Apple without Jobs: Who's next?
'Frustratingly obtuse' succession plans
Analysis Steve Jobs has stepped away from his daily duties as Apple CEO, and by doing so, the famously-private tech kingpin has ignited rumors and speculation about his future with the company – and of the company's future without him.
Jobs' just-announced medical leave of absence is his third. The first began when he revealed in August of 2004 that he had undergone an operation to remove a cancerous tumor from his pancreas. The cancer was of the islet cell neuroendocrine type, and not the incurable adenocarcinoma variety. Apple COO Tim Cook took over for Jobs, managing day-to-day operations until Jobs returned to his Cupertinian duties that September.
In early January 2009, after telling the world the previous month that he wouldn't be presenting his traditional Macworld Expo keynote, Jobs released an open letter to the "Apple Community" in which he blamed a "hormone imbalance" for his weight loss, which was becoming apparent to even the most casual observer.
A week later, however, Jobs announced that he would take a leave of absence, saying that his health problems were "more complex" than previously thought.
Again, Cook took the reins, with marketing headman Phil Schiller filling in for Jobs at public appearances and product introductions.
In late June 2009, the internet buzzed with reports that Jobs had a liver transplant sometime in April – a fact confirmed days later by a spokesman for the Methodist University Hospital Transplant Institute in Tennessee, where Jobs received the transplant.
Jobs returned to work on a part-time basis at the end of June, and made his first public appearance in September at a roll-out of new iPod models, at which time he said that his new liver was from a young adult who had died in a car crash.
"I'm vertical, I'm back at Apple and loving every minute of it," Jobs told his cheering admirers at that event.
Since his return, though, Jobs has appeared increasingly frail. One unconfirmed report by a Reg reader who told us he had spotted Jobs in public, noted that he required help walking. On Monday, The New York Times cited an unnamed source who said that Jobs was coming into the office only about two days a week, and that he appeared "increasingly emaciated."
And now Jobs has again stepped away from the daily grind of running the world's second most valuable public company (in market capitalization terms), and again put Cook in charge.
"I love Apple so much and hope to be back as soon as I can," Jobs wrote in an email to Apple staff on Monday. "In the meantime, my family and I would deeply appreciate respect for our privacy."
When announcing his two previous leaves of absence, Jobs had indicated a date of return. Tellingly, this most recent announcement included no such surety, only "hope".
As a private citizen, Jobs most certainly deserves the privacy he requests. As the CEO of Apple, however, opinions differ as to how much information he is required to provide to investors about the severity of his condition.
"In this day and age, shareholders want to know everything," one former Security and Exchange Commission lawyer, Jacob Frenkel, told Bloomberg. "As a practical matter, in terms of Mr. Jobs’s personal health condition, they're entitled to know very little."
A former GE general counsel, Ben Heineman, disagreed, writing in The Atlantic's blog: "Under the securities laws, companies are required to disclose material information: usually defined as any information that would influence an investor's decision to buy or sell securities."
Heineman faults the SEC for not making clear what it means by "material", but concludes: "The SEC, which has been reluctant to promulgate rules on disclosure of CEO illness, should do so now. The latest secrecy by Jobs is not tolerable. And Apple, if it wishes to retain the loyalty of thoughtful (not emotional) shareholders, should also disclose the condition as a matter of basic principle regarding sound and fair investor relations."
The SEC, by the way, launched an investigation of Jobs' reluctance to give more health details during his 2009 absence, but failed to either report on that effort or clarify its guidelines on executive health disclosures.
One Apple investor, the Central Laborers' Pension Fund of Jacksonville, Illinois, holder of 11,484 Apple shares, isn't waiting for SEC clarification. Apple's proxy statement of January 7 of this year notes that the Fund has placed before Apple's stockholders a proposal to be voted on at next month's investors meeting that would require Apple to detail its succession plan.
That proposal reads, in part, "Resolved: That the shareholders of Apple ... hereby request that the Board of Directors initiate the appropriate process to amend the Company's Corporate Governance Guidelines to adopt and disclose a written and detailed succession planning policy."
As might be expected, Apple's board of directors has recommended that shareholders vote that proposal down: "The Company recognizes that a highly talented and experienced management team, not just the CEO, is critical to Apple's success. Accordingly, the Board already implements many of the proposed actions and maintains a comprehensive succession plan throughout the organization."
Apple's board has a plan. They simply don't want to make it public. "The Company takes succession planning seriously," the proxy statement says, "and the Board has adopted a comprehensive process to ensure continuity and maintain the superior quality of its management team."
Should Jobs not return, his most likely replacement, it appears, would be Cook. During Jobs' 2009 absence, Apple's stock value rose about 70 per cent – a fact that is certainly not lost on either Apple's board or its investors.
Beyond Cook, however, Apple's management team doesn't include another obvious contender. Although Schiller was a more than capable stand-in for Jobs when announcing products and leading the faithful in morale-boosting events, it's unlikely that he has the technical prowess to lead the company in product planning or the operational expertise to manage day-to-day operations.
Famed product designer Jonathan Ive is certainly a visionary when it comes to creating highly marketable and iconic hardware, but his capability as a corporate leader is unknown.
The man behind the meteoric rise of iOS, Scott Forstall, may have the technical chops to inspire Apple's software engineers, and Apple's hardware honcho Bob Mansfield would command respect from the nuts-and-bolts crew, but neither have Cook's day-to-day operational experience and successful track record.
And then there are the ones that got away. Avie Tevanian and Jon Rubinstein, for example, both of whom joined Apple from Jobs' previous company, NeXT, in February 1997, and both of whom left in March 2006.
Tevanian was the brains behind the Mac OS X team. He was elevated to chief technology officer in July 2003, at which point Bertrand Serlet – another ex-NeXT employee – took over as head of software engineering.
Tevanian may not have had the managerial chops to have ever taken over as Apple CEO, but an argument could have been made for Rubinstein – if he had remained at Apple.
Rubinstein was famously the father of the iPod, and he shepherded the development of the company-saving iMac, a process during which he acquired a reputation as an efficient manager.
After leaving Apple, Rubinstein took over at Palm, where he managed the development of that company's ill-fated Pre smartphone and the phone's operating system, webOS.
If Jobs is involved in picking his successor, however, don't expect him to give Rubinstein a call. Last November, when asked if Jobs was miffed when his former hardware headman had joined competitor Palm, Rubinstein answered: "I'm definitely off the Christmas list."
It may be premature to speculate about Jobs' replacement – he may very well again have the opportunity to tell an admiring crowd "I'm vertical, I'm back at Apple" – but it's not at all too early to conclude that with his latest medical leave, Apple will be under pressure to be more open about their succession plan – one that The Wall Street Journal has referred to as "frustratingly obtuse."
The inside track for the position of Apple's next CEO belongs to Tim Cook – that is, unless the board of directors pulls a Larry Ellison and brings in an experienced outsider such as Ellison did with Mark Hurd, late of HP.
eBay's ex, Meg Whitman, for example, is available. After all, she flopped in her most recent job interview. ®