Few if any CEOs in the high-tech industry are as closely identified with their corporate brand as Steve Jobs is at Apple Inc.
Thus the widespread interest in Jobs’ health and his statement last week that his gaunt appearance was due to a treatable “hormone imbalance.”
Reactions ranged from relief – Apple’s stock climbed on the news – to outright disbelief that Jobs and Apple, a famously tight-lipped pair, were delivering the full truth.
(Jobs said his public statement was prompted by widespread speculation over his absence as the keynote speaker at Macworld last week, Apple’s last. Job’s attempt at reassurance simply reignited discussion of his health and longevity at Apple – a discussion that’s been ongoing since Jobs belatedly announced in 2004 that he had undergone surgery for pancreatic cancer.)
Some financial analysts demanded transparency in the company’s succession plan, shrieking that offering no public plan left the company vulnerable to stock price manipulation and created an opaque future for investors. Other analysts demurred. Apple said it has a plan, but (naturally) it’s secret.
News magazines have for years run photo galleries of top Apple management, with eenie-meenie-miny-moe write-ups about succession that portend nothing, given the speed of change in Apple’s business.
But if death and taxes are inevitable – not to mention retirement – then someday the issue will not go away, particularly if, like many over-achievers, Jobs eventually turns to family and fortune and away from the office.
So, how closely are Apple’s fortunes tied to Jobs’ presence? Should he transition from hands-on CEO to an “adviser,” how would that work? Should he leave voluntarily or take seriously ill, how much guidance could he bequeath the company and how long would that guidance be relevant?
The questions are concrete. The answers, of course, are speculative. But analysts shared their thoughts on the topic.
“There’s no question that Jobs is instrumental in setting direction at Apple,” said Avi Greengart, analyst at Current Analysis. “He’s involved in decisions both large and, famously, small. You can’t overstate his influence. This is his company. But he doesn’t do anything alone.”
For instance, Jonathan Ive, senior VP of industrial design at Apple, is often credited with the iPhone design, which resembles the iPod design, Greengart noted.
“I do know that Jobs doesn’t like buttons,” Greengart said. “He likes simple and elegant.”
“Knowledgeable people” understand that Jobs apparently makes decisions about which features to include and which to exclude, Greengart added.
“The iPhone was not a committee product,” agreed analyst Tero Kuittinen at Global Crown Capital L.L.C. “Sometimes you need a single individual to make hard decisions. The iPhone had short standby time and lacked a camera at a time when everyone else said those elements were a ‘must.’ But when everyone includes ‘must’ features, no one stands out.”
Both analysts agreed that few if any outside Apple’s walls really know exactly how closely and in what manner Jobs is involved in product development.
Greengart said that, in the bigger picture, Jobs isn’t given enough credit for being “a keen technologist” with strategic thinking on an ecosystem-level. The iTunes approach for the Mac personal computer eventually served the iPod and the iPhone, creating the most successful online music store in the world. Uniform use of jacks, for example, allowed the company to create a complementary accessory line that serves all Apple products.
Fly in the ointment
“Jobs is known for three things that matter to him: assuring quality, pitching the products and actively driving the company to his vision, which requires that he’s there everyday,” said Rob Enderle, principal at Enderle Group. “He’s not doing any of those three at the moment.”
Enderle said he had no inside information on Jobs’ current involvement at Apple, but based his view on last summer’s iPhone connectivity glitches that made headlines for months, as well as what the analyst said were other product glitches.
“He scares the crap out of people, having them work 24/7 to get stuff done that nobody else can get done,” the analyst said. “From what I can tell, right now he’s not spending much time at Apple at all. I think the reality here is, based on Apple’s past practices, that they want to create the impression that Steve Jobs is still actively involved. From everything we can see, he is not.”
“My contacts say that Jobs is around regularly, but took the holidays off this year,” said Carl Howe, analyst at Yankee Group. “He is known for jetting around to get deals done that wouldn’t get done without his presence, so absences from the office are pretty common even when he’s actively running things.”
“I put absolutely no credence in rumors that he’s sick or otherwise disengaged,” Howe added. “Rather, I think he’s pretty focused on running the show and doesn’t like to deal with publicity unless he needs to.”
When he leaves
Due to the speed of technology development and rapid changes in consumer preferences, Jobs cannot realistically have more than 24 months of influence on product development when he leaves the company, according to Kuittinen.
“It’s difficult to forecast what’s even do-able two years out,” Kuittinen said.
As for the notion that Apple’s CEO might one day decide to walk away from it all, Kuittinen is dubious.
“I’m pretty sure Jobs can’t let go,” Kuittinen said. “He won’t simply hand in the keys. And his successor must be willing to share power, if Jobs takes on an advisory role.”
“I don’t think he has a plan for retirement,” agreed Enderle, “unlike Bill Gates, who announced a plan before he retired. Steve Jobs’ life is Apple.”
On the question of succession, Kuittinen said corporate history offers a guide. Someone who follows a strong CEO must be perceived as somewhat neutral, as was the case when Olli-Pekka Kallasvuo followed Jorma Olilla as CEO at Nokia Corp. “OPK,” as he is known, ascended to CEO largely on a platform of continuity, though several business deals hatched in the Olilla era were nixed soon after Kallasvuo took over.
“People want more of a caretaker, if a company is already riding high,” Kuittinen said.
Should Apple name names in a public succession plan, as many analysts have demanded?
“I’m not a huge fan of succession plans because they can lead to an exodus of talent, people who see they won’t be tapped,” said Kuittinen. “Why create problems?”
“Unlike any other CEO, Jobs is tightly integrated to the success of Apple’s core products,” Enderle said. “When he goes, Apple has to fundamentally become a different company or they have to replace him with somebody else or a group of people that can perform all three of his critical roles. Your typical CEO is operations-oriented, they don’t pitch products and they don’t control quality.”
“Last time Apple tried to be a different company, without Steve Jobs, it didn’t work out well,” Enderle concluded.