'One More Thing' (Actually, A Few More) About Steve Jobs's Possible Successors

Up until last week, it was hard to imagine Apple without Steve Jobs. But in the face of Jobs's announcement that he's temporarily stepping aside as CEO, some new management faces have taken the spotlight at Apple. It's become apparent that the company has a deep enough management bench that it can continue to thrive, even in the absence of its charismatic co-founder. It'll be a tough job, and the Apple that emerges will be a different company, but at least potentially still powerful and still pr

Mitch Wagner, California Bureau Chief, Light Reading

January 20, 2009

11 Min Read

Up until last week, it was hard to imagine Apple without Steve Jobs. But in the face of Jobs's announcement that he's temporarily stepping aside as CEO, some new management faces have taken the spotlight at Apple. It's become apparent that the company has a deep enough management bench that it can continue to thrive, even in the absence of its charismatic co-founder. It'll be a tough job, and the Apple that emerges will be a different company, but at least potentially still powerful and still producing great, innovative products.The emergence of new leadership is a significant change for Apple. But it's a positive one. It would be necessary even if Jobs was as healthy as an ox. Companies, no matter how big or small they are, and no matter how healthy or sick their leaders are, need a plan of succession, what to do in case something happens to the leadership. Investors, employees, and partners should know what the plan is, so they can have confidence on the company's long-term future.

For the short term, Apple is likely to do just fine, notes Harry McCracken, writing at PC World. The company's leadership, including COO Tim Cook (named to run the company day-to-day in Jobs's absence), marketing head Phil Schiller, designer Jonathan Ive, and iPod software leader Scott Forstall "are a talented bunch with deep exposure to the mind of Jobs," McCracken writes. The first half of the year is traditionally quiet for Apple, with no big announcements other than processor upgrades to existing products.

But products beyond the first half of the year might suffer from Jobs's absence, McCracken says. He compares Jobs to Walt Disney, "another self-made California tycoon so synonymous with the company he founded that it was hard to imagine it without him."

Jobs, like Disney, is as much an editor as a showman, and as with all world-class editors, the things he takes away are at least as important as the things he adds. It's tough to envision an Apple without Jobs coming up with a cell phone with only one button on the front, for instance, or a laptop with a battery that can't be removed. He may or may not have been the instigator of those particular decisions, but they represent Jobsian thinking, and are a radical departure from the groupthink and compromise that make so many tech products from other companies so unmemorable.

Apple is unquestionably working on next-generation Macs, iPods, and iPhones right now that won't see the light of an Apple Store until well after Jobs's scheduled return. It may be working on tablets or TVs or netbooks. If any or all of those products have to do without his input at crucial moments during the design process, they'll suffer-even if he's back at work well before they're released. There's certainly no evidence that Tim Cook, with whom the buck will stop until June, can play Jobs' editing role.

Jobs's absence might not be felt for years, writes Brad Stone at the New York Times.

"If you look at the history, Apple can coast for several years and still do very well," said Paul Mercer, who worked for Apple in the '80s and subsequently developed software that was used to design the user interface for the first iPod. "But it's very risky, and without Steve, the long term is untenable."

Jobs's influence extends beyond design. He provides leadership. Other companies are sometimes handicapped by inside factions working at cross-purposes, competing to develop related products that are sometimes incompatible. But Jobs provides a unifying vision. And that leadership extends to dealmaking; he persuaded entertainment companies to sell their wares in the iTunes store.

In their moments of great anxiety, Apple fans look back to the late '80s and early '90s for a glimpse of Apple without Mr. Jobs. After he was ousted in a boardroom coup in 1985, Apple actually thrived for several years, unveiling the first Mac with a color screen, the PowerBook laptop and QuickTime, which broke ground in bringing video to personal computers.

But then, to the horror of its diehard fans, Apple withered. Its stock fell 68 percent from its 1991 peak to Mr. Jobs's triumphant return in 1996.

In the meantime, three chief executives came and went, and Apple's core product, the Macintosh, did not evolve as fast as computers based on Microsoft Windows.

Part of the problem 20 years ago was that Jobs hadn't allowed people with talents similar to his to thrive at the company, and the same may be true today, the Times writes.

But some Apple watchers are reluctant to use the past as a guide. Andrew Hertzfeld, who helped develop the original Macintosh and now works at Google, says that Apple has had 12 more years under Mr. Jobs's leadership to soak up his unique values.

He also notes that products already in the pipeline -- which analysts say may include new iMacs and smaller iPhones -- already bear Mr. Jobs' imprint and can sustain Apple for years to come. "It will take half a decade for the absence of Steve to really show up in the products," Mr. Hertzfeld said.

But it's hard for companies to make the transition from iconic founders, wrote Jason Perlow at ZDNet's blogs in June, when Jobs put in a gaunt appearance at the iPhone 3G announcement and started a round of speculation that he was sick.

Companies that are centered around iconic founders and which cannot form effective long-term transition and mission strategies after they depart are doomed to suffer serious consequences. Case in point -- from 1985 to 1987, Jobs lived out his exile at NeXT and Pixar, only to return as the company-s savior after over a decade of being completely rudderless and on the brink of oblivion.

The industry is littered with examples of poor transition management. Microsoft itself seemed to have hit a major bump in the road in vision and mission when Bill Gates decided to spend more time on his personal projects rather than be involved in day-to-day matters of the company -- a road bump that it seems to still not have recovered from given the train wreck that is Windows Vista -- although it could be said that Steve Ballmer had been groomed for the position since the day the company was founded. Michael Dell had to be brought back in to turn his company around after watching its market share deteriorate after three years of stewardship under Kevin Rollins. And who could forget how Palm Computing went completely, irretrievably south after Donna Dubinsky and Jeff Hawkins made the break. While Donna still serves on the board of directors, Palm hasn't seen its glory days in a long time.

The tech industry isn't the only one to be affected by founder exodus transition mismanagement syndrome.  Harley-Davidson went through years of deterioration and shipping poor products after being purchased by AMF in 1969 when the original founders left and only rebounded when 13 employees made a concerted effort to save the company and buy it back in 1981. It also could be said after Walt died in 1966, Disney went through an extremely difficult period in its core animated film business, for as much as two decades until Eisner revitalized the company.

If Jobs were to abdicate, would Apple indeed become rudderless again? Or has he installed a church of his own followers that would continue on in the same tradition and ideology? Is there a "Book of Jobs" somewhere in a pile of Word for Mac files or PDFs that contain the ideological canon of what comprises the essence of Apple? Is enough institutional knowledge and Jobs's teachings documented and retained among the management staff? Only Steve Jobs can answer that question for sure.

Other examples from history include Ford Motor Company and Hewlett-Packard, writes Robert Palmer at The Unofficial Apple Weblog.

Ford Motor Company was founded in 1903 by Henry Ford. In 1918, at the age of 55, Henry handed the presidency of the company to his son Edsel. When Edsel died in 1943, Henry came back to Ford Motor Company ill, "mentally inconsistent, suspicious, and generally no longer fit" for the job.

Most of the board didn't want him to be president. Even with no official title, he'd been in de facto control of the company since Edsel took over. Nevertheless, the board elected him (rather than cross him), and he served until the end of the second World War. Gravely ill, he turned control of the company over to his grandson, Henry Ford II, in 1945. Henry Ford died two years later....

Many companies have found new CEOs from outside their walls, with varying degrees of success. Carly Fiorina, famously, was hired by HP from Lucent, and she became a reviled figure among HP's employees for her brash management style -- and for allegedly spying on other board members. On the other hand, there's Lee Iacocca, who is credited with reviving the Chrysler brand in the 1980s after being fired by Henry Ford II. Iacocca introduced the world to the minivan, and bought AMC to revitalize the Jeep brand in the early '90s.

Tim Cook, whom Jobs named to run day-to-day operations in his absence, will be key to the company's future. "For the next six months , Steve Jobs has asked Tim Cook run Apple while Jobs convalesces. For Cook, that must feel a little like getting the keys to dad's Porsche. For Jobs, it suggests he's confident Cook won't drive the company into a ditch," writes Nick Wingfield at The Wall Street Journal's blog.

Cook has been closely involved with day-to-day operations at Apple for a long time, wrote Adam Lashinsky at CNNMoney.com, in November. Cook took the reins at Apple once before, in 2004, when Jobs stepped aside for a month to get treatment for his pancreatic cancer.

An intensely private Alabaman and Auburn University engineering grad (class of 1982), Cook is also a workaholic whose only interests outside of Apple appear to be cycling, the outdoors, and Auburn football. (Talk about tough years: Apple's stock is down 50% year to date; the Tigers, nationally ranked early in the season, were 4-5 at presstime.) What's more, there's every reason to believe that Apple would at least be stable for some years to come if Cook were to find himself at the helm. The reason: He's essentially been running much of the company for years.

Demanding and even-keeled

Tim Cook arrived at Apple in 1998 from Compaq Computer. He was a 16-year computer-industry veteran -- he'd worked for IBM (IBM, Fortune 500) for 12 of those years -- with a mandate to clean up the atrocious state of Apple's manufacturing, distribution, and supply apparatus. One day back then, he convened a meeting with his team, and the discussion turned to a particular problem in Asia.

"This is really bad," Cook told the group. "Someone should be in China driving this." Thirty minutes into that meeting Cook looked at Sabih Khan, a key operations executive, and abruptly asked, without a trace of emotion, "Why are you still here?"

Khan, who remains one of Cook's top lieutenants to this day, immediately stood up, drove to San Francisco International Airport, and, without a change of clothes, booked a flight to China with no return date, according to people familiar with the episode. The story is vintage Cook: demanding and unemotional.

When Cook arrived, he closed Apple's factories and warehouses around the world and replaced them with relationships with contract manufacturers, shrinking Apple's inventory from months to days. Cook's obsession with lean inventory has been key to Apple's success; he compares electronics inventory to dairy, which goes bad quickly. Cook's leadership makes supply and inventory look easy. Apple routinely keeps big new products relatively secret until they're announced, when they appear, as if by magic, on retail shelves. And when Apple made the transition to Intel processors in its Macs in 2006, the change was complicated and difficult -- but Apple's customers didn't see any of those problems.

Jobs is irreplaceable at Apple. His vision for design and how to run the company is unique. But the company has many talented designers and managers, and Jobs has been with Apple long enough for his spirit to infuse the company at all levels. But he's not indispensable; the company can endure and even prosper without him.

Most likely, we won't have to see what Apple without Jobs will look like for many decades. Jobs's medical condition is most likely life-threatening -- I can't imagine he'd have stepped aside as CEO otherwise, given his dedication to Apple and his work. But, with treatment, people recover from life-threatening medical conditions all the time, and go on to live long lives. I expect Jobs will be one of those people.

But everyone, including Jobs, is mortal. Jobs might get hit by a bus. He might, like his rival Bill Gates, decide he's finished running a technology company and it's time for a new life's work. Apple, like all companies, needs a plan of succession, and it's healthy for the company and its community of supporters to think about these things.

About the Author(s)

Mitch Wagner

California Bureau Chief, Light Reading

Mitch Wagner is California bureau chief for Light Reading.

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