Jobs vs. Cook case.

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Case Study

AppleBackground Information

The name of Apple CEO and co‐founder Steve Jobs is synonymous with the Apple company. Fired from Apple in 1985, Jobs founded NeXT Computer, bought the Graphics Group from Lucasfilm and transformed it into Pixar Studios, and then returned to Apple as CEO in 1995. In his absence, Apple lost billions and its share of the personal computer market dropped from 9% to 2%. Jobs saved Apple by procuring a $150 million investment from Bill Gates and Microsoft and launching the iMac, a desktop machine that became one of Apple’s leading sellers. Most importantly, though, Jobs directed the development of Apple’s new operating system, OS X, an operating system that is speedy, simple to use, incredibly stable, and easy to write software for. OS X, in combination with easy‐to‐use software for film and picture editing, desktop publishing, presentations, and word processing, stabilized Apple’s sales and market share and put it in a financial position to eventually create the iPod, the iPhone, the iPad, and now iCloud. Today, Apple’s 10% share of the personal computer market is growing, and it has a large market share in smartphones, and a commanding market share in tablets and digital music.Furthermore, its combined stock value is greater than Intel and Microsoft combined.Distinct Leadership StylesJobs was known for his highly demanding and influential leadership at Apple. When Apple’s MobileMe service (which synchronized calendar and email and files across Macs, iPhones, and corporate networks)launched to terrible reviews and buggy performance, he berated the MobileMe team, telling them, “You’ve tarnished Apple’s reputation. You should hate each other for having let each other down.” He named a replacement manager on the spot. Jobs was also famous for saying “no.” A former Apple executive says, “Over and over Steve talks about the power of picking the things you don’t do.” Jobs said, “We’re always thinking about new markets we could enter. But it’s only by saying no… that you can concentrate on the things that are really important.” Yet, despite his toughness and discipline, Jobs was able to inspire Apple’s managers, software engineers, and designers to create elegant, simple, innovative products. Jeff Robbin, Apple’s lead software designer for iTunes and the iPod said, “I remember sitting with Steve and some other people night after night from nine until one, working out the user interface for the first iPod. It evolved by trial and error into something a little simpler every day.We knew we had reached the end when we looked at each other and said, ‘Well, of course. Why would we want to do it any other way?’”Apple’s future was bright, but Jobs’ health was a concern. In 2004 and 2009, he took medical leaves due to pancreatic cancer, a liver transplant, and an inability to maintain weight. In January 2011, he announced his third medical leave, telling Apple’s 50,000 employees, “I love Apple so much and hope to be back as soon as I can. In the methe antime, my family and I would deeply appreciate respect for our privacy.” In October 2011, Jobs died, one month after handing the CEO job to long‐time COO, Tim Cook.Jobs’ charismatic leadership was clearly central to Apple’s success. But can Apple continue to succeed without him? You know that charismatic leaders articulate a clear vision for the future that is based on strongly held values or morals, model the values by acting in a way consistent with the vision, communicate high-performance expectations to followers, and display confidence in followers’ abilities to achieve the vision. (Jobs was known for being highly demanding, for his critical outbursts when

performance falls short, and for holding executives accountable for failure), Jobs was clearly a charismatic leader. Furthermore, his highly successful return to Apple fits with the pattern of charismatic leaders who tend to emerge in times of crisis. Likewise, Jobs was seen as larger‐than‐life most inside and outside of Apple. The challenge for Apple is replacing a charismatic leader like Jobs.This kind of thinking illustrates one of the basic assumptions about leadership, namely that leaders always matter. According to this thinking, organizations are sure to fail without sound leadership and almost certain to fail when a charismatic leader like Steve Jobs leaves. Leadership, however, isn’t always needed. Furthermore, charismatic leadership isn’t always needed. Stanford business professor Jeffrey Pfeffer says surviving the exit of a charismatic leader depends on preserving or strengthening the part of the company that made the company great (under the charismatic leader). Wal‐Mart continued to grow after founder Sam Walton’s death by maintaining its focus on low costs and its competitive advantage in supply chain and information technology. After founder Herb Kelleher’s retirement, Southwest Airlines continued to be the only consistently profitable U.S. airline by maintaining its focus on short‐hop flights from multiple hubs, low-cost fares (including no charges for luggage or change fees), and great service.Pfeffer says, “The genius of Jobs is to get his company and its people to get out of that rut, to not follow the crowd but lead it."What to Do?What steps should Apple take to increase its chances of continued success without Jobs as CEO? Are there ways to substitute for Jobs’ leadership at Apple? Next, is Tim Cook the right leader to replaceJobs? Jobs was demanding, creative, and controlling; Cook is not. Should Tim Cook try to emulate Jobs, or should he run Apple using a different leadership style? Should Cook focus more on managing or leading Apple? Finally, Jobs was at the center of all of Apple’s key decisions over the last decade and a half. Jez Frampton, group CEO of Interbrand says, “Now the worry is the organization has to rewire itself and learn how to make decisions on its own.”Differ ence Be tween a Leader and ManagerAccording to University of Southern California business professor Warren Bennis, the primary difference between leaders and managers are that leaders are concerned with doing the right thing, while managers are concerned with doing things right. In other words, leaders begin with the question, “What should we be doing?” while managers start with “How can we do what we’re already doing better?” Leaders focus on vision, mission, goals, and objectives, while managers focus on productivity and efficiency. Managers see themselves as preservers of the status quo, while leaders see themselves as promoters of change and challenges of the status quo in that they encourage creativity and risk taking. Another difference is that managers have a relatively short‐term perspective, while leaders take a long‐term view. Managers are concerned with control and limiting the choices of others, while leaders are more concerned with the expa the ending people’s choices and options. Managers also solve problems so that others can do their work, while leaders inspire and motivate others to find their own solutions. Finally, managers are also more concerned with means, how to get things done, while leaders are more concerned with ends, what gets done.Steve Jobs was a leader, not a manager. The question, however, is what kind of CEO should be selected to follow Jobs? The decision is critical for Apple, says leadership professor Jay Conger because, “The period after the charismatic leader is gone is always perilous, but in hypercompetitive, fast‐moving industries, the loss becomes apparent much more rapidly.”

One way to gain some insight into this issue is to examine what has happened during Jobs extended medical absences from the company. One thought is that anyone can manage Apple, but that Jobs’replacement, like him, needs to be visionary. One of Apple’s business partners believes that “creative tension” waned during Jobs’ absences, replaced by a “play‐it‐safe ethos.” Yet, another view is that Jobs absence gave Apple’s managers and employees more freedom. For example, when Jobs returned after his liver transplant, he spent most of his time leading the team developing the iPad. The members of this team who had had the freedom to make decisions about product strategy and development relinquished that when Jobs returned. All of their work and decisions were then subject to Jobs’ intense scrutiny. One Apple employee said, “People have had to readjust” now that Jobs is back.Difference Between Steve Job and Tim CookWhat can’t be disputed, however, is that during Jobs’ medical leaves, Apple thrived under the leadership of Chief Operating Officer Tim Cook. Cook, like Jobs, demands much of the people who work for him.Steve Doil, who left Apple to move to Texas for family reasons, says, “He’ll ask you 10 questions. If you answer them right, he'll ask you 10 more. If you do this for a year, he'll start asking you nine questions.Get one wrong, and he'll ask you 20 and then 30.” Cook also does this in meetings. Says Doil, “I've seen him shred people. He asks you the questions he knows you can't answer, and he keeps going and going.It isn't funny, and it's not fun.”But, that’s where the similarities end. Prior to Jobs’ death, a Silicon Valley investor said, “Nobody would make Tim Cook CEO. That's laughable. They don't need a guy who merely [gets stuff done.] They need a brilliant product guy, and Tim is not that guy. He is an ops guy, at a company where ops is outsourced.” Michel Mayer, formerly CEO of Freescale Semiconductor which used to make microprocessors for Apple, says of Cook, “I'm not sure he'd be able to replace Steve's design creativity.Then again, I could argue that it's not the role of the next CEO to do that.” John Thompson, vice chairman of Heidrick & Struggles, the search firm that placed Cook at Apple says, “If Tim were to be CEO of Apple, he'd need to have different people around him to make up for his weaknesses, just asSteve has Tim around to make up for his.”While Jobs was creative, demanding, and visionary, Cook is demanding, and is an accomplished manager who knows how to execute and get things done. When Apple came out with the iPod Nano, Cook and his operations executives prepaid $1.25 billion to Samsung and Hynix to buy nearly all of the flash memory on the market. In doing so, they greatly reduced Apple’s cost per unit. Kevin O’Marah, at AMR Research, a Boston consulting firm, says, “That’s the sort of thing they wouldn’t have thought of in the days before Tim Cook.”Tim Bajarin, who leads technology consulting firm Creative Strategies, says, “He's (Cook) one of thoseguys who just gets things done. But he has been with Steve long enough that he knows how he thinks.He's been working for years with this steady mantra of, 'What would Steve do?' And then whatever he decides, he puts solid business principles behind it.” Cook is quieter, and unlike Jobs, isn’t a yeller and a screamer. Furthermore, Cook has responsibility for nearly half of Apple, and the support of many in the company. An Apple executive said, “The company already has coalesced around him. Tim does almost nothing that would make you disrespect him, which you can't always say about Steve.”Adapted fromMGMT 6Instructor Resources, Chapter 14, Cengage Learning, 2013.