What challenges does Tim Cook's Apple face?
Apple for years rallied around its charismatic co-founder, Steve Jobs, so it’s only natural now to question whether the company can retain its market dominance and magic with a new leader.
Jobs, who stepped down as the company’s CEO on Wednesday, has stamped his personality on Apple’s operations and products. Under Jobs’ leadership, Apple not only sparked the personal computing revolution in the 1970s and 1980s, but more recently established new directions in technology with iconic products such as the iPod, iPhone and iPad.
Jobs has been replaced as CEO by Tim Cook, formerly the company’s chief operating officer, who was Apple’s public face during Jobs’ medical leaves. Cook is considered an operations person, but has shown his ability to run Apple’s day-to-day operations during Jobs’ leaves of absence.
Cook has the drive and has also silently been at the center of Apple’s recent successes, said Edward Marczak, an author and executive editor of MacTech magazine.
“While the market may worry, those who have stuck by Apple through it all know there’s only more excellence ahead,” Marczak said.
Spirit of innovation
But there are questions about his ability to continue the spirit of innovation embodied by Jobs, whose headstrong management style inspired workers and helped the company think ahead of market trends. Cook previously was responsible for Apple’s sales and operations, and has revamped the retail side of the company’s business with the establishment of Apple stores.
“Cook is very talented. But he doesn’t have Jobs’ innovative spirit—it’s just not in the DNA,” said James Post, professor at the Boston University School of Management, in an interview.
Jobs will remain at Apple as chairman and will be involved in design and product decisions, so his influence could be felt on Apple’s products for years. But Cook was clearly Jobs’ first choice for CEO, and in a letter he “strongly recommended” to the board that it appoint Cook to the position.
Some company observers believe that Jobs has established a blueprint for Apple to follow and churn out hit products, laying the groundwork for Cook to succeed. Nevertheless, Jobs’ absence from daily operations will leave a creative and management void. Without Jobs, whose charismatic management style inspired workers to think outside the box, there are questions about how long Apple will be able to sustain its ability to lead market trends.
“Visionaries are easy to find, but great visionaries who can go from concept to reality to execution to mass marketing are rare indeed,” Post said.
Companies of all stripes can easily go astray, at least for a while, when their founders leave, Post said. Companies like Walt Disney, Ford and Dell are examples of companies losing direction after their founders left, returning to stability only after a period of time passed.
Apple will lack Jobs’ “my way is the only way” approach to business decision making, Post said. Cook will have to devise a new way of making effective decisions that drive the company to continue developing successful products.
Jobs founded Apple in the mid-1970s with Steve Wozniak but was ousted in a boardroom struggle in 1985. He returned in 1996 to save the company from near ruin, and returned it to profitability a few years later.
Jobs turned Apple into a successful consumer electronics company by crystallizing concepts into a series of popular products. Apple revolutionized the music industry with the iPod music player and iTunes store, and created new product categories with the touch-controlled iPhone smartphone and iPad tablet.
In 2011, Apple for a short period became the highest valued company in the world in terms of market capitalization, passing Exxon Mobil.
As CEO, Jobs was an inspirational leader and had a knack for reading user sentiment and future technology trends, said Owen Linzmayer, author of Apple Confidential 2.0, which describes Apple’s history.
Jobs had “the vision and power to force Apple’s engineers to use technology to create products that serve users’ needs, minus the frills, without bogging them down,” Linzmayer said.
Apple has the products, marketing capabilities, and managers to continue to dominate markets, Linzmayer said. But the technology industry moves fast, and Apple will need to figure out ways to remain a step ahead of its competitors.
“Longer term, who knows? Things happen so rapidly in this industry, and new competitors and technologies can appear out of the blue, that it’s hard to predict what will happen to any firm, much less a company that’s been as innovative as Apple,” Linzmayer said.
Over the years, Apple has competed with the likes of Google, Microsoft, Hewlett-Packard, Dell, Samsung and Research In Motion in the areas of computing, smartphones, operating systems and entertainment. Today, Apple has a near-unassailable position in tablets and a strong position in smartphones.
Jobs ruled Apple with an iron fist as CEO, and his obsession with secrecy drew critics. His rejection of Adobe’s Flash technology from the iPhone polarized the IT industry, and tight policing of the App Store led to criticism that Apple was too insulated.
The secrecy was part of Jobs’ paranoia, which is warranted in a business that depends on innovation and market pizzazz, Post said.
“The cloak of secrecy was an extension of Jobs’ personality and obsessions. After his departure, the company could … become more open and transparent,” Post said.
Jobs also personified an anger that hooked users to the perception of Apple being an underdog, said Roger Kay, principal analyst at Endpoint Technologies Associates.
Jobs gave Apple fans the feeling that Apple was being treated unfairly, and users were attracted to the notion of a company fighting its way through a jungle of hostile competitors such as Microsoft, which preyed regularly on Apple’s ideas, Kay said.
The new management would do well to maintain the passion of the company’s fans, Kay said. Jobs inspired loyalty, the likes of which a future CEO may not be able to match, which could take away some of the company’s edge.
Replicating product success
Another big challenge for Cook and Apple’s management team will be to replicate the success Jobs had with creating a series of products that coalesced under a single umbrella and offered tight interoperability, a major reason the company has been so successful. Products such as the iPad, iPhone and Apple TV are sold as stand-alone devices, but can also work together. For example, users can stream movies from the iPad or iPhone to TV sets connected to the Apple TV device.
In the end, the onus will lie on Cook to sustain Apple’s growth. Cook inherits qualified staff, products that are market leaders, and a pipeline of future offerings that have Jobs’ stamp of approval. Research of new products at Apple starts well in advance —speculation around the iPhone began in 1999 when Apple registered the iPhone.org domain name. The New York Times in 2002 wrote about a product possibly combining phone and PDA-like features being under development. The iPhone was finally unveiled in 2007.
Cook will be assisted by Jonathan Ive, the senior vice president of industrial design, who is one of the creative forces behind the iPhone, iPad and iPod. Ive has been discussed by Apple enthusiasts as someone who could succeed Jobs as Apple’s CEO, but he is not considered a leader. Other executives include Philip Schiller, senior vice president of worldwide product marketing; Scott Forstall, senior vice president of iOS software; Bob Mansfield, senior vice president of Mac hardware engineering; and Peter Oppenheimer, CFO.
Cook may not bring Jobs’ panache and passion to the job, but Apple’s management team and product pipeline will likely ensure that the company won’t stumble, at least in the short term.
“Keynotes certainly won’t be as interesting without Jobs, but I doubt anyone is going to take over and do anything incredibly stupid or turn the company into a boring place to work,” Linzmayer said.