Friday, April 19, 2013

What’s Apple’s biggest challenge: replacing Steve or Wall Street?

Steve Jobs’ influence on Apple was pervasive – maybe too much. Prof. James L. Heskett of Harvard Business School questions in an HBS working knowledge paper on whether Apple faces an almost impossible task in replacing the visionary founder.

Discussions of management succession have been triggered once again in boardrooms around the world by Steve Jobs’ demise. Regarding Apple, of course, the question is what will the Jobs-loss mean for its future? If leaders often become “cult heroes,” to use a term coined by Jeffrey Sonnenfeld, Steve Jobs was the cult hero’s cult hero. The assumption is that cult heroes are unique, one of a kind, impossible to replace, and that succession is the biggest challenge facing any company led by one. But is this the real problem confronting the company with the departure of a Steve Jobs?

Apple watchers cite several important contributors to the company’s success: 1) Its product development relies less on finding out what customers want than it does on what its employees think would be “cool”; 2) Its strategy is based on the introduction of a stream of thoroughly tested and proven products and new models, all based on a common platform, that often cannibalise each other, and that are simple, elegant, and easy to use; 3) It borrows good ideas from organisations such as Xerox and Gap but practices secrecy with its own ideas; 4) Its strengths and interests reflect its cofounder’s interest in hardware, not software. Possibly as a result, it relies heavily on partnering with others in the development of application software; 5) Its product development is organised around sometimes competing teams operating under a regime with the philosophy that “The system is, there is no system … (as opposed to discipline and) great processes,” as Jobs put it.

All of this occurred under the leadership of a person who practiced hands-on management, sometimes personally making detailed decisions. Jobs’ influence on Apple was pervasive. As one visitor observed, designers are the most respected people in the organisation at Apple, as opposed to Microsoft where the technical people rule.

In some respects, Apple’s experience with Jobs has parallels with Starbucks’ history with Howard Schultz, also a hands-on, detail-oriented leader who created the innovative concept of a “third place” outside the home and workplace where customers could enjoy an experience that included great coffee. However, after he stepped away from the CEO’s job (in 2000), Schultz watched apprehensively as new competitors entered the market and his successors succumbed to Wall Street’s expectations for even greater success than Starbucks’ had enjoyed under Schultz. Wall Street demanded increasing growth, internationalisation, better productivity, and new products. And Schultz’s successors responded by opening up to 5 new stores per day; extending business to new foreign markets; introducing a faster, higher capacity espresso machine that, because of its bulk, created a barrier between the barista and the customer; and offering new products. In 2008, Schultz had to step back in to save the company.


Source : IIPM Editorial, 2012.
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