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After Jobs, questions about Apple’s future

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By Hiawatha Bray
Globe Staff / October 7, 2011

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With his death on Wednesday, Apple Inc. cofounder Steve Jobs left behind one of the most successful businesses on earth, but it’s an open question whether the company’s extraordinary winning streak can continue in the absence of its iconic leader.

When a company is so closely identified with its chief executive, that leader’s death could potentially be catastrophic for the business. Jobs, though, knew for seven years that he was struggling with life-threatening pancreatic cancer, and used the time to plan for Apple’s future.

“One of his great legacies will have been to always build a great, sustainable company,’’ said Harvard Business School professor of management practice Robert S. Kaplan.

But for Apple to thrive without Jobs, it must adopt a more open, less hierarchical management style, said James Post, a professor at the Boston University School of Management. Post criticized the notorious Jobs penchant for secrecy, which for years kept investors largely in the dark about the Apple chief executive’s health and the company’s succession plans. The Apple board of directors should have challenged Jobs’s actions, but rarely did, according to Post.

“There was really pretty poor corporate governance,’’ he said. “There was a board that was dominated pretty much by him.’’

Jobs isn’t the first legendary corporate leader to leave behind nagging doubts about his successors. Similar questions arose after the deaths of McDonald’s Corp. founder Ray Kroc, Wal-Mart Stores Inc. founder Sam Walton, and other executives that seemed inseparable from the businesses they led. Some of those companies, like Wal-Mart and McDonald’s, continued to thrive beyond the tenure of their famous leaders, while others faltered.

Apple has already experienced life without Jobs. Kicked out of Apple in 1985, Jobs was recruited back to save the company in 1997. Not only did Jobs return, but his rescue turned him from goat to hero. It was then that he began the winning streak of iconic products that transformed Apple into a $350 billion consumer electronics behemoth.

At the coffee chain Starbucks Corp. , founder Howard Schultz retired as chief executive in 2000, but came back in 2008 after the company stumbled. He did lead a successful revival of the business, although not quite on the same scale as Jobs at Apple.

One example of a business leader who planned well for his 1988 departure was Wal-Mart’s Walton, according to BU’s Post. “He had a trusted person who followed him as CEO, and they had systems in place, and they were able to continue the Wal-Mart juggernaut,’’ Post said.

Consider the difference between McDonald’s continued success after Kroc’s death in 1984, and the fortunes of rival fast-food chain Wendy’s International Inc., which faded after the 2002 death of Dave Thomas, the charismatic founder who often appeared in the company’s TV commercials. “They never really got back on track’’ after Thomas’s death,’’said Post. “That left a huge void in the company, and that’s the kind of void we’re likely to see at Apple.’’

Harvard’s Kaplan was far more optimistic about the prospects for Apple, citing the way Jobs carefully groomed executive Tim Cook, who joined the company 13 years ago, to be his successor. Cook filled in for Jobs when the latter took leaves of absence to address his health problems, and took the chief executive position when Jobs stepped down in August.

During Tuesday’s unveiling of Apple’s new iPhone 4S smartphone, Kaplan noted, Cook shared the stage with several of the executives who will now lead Apple, including Scott Forstall, who oversees Apple’s mobile software development, Eddy Cue, senior vice president of Internet software and services, and Boston College graduate Phil Schiller, vice president of worldwide product marketing.

Kaplan said that was a subtle message to the world that Apple has a deep pool of talent capable of carrying on without its charismatic cofounder. In a sign of market confidence in the company’s prospects, Apple shares lost only 88 cents yesterday to close at $377.37 on the Nasdaq Stock Market.

The 1985 ouster of Jobs from Apple, engineered by then-chief executive John Sculley, taught Jobs the crucial importance of promoting leaders from within, said Kaplan. Jobs himself had recruited Sculley from soft drink maker PepsiCo Inc. Later, “he realized that’s a very risky thing to do,’’ Kaplan said.

After his return to Apple, Jobs took pains to promote and groom talented veteran staffers who were steeped in the company’s traditions. “I’m impressed with Apple’s products and with Steve Jobs,’’ Kaplan said, “but as a leadership professor, I’ve been particularly impressed by how they develop talent.’’

The succession plans of other high-profile corporate chieftains may draw more scrutiny from investors in the wake of Jobs’s death.

Warren Buffett, chairman of conglomerate Berkshire Hathaway Inc. , long said that he would continue to work until he is incapacitated or dead. Now 81, Buffett says that a plan is in place to replace him.

Last month, Buffett named hedge fund manager Ted Weschler to help manage the company’s investment portfolio.

Weschler joins Todd Combs, another hedge fund manager who was assigned similar duties last year.

Both men are considered prime candidates to succeed Buffett.

“He may the oldest CEO in this country,’’ Kaplan said of Buffett. “If you have the luxury of being a CEO at that age, you need to be clear to people. And he’s done that, and he’s done it well.’’

Jobs brought as much focus to the unglamorous and difficult problem of succession as he did to the design of the iPhone or iPad, according to Kaplan.

“This is something that great companies worry about and great CEOs worry about,’’ he said, “for good reason.’’

Hiawatha Bray can be reached at bray@globe.com.