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Cook Aims to Provide Jobs’s ‘Gravitational Force’ at Apple

Thursday, 25 Aug 2011 06:53 AM

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’s taking the reins from Jobs. During his 13 years at Apple, the 50-year-old Cook has mastered an expanding list of operational roles, including manufacturing, distribution, sales and customer service. The thing he has not shown is whether he’s 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.

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

‘Father Knows Best’

“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 Inc.’s Android has emerged as the biggest smartphone operating system, bolstered by HTC Corp., Samsung Electronics Co. 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.

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.

Inspirational Manager?

“He’s a very competent corporate manager,” said Apple investor Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati, which oversees $14.8 billion in assets. “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.”

Safest Choice?

There weren’t any realistic candidates for CEO 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 now works as a managing director at Elevation Partners in Menlo Park, California.

“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’s 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, now the chief executive officer of tickets search engine FanSnap.com. “They are both perfectionists.”

‘Energy Bars and Caffeine’

Janes recalls long meetings combing through sales data, with Cook powering himself with “energy bars and caffeine.”

“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’d 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.

Cook is from Robertsdale, Alabama. He calls home every Sunday to talk with his parents, who still live in the area, according to an interview they did in 2009 with local television station WKRG. Other than Apple, his passions including biking and Auburn University sports.

Long Hours

He’s typically found working long hours at the company’s headquarters or traveling around the world to meet with suppliers and manufacturers, Janes said. Cook led the company’s negotiations with Verizon Wireless to bring the iPhone to that carrier in the U.S. this year.

“He’s always on a plane, on the phone or online with somebody on the team or a partner or a customer somewhere in the world,” Janes said.

In fiscal 2010, Cook made $59.1 million, which included $52.3 million in stock awards after running the company while Jobs was out on medical leave. Jobs, who has battled a rare form of cancer, left Cook at the helm in the first half of 2009. Cook built confidence with investors during that stint, when the shares climbed about 70 percent.

Cook and Jobs were introduced in 1998 in Palo Alto, California. Cook was an executive at Compaq and a recruiter, Rick Devine, introduced him to Jobs as a candidate to lead an overhaul of Apple’s global manufacturing operation, said Devine, a former partner at Heidrick & Struggles. Devine said he could tell Jobs liked Cook by how enthusiastically he was talking about the future for Apple, which then wasn’t sound financially.

‘Best Hire’

Years after hiring Cook, Devine ran into Jobs in an elevator at Apple’s headquarters.

“Tim Cook is the best hire I ever made,” Jobs said, according to Devine, who has since founded the Devine Capital Partners recruitment firm.

Jobs told Businessweek that after previous operations chief James McCluney left in 1997, he had a hard time finding the right person to fill the role.

“I couldn’t find anyone internally or elsewhere that knew as much as I did -- so I did that job for nine months before I found someone I saw eye to eye with, and that was Tim Cook,” Jobs told Businessweek in 2000. “After Tim came on board, we basically reinvented the logistics of the PC business.”

In addition to overhauling the company’s supply chain, Cook also has led the company into new markets. Sales in China reached $3.8 billion last quarter, up sixfold from a year ago.

Management Team

To maintain its streak of innovations, Cook will have to lean on a corps of executives. Jonathan Ive oversees a staff of product designers that is considered among the best in the world. Scot Forstall leads development of Apple’s mobile software. Bob Mansfield runs hardware engineering, and Peter Oppenheimer is chief financial officer. The executive team, which often meets on Monday mornings to receive sales updates and discuss strategy, has been together for years.

“The team here has an unparalleled breadth and depth of talent and a culture of innovation that Steve has driven in the company,” Cook said in January. “Excellence has become a habit.”

Companies such as Nike Inc. and International Business Machines Corp. have thrived without their iconic leaders, said John Connors, a venture capitalist at Ignition Partners and former finance chief at Microsoft Corp. He and Cook sit on Nike’s board, which oversaw the retirement of CEO Phil Knight.

“The good Lord created one Steve Jobs, but he only created one Phil Knight and Nike is still an enormous success,” Connors said. “I am sure the world will see in the next several years that Tim is a very uniquely gifted guy and Apple will be wildly successful under his leadership.”

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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...
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