On Succeeding Steve Jobs

Friday, 22 July 2011

On Wednesday, less than 30 minutes before Apple announced another record-breaking quarter of financial results, the Wall Street Journal published a story by Yukari Iwatani Kane, Joann S. Lublin, and Nick Wingfield regarding the issue of Apple CEO succession. (You can circumvent the WSJ paywall using this link, which allows access to anyone coming to the story from Google.)

Here’s the nut of it:

Since Steve Jobs went on medical leave this winter, some members of Apple Inc.’s board have discussed CEO succession with executive recruiters and at least one head of a high-profile technology company, according to people familiar with the matter.

The conversations weren’t explicitly aimed at recruiting a new chief executive and were more of an informal exploration of the company’s options, said these people. The directors don’t appear to have been acting on behalf of the full board, some of these people said. Apple has seven directors, including Mr. Jobs.

It is also unclear whether Mr. Jobs was aware. In response to questions from The Wall Street Journal about the discussions, Mr. Jobs said Monday in an email, “I think it’s hogwash.”

As I wrote when the story broke, to say that the timing of the publication was suspicious is an understatement. Everyone knows the question of succeeding Jobs is attached to dynamite. He cannot be replaced, but, inevitably, someday will be. If Jobs steps down as CEO at any point in the foreseeable future, the company’s stock price is almost certain to take some sort of hit. I can’t see how a speculative and sketchily-sourced story such as this, published 30 minutes before Apple announced overwhelmingly positive financial results, was not intended to dampen, to some degree, the positive effect of those results on Apple’s stock.

Regarding my description of the story as “sketchily-sourced”: the only attribution in the story is “according to people familiar with the matter”. That could be anyone. A good source would be one or more of the purportedly rogue board members. A dubious source would be, say, simply an executive headhunter who claims to have been approached by members of the Apple board, or the “head of a high-profile technology company” — i.e. perhaps an Apple competitor. I find it hard to believe any member of Apple’s board would speak about such an effort to reporters. There are no names in the story whatsoever. No board member, no headhunter, no supposedly-considered outside candidates for the job. None.

The more I think about this story, the worse it looks. Here’s what gives credence to Jobs’s dismissal of it as “hogwash”: there is no one from outside Apple who could credibly replace Jobs as CEO of Apple. If Jobs steps down in the foreseeable future, his replacement will come from within the company.

A new Apple CEO would need credibility and the ability to instantly instill confidence with two highly disparate groups: Apple’s rank-and-file employees, and Wall Street. The only candidates who could satisfy both factions, to any degree, already work at Apple. Name one outsider who’d be accepted both inside the company and on Wall Street. I can’t. Not one.

Apple employees respect and cultivate great design above all else. No other company in technology reflects this ethos. There is no other company like Apple. An exodus of talent from the company would be utterly devastating. Everyone on Apple’s board of directors must know this. It’s completely obvious.

Names I’ve seen bandied about as potential outside successors:

• Eric Schmidt. Zero chance. Schmidt is viewed throughout Apple as a traitor, who perhaps used his knowledge of the iPhone, gleaned while then a member of Apple’s board himself, to give Google’s Android effort a leg up. There is a better chance of Apple choosing its next CEO through a raffle of ten golden tickets hidden inside iPad boxes distributed around the globe than that they’d give the job to Eric Schmidt. Wall Street might accept him but Apple rank-and-file would revolt.

• Anyone else from Google. No credibility within Apple regarding design, no experience with hardware products.

• Jon Rubinstein. Rubinstein left Apple in March 2006. He did good work at Palm as CEO — their WebOS products are far better than the junk they were making when he joined. But why would Apple hire back as CEO someone who left the company a year before the iPhone and whose post-Apple track record is producing failed iPhone competitors? How could Apple pass over the executives who’ve helped create the iPhone, iPad, iOS, and the App Store for someone who wasn’t there for any of it? I still hope Rubinstein and HP pull it out, and I think they can. But the bottom line is that Rubinstein is now a competitor.

• Tony Fadell. Nope.

• Jeff Bezos. The best answer I’ve seen, but I can’t imagine him wanting to leave Amazon for any other company. Amazon is shaped in Bezos’s image. And Amazon — although a company I think most Apple folk greatly respect and frequently patronize — doesn’t exactly have a reputation for producing Apple-caliber user interfaces or hardware.

• Larry Ellison. Same as Bezos. Not going to leave the successful company he founded and built; no record of producing Apple-caliber design.

• Anyone from Microsoft. No credibility, period. The one and only reason I can think of to even consider hiring from outside Apple would be to get someone who already holds or has held the title “CEO”. Gates or Ballmer at Apple? Come on.

• Woz. Beloved within Apple, but he’s been out of the game for decades, and, let’s face it, is a bit of a flake.

• Jean-Louis Gassée. A smart guy, and he gets how Apple works and understands great design. But his chance to lead Apple was in 1996, and everyone knows it. How could Apple pass over its own executives who’ve been at the company throughout the past decade for someone they passed over 15 years ago?

• Guy Kawasaki. No recent relevance to anything related to Apple. Little credibility among current Apple employees, none on Wall Street.

• Jack Dorsey. Square suggests he has an Apple-caliber design eye, but neither of his companies, Twitter nor Square, has made a dollar of profit. Apple generates over $500 million in profits per week. Dorsey may well be the industry’s next Steve Jobs, but he can’t be the next Apple CEO.

The Only Credible Candidates

Everyone wants this to be an interesting story, but it’s not. There is no intrigue. If Jobs steps down in the foreseeable future his replacement will almost certainly be Tim Cook. Utter credibility on Wall Street, and much respect within Apple. He’s already run the company while Jobs has been on leave. The knock against him is that he’s an operations and finance guy, not a product design guy. Ideally Apple would find someone just like Steve Jobs, but there exists no such person. There will not be a next Steve Jobs. There will be a next CEO.

Read what Tim Cook has said about Apple over the past few years. He is anything but a typical operations and finance guy. He’s an operations guy who understands how Apple works and why it has succeeded, and what it needs to keep doing to continue growing. Cook cannot do what Jobs does, but no one else can either. And Cook, I think, is not only aware of that, but he’s comfortable with it. The obvious structure for a post-Jobs Apple has Cook as CEO, doing mostly what he’s already been doing as COO. What he already does at Apple is what most CEOs do at other companies. Final word on product design goes to the senior vice presidents: Scott Forstall (iOS), Jonathan Ive (hardware design), and Phil Schiller (marketing and, perhaps, Mac).¹

Those three men are the only other credible candidates for the job than Cook — and one gets the distinct impression that Ive has no interest in the limelight that would accompany the post. And I don’t see how Forstall or Schiller could be offered the gig unless Cook was on board, satisfied remaining as COO.² Because if Cook were passed over and in response left Apple, that’s the sort of thing that could trigger a stock collapse on Wall Street.

Things would be different if Apple weren’t both larger and growing faster than all of its competitors. But they are. Apple has different values than its competitors, and everyone in the company believes that it is because of these differences, not despite them, that Apple has achieved its current success. The last thing Apple needs is a shake-up or a dose of what any of their competitors are drinking.

Put another way, the obvious structure for a post-Jobs Apple is simply Apple as we know it, without Steve Jobs.