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New CEO aims to be ‘gravitational force’ of Apple

By Adam Satariano and Peter Burrows
Bloomberg News / August 26, 2011

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SAN FRANCISCO - Steve Jobs had a theory about what makes some technology businesses succeed while others fail.

“Lots of companies have tons of great engineers and smart people,’’ Jobs told Businessweek in 2004. “But ultimately, there needs to be some gravitational force that pulls it all together. Otherwise, you can get great pieces of technology all floating around the universe.’’

Tim Cook, Apple Inc.’s chief operating officer, will have to fill that role now that he is taking the reins from Jobs. During his 13 years at Apple, Cook, 50, has mastered an expanding list of operational roles, including manufacturing, distribution, sales, and customer service. The thing he has not shown is whether he is a product visionary.

“The quintessential differentiator between Steve Jobs and everyone else is the sheer tenacity and commitment to perfection - the willingness to move mountains to get the right thing,’’ said Gadi Amit, founder of NewDealDesign, an industrial design firm in San Francisco.

Cook said yesterday in a message to employees that Apple is not going to change.

“I cherish and celebrate Apple’s unique principles and values,’’ he said in the memo. “Steve built a company and culture that is unlike any other in the world, and we are going to stay true to that - it is in our DNA.’’

While Cook was Jobs’s choice for successor, he has not demonstrated whether he can rally the company’s about 50,000 employees as effectively as Jobs, who steered Apple into industries as varied as cellphones, music downloads, and retailing.

“One of the costs of having a heroic leader is that problems get kicked upstairs,’’ said David Bradford, professor emeritus at Stanford University, who has studied management changes. “When father knows best, that’s a great way to run a business.’’

Cook also faces mounting competition, in part because of Apple’s foray into new markets. Google’s Android has emerged as the biggest smartphone operating system, bolstered by HTC, Samsung, and Motorola Mobility Holdings Inc. adopting the software.

Google announced plans this month to purchase Motorola Mobility for $12.5 billion.

Investors, meanwhile, have put pressure on Apple to use its cash - now more than $75 billion, including long-term holdings - for a dividend or stock buyback. The shares declined $2.46 to $371.99 yesterday Nasdaq Stock Market trading.

Cook’s operational skills have served as the backbone of Apple’s expansion since he joined the company from Compaq Computer Corp. in 1998.

His inventory management skills allowed Apple to sell iMac computers in a broad palate of colors instead of just beige.

The company keeps up with demand for its iPods, iPhones, and iPads, with new products delivered to the customer’s doorstep often in less than 48 hours.

“He’s a very competent corporate manager,’’ said Apple investor Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati. “People are going to be looking for that crack of weakness, and they’ll be looking at him a lot closer than they look at Steve.’’

Following Jobs’s resignation, Apple’s board pledged support for Cook.

“The board has complete confidence that Tim is the right person to be our next CEO,’’ Art Levinson, a director, said in a statement on behalf of the board. “Tim’s 13 years of service to Apple have been marked by outstanding performance, and he has demonstrated remarkable talent and sound judgment in everything he does.’’

There were not any realistic candidates for chief executive other than Cook, said Fred Anderson, who served as chief financial officer until 2004 and briefly led the company before Jobs took over in 1997.

“He knows the soul of Apple, and he makes the trains run on time,’’ Anderson said. “It would be very risky for the board to go outside unless they had a real superstar, and I don’t know of anybody.’’

Cook led the company when Jobs was out during his three medical leaves since 2004. Though he is a counterpoint to Jobs’s more emotional personality, the men are two sides of the same coin, said Mike Janes, who used to run Apple’s online store. Both are demanding leaders with an attention to detail.

“Despite their style differences, their intensity is basically equal,’’ said Janes. “They are both perfectionists.’’

Janes recalls long meetings combing through sales data.

“It is because of Tim that I had to get reading glasses - he has a fondness of spreadsheets with the smallest fonts possible to get the most columns of data on one page,’’ Janes said. “There’s an old saying that you can’t manage what you can’t measure. That’s very much the philosophy that he adheres to, sometimes to the chagrin of his direct reports.’’

In a 2009 commencement speech at his alma mater, Auburn University, Cook said the best decision he had ever made was agreeing to join Jobs at Apple in 1998.

“It’s enabled me to engage in truly meaningful work for over 12 years,’’ he said.