas wise leaders like Steve Jobs focus on mental model innovation. What kind of a leader are you and how do you plan to reframe your ecosystem?

Acknowledgments: The author appreciates the research support given by Sarwath Khizrana at ISB and thoughtful suggestions by Satya Iluri.