In the mid-1990s, Apple Computer, Inc. stood as a cautionary tale in the annals of corporate history. Once a titan of innovation, the company that had revolutionized personal computing was teetering on the precipice of bankruptcy. By 1997, Apple was hemorrhaging money, posting a staggering annual loss of over $1 billion. Its market share had plummeted to a dismal 4%, a fraction of its former glory. The product line was a chaotic, sprawling mess—dozens of Mac models, various peripherals, and failed ventures like the Newton MessagePad, all competing for limited resources and confusing consumers. Internally, morale was at an all-time low, marked by incessant infighting, a lack of clear direction, and a pervasive sense of impending doom. Externally, analysts and the media alike had largely written Apple off as a dying company, a relic of the dot-com boom.

It was into this maelstrom that Steve Jobs, the company’s charismatic co-founder who had been ousted over a decade earlier, made his improbable return. The circumstances were serendipitous: Apple, desperate for new technology and a fresh vision, acquired NeXT, Jobs’s struggling software company, for $429 million in late 1996. Initially brought back as an advisor, Jobs quickly ascended to the role of 'interim CEO,' or 'iCEO,' a title he would famously hold for several years. His return was met with a mix of hope and trepidation; many remembered his mercurial personality and uncompromising demands.

Jobs wasted no time in demonstrating Transformational Leadership in action. His first, and perhaps most ruthless, move was a strategic pruning of Apple’s bloated product portfolio. He famously gathered his management team and, drawing a 2x2 matrix on a whiteboard—desktop vs. portable, consumer vs. pro—demanded a single, focused product for each quadrant. Everything else was mercilessly axed. Out went the Newton, the various printer lines, and a multitude of niche Mac models that had diluted the brand and drained resources. These were courageous, vision-driven decisions that required immense conviction. He faced internal resistance and external criticism, but Jobs understood that radical simplification was essential for survival. He articulated a clear vision: focus on a few, exceptionally designed products that Apple could execute perfectly.

Another highly controversial but ultimately crucial decision was the alliance with Microsoft. At Macworld Boston in August 1997, Jobs announced a deal that saw Microsoft invest $150 million in non-voting Apple stock and commit to developing Office for Mac for the next five years. The crowd booed, but Jobs stood firm. This move was a stroke of strategic genius, designed not just to infuse much-needed capital but, more importantly, to ensure software compatibility and signal to the market that Apple was not an isolated, dying platform. It shifted the narrative from 'Apple vs. Microsoft' to 'Apple is viable,' providing both financial stability and a significant psychological boost. It was a clear demonstration of Jobs' ability to challenge the status quo and make difficult decisions for the greater good of the organization.

Beyond these strategic cuts and alliances, Jobs began a profound re-energizing of Apple’s culture. He instilled a new sense of purpose, reminding employees of Apple's legacy of innovation and its potential to 'Think Different.' He demanded uncompromising design excellence and quality, fostering an environment of intellectual stimulation where employees were challenged to push boundaries. His presence alone, combined with his infectious passion and vision, began to restore faith and pride among the workforce. He communicated a compelling future, inspiring followers to believe in the possibility of Apple's resurgence.

Jobs’ return also heralded a complete revolution in Apple’s Product Strategy. He redefined the company’s approach around core competencies: simplicity, intuitive user experience, and unparalleled design. The 2x2 matrix became the guiding principle, focusing engineering and marketing efforts. The era of convoluted product names and confusing specifications was over. Apple would make great computers for specific market segments, elegantly designed and easy to use.

This new strategy found its ultimate expression in the introduction of the iMac in August 1998. Designed by Jony Ive, the iMac was a radical departure from the beige boxes dominating the market. Its translucent, colorful plastic casing, all-in-one design (monitor and computer integrated), and simplified setup (just plug in and go) captured the world’s attention. The 'i' in iMac famously stood for 'internet,' positioning it as the ultimate consumer device for the burgeoning online world. The iMac wasn't just a computer; it was a fashion statement, a piece of art, and a powerful symbol of Apple's renewed commitment to design and user experience. It resonated with consumers, especially those who felt intimidated by traditional PCs, and became an overnight sensation, selling hundreds of thousands of units within months and pulling Apple back into profitability. The iMac perfectly encapsulated Jobs’ product strategy: focus, differentiation, and an uncompromising dedication to the user.

To complement the product revolution, Jobs initiated a brand revitalization effort. The iconic 'Think Different' advertising campaign, launched in 1997, featured black-and-white images of historical figures like Albert Einstein, Martin Luther King Jr., and Mahatma Gandhi, celebrating those who challenged the status quo. The campaign's tagline, 'Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes...' resonated deeply with Apple's heritage and its new, defiant direction. It rebuilt brand loyalty and attracted new customers who identified with Apple's counter-cultural ethos, effectively signaling a new era for the company.

The immediate decisions made by Steve Jobs upon his return—the ruthless product simplification, the pragmatic Microsoft alliance, the cultural overhaul, the visionary product strategy epitomized by the iMac, and the 'Think Different' campaign—laid the crucial groundwork for Apple's sustained success. These foundational shifts in strategy and leadership paved the way for future triumphs, including the establishment of Apple Retail Stores, the optimization of its supply chain, and, most famously, the revolutionary launches of the iPod, iTunes, and eventually the iPhone. Each of these innovations built upon the core principles re-established during Jobs' initial turnaround.

In conclusion, Apple's remarkable comeback from the brink of collapse in 1997 stands as a powerful testament to the transformative power of exceptional leadership and a clear, audacious product strategy. Steve Jobs’ application of Transformational Leadership—articulating a compelling vision, inspiring followers, fostering innovation, and challenging the status quo—combined with a bold, consumer-centric Product Strategy emphasizing simplification, design excellence, and market focus, not only saved Apple but propelled it towards becoming the most valuable company in the world. His tenure at Apple serves as a masterclass for MBA students in how to navigate extreme corporate distress and engineer a profound resurgence.