Monday, September 22, 2014

Replacing the Legend at Apple

Apple HQ: 1 Infinite Loop
My uncle's worked on Wall Street for half a century. There are two pieces of advice he's repeatedly told me. "Bulls make money, bears make money, pigs get slaughtered," and "You can't replace the legend."

It's the advice about replacing the legend that's interesting. When the legend leaves a great company, things change, almost always for the worse since the legend can't be replaced. Ford at Ford, Dell at Dell, Gates at Microsoft, Perot at EDS, Hewlett and Packard at HP. There's no shortage of great 20th Century companies whose best days are behind them. Companies tend to decline when the founders relinquish control.

This begs the question I've been repeatedly asked over the last three years, "How will Apple do without Steve Jobs?" Is Apple so different that they can transcend this pattern? After all, it's crystal clear that Steve Jobs was the leader who made Apple great. He founded the company and created the personal computer era for the first decade. Then the Apple board of directors pushed Steve out under direction from then CEO, John Sculley. During the decade that Steve was gone, the company came within 90 days of bankruptcy. Steve returned. Apple fans call it the Second Coming. It's crystal clear that Steve made all the difference. Not by going after marketshare. Rather, by creating great products and answering the fundamental question, "Why?" as in, "Why are we doing this?"

Steve's Greatest Invention

What was Steve's greatest invention? It wasn't the Mac, iPod, or iPhone. Steve always believed his greatest invention was Apple, the company. Steve's focus was simply on creating the best possible customer experience, from womb to tomb. Initially, Apple employees learned this by osmosis. When Steve returned to Apple, he made sure this cultural thinking was instilled into the DNA of Apple.

Steve focused on nearly every aspect of Apple. This worked well before the iPod and the iTunes Music Store. Since then, Apple's operations have become almost overwhelmingly complex.

The logistical coordination for Apple to ship their products requires a herculean effort. Tim Cook is certainly the person to manage this. He did an outstanding job as COO. Now, as CEO, he's changed some of Apple's processes to fit his style. Steve relied on small teams. Tim, on the other hand, now cross-coordinates large teams when designing and building new products. These teams have a long term focus on financial discipline.

Steve had the vision. Tim made it happen. I think Tim had the insight of seeing the operational mistakes Steve made. This weekend showed that Apple is still plagued by the same high-quality problem. They simply can't make enough of their products. But, only time will tell if Tim can succeed Steve. The success of the  Watch will be a crucial indicator.

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