Killing the clones
In 1994, Apple began licensing Mac OS to a handful of select vendors who paid Apple $80 per machine to use the operating system. As the years went by, it became apparent that this wasnt such a great idea. The clone manufacturers produced relatively low-cost machines that cannibalized Apples most profitable product line, and the clones did not have the intended effect of significantly expanding the footprint of the Mac platform.
So when Jobs returned to Apple, he knew the Mac OS licensing program had to go. He declined to license Mac OS 8 to the clone vendors upon its release in 1997, thus effectively ending the clone program (one manufacturer, UMAX, did manage to license OS 8 until 1998, however).
Jobs believed strongly in controlling the total user experience from hardware to software, and that could not be achieved if the hardware end was out of Apple's hands. Clones watered down the Macintosh brand, and if they had remained, Apple could not have become as proficient at the secrecy, desire, and new product execution as they later became famous for.
Trusting Jonathan Ive
When Steve Jobs returned to Apple in 1996, Jonathan Ive was already head of the companys design team. He was thinking about quitting -- in fact, until a company-wide presentation by Steve Jobs convinced him to stay.
At first, Jobs looked to outside star designers for a possible new head of design, but Ive and Jobs soon hit it off and became personal friends. They found that they shared key elements of their design philosophies.
As a result of the newfound camaraderie, Steve Jobs put his faith in the relatively untested designer instead of hiring someone new from the outside. The pair (with the assistance of the entire design staff, of course) would go on to create some of the most famous consumer electronics designs ever made.