All of this recent talk about Steve Job’s health has got me thinking back to a team paper I helped write in Business school.
We concluded that if Job’s stepped down at CEO, it could have extremely strong signaling value to investors and customers, because it would prove Apple is on the right path and could do OK without him. In effect, we became convinced that Apple and Jobs are not one trick ponies, and that there are strong reasons why that company will continue on the path to greatness.
For some business babble about why this could be true, read on.
First, A Strategic Analysis
Apple.com is not just a one man show. Our research showed the company appears to have a strong, and well-operating, internal culture that effectively rewards teamwork, creative thinking and innovation in the face of market challenges. They may not be perfect, but compared to many in the industry, they are near the top. These processes have become well-adapted to the market environment, and are internally and externally ‘consistent’ (usually a mark of a well-tuned organization and predictive of long term sustained competitive advantage.) Steve Jobs may be the origin and poster child for the company’s strengths, but our field interviews and legwork suggested that the company is not a house of cards that would fall should its leader depart. In fact, we observed evidence of strong internal systems that should allow the company to remain successful without Jobs.
Our comprehensive strategic analysis revealed Apple to have an organization and strategic position that is internally consistent and able to meet the demands of the marketplace even if its charismatic leader were to depart.
Reasons Steve Holds Things Back Slightly
IMPLICATION #1: If you accept the conclusion made previously, there could be some ways in which Steve holds his company back. The company faces a certain amount of random decision making, a cult of “Steve” and the risk that the internal process will be overruled by a strong and sometimes tyrannical CEO. Jobs’ influences may potentially prevent a few key parts of the company’s process and operations from gaining needed confidence that they are solely able to prioritize, evolve and create Apple’s success. In essence, Jobs may be an obstacle to his company’s internal maturation.
IMPLICATION #2: Main Street and Wall Street incorrectly assume that a lot of the company’s success is tied up with a cult of personality. This creates wild swings in Apple’s stock, and clouds investors capacity to understand the correct basis of Apple’s valuation. To put it another way, Job’s presence specifically as CEO creates uncertainty because the market is not able to discern which parts of Apple’s success should be attributed to Jobs. We did not run the numbers to assess a fair strategy for measuring Apple valuation, but it is clear from the behavior of the market that Job’s likely has undue influence.
Market uncertainty does not just affect share price — it affects alliances, as well as customer and supplier behavior.
Our Report’s Recommendation
Mr. Jobs therefore should try to transition his role. This act will have more of a signaling value than anything else — it will let parts of his organization step up to the plate, and allow both internal and external observers to begin to understand Apple’s strengths apart from Jobs. Meanwhile, he can still guide the company from behind the scenes, act as its evangelist on stage at MacWorld, etc.
Before you all flame me to death, bear in mind this opinion is the result of a term paper, conducted in the last semester of business school. None of us have worked for Apple, and we weren’t privy to any deep company secrets. [It might also be an appropriate time to mention that this opinion (as well as this blog in general), represents my personal opinion and not that of my employer.]