Apple needs a more formal delegation of Steve Jobs' power.
The tech giant's chief executive is handing day‐to‐day control to Chief Operating
Officer Tim Cook due to health issues. Yet he retains his CEO title. This is
the third such move, and this time the handover is indefinite. However painful,
a more formal transfer to an acting CEO would have been better.
Both the company and its shareholders can take comfort from
the fact that the last two transfers – also to Cook – took place smoothly.
Apple's operations showed no signs whatsoever of impairment under caretaker
management. Cook has worked at Apple for more than a decade and has been COO
for several years. He's clearly a safe pair of hands. Moreover, Jobs has
promised to retain control over big strategic choices.
But Jobs' fitness is, sadly, an increasing concern. The
company hasn't said exactly what the matter is, but this latest setback follows
previous treatment for pancreatic cancer and an organ transplant. Furthermore,
the open‐ended nature of Jobs' current respite will add to the
worry for employees and investors alike. In these circumstances,
Apple would have been better served by explicitly naming
Cook as acting CEO. That would leave Jobs as chairman where he could retain say
over Apple's strategic direction without the gruelling daily chores of running
the company. That is where he is most valuable anyhow. Such a division would
provide clarity and give Cook a proper mandate, given the responsibility of
overseeing a $300 billion group. Jobs plays an outsized role at Apple. He is
arguably the best executive in technology. But his reputation also depends on
keeping the company on the soundest footing possible – even if that means
formally loosening his grip.
Published Jan. 17, 2011
CREATIVE CONSTRUCTION
By Robert Cyran
Losing a visionary like Steve Jobs as chief executive is
reasonable cause for shareholder concern. But Apple wouldn’t be the first large
and innovative company to weather a difficult succession. IBM, Wal‐Mart
and General Motors show how an obsessive focus on design, customer needs and
tight control over supply chains can be ingrained in a culture by its creator.
But these examples also provide warning signs about how those who follow Steve
Jobs could go wrong. Thomas Watson was a similarly iconic figure at IBM.
When he joined in 1914, he established a near religious
atmosphere. Salesmen wore buttoned‐down vestments, engineer priests
toiled away in labs and there was even a corporate mantra: THINK. This virtuous
combination helped the company churn out high‐quality equipment and gain a hard‐won
reputation that IBM couldn’t
be the wrong choice. Post‐Watson leaders stuck to the
formula with great success for several decades. Wal‐Mart also
showed the value of wash‐rinse‐repeat. The
mega‐retailer
didn’t skip a beat
when founder Sam Walton stepped down in 1988. New CEO David Glass wisely didn’t
tinker with the recipe: set up shop outside a small town not well served by
rivals, embrace economies of scale to sell goods cheap and use technology to
keep inventory at remarkably low levels.
Wal‐Mart’s sales are 26 times as large now as they were when Walton
stepped down. Even General Motors thrived for a time after Alfred Sloan gave up
the reins in the mid‐ 1950s. Under his rule, the carmaker set up a system of
distinct brands, dealers to support them and a systematic approach to
management befitting its engineering culture. GM stayed on autopilot after
Sloan left – and the company retained its solid position in the U.S. car market
in the ensuing years. While all three enjoyed success after their larger‐than‐life
figures retired, their playbooks also paved the way for stagnation. IBM’s
buttoned‐down culture and focus on big business meant it was
slow to the PC revolution. GM’s technocratic system failed when the firm became
increasingly sclerotic and bean counters took over from the engineers. Wal‐Mart
has struggled to export its model and has experienced persistent labor problems
at home.
As the new Apple boss, Tim Cook will have his work cut out
avoiding such pitfalls. But history also suggests that trailblazers like Jobs
leave behind some worthy blueprints to follow.
Published Aug. 26, 2011
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