Apple's new boss is a logistics genius, but he's no Steve Jobs
Tim Cook ignored best advice and threw 'caution to the wind' to join the then struggling computer firm in 1998. Now he's stepped into the shoes of the ailing chief executive who built it into a $350bn goliath. That's a hard act to follow
Sunday 28 August 2011
Tim Cook's MBA course at Duke University in North Carolina included an exercise to produce a 25-year plan as a guide for life. That was 23 years ago and the plan said nothing about becoming chief executive of the world's largest technology company.
The new head of Apple recently found that document and admits: "It was not worth the yellowing paper it was written on.
"I did not understand it then, but life has a habit of throwing you curve balls."
The curve ball that elevated him to his new role is the deteriorating health of Steve Jobs, the 56-year-old founder of Apple who last week resigned his executive position.
Jobs – who will remain chairman of the company he founded in 1976 – is regarded as a business genius. He successfully gave PCs the mouse, created the Apple Mac, and developed the iPod, iPhone and iPad. During this month's stockmarket turmoil Apple briefly overtook ExxonMobile to become the world's most valuable quoted company. It is a hard act for Cook to follow. Toni Sacconaghi of New York brokers Sanford C Bernstein says: "Even though he is a great successor, there's an implicit acknowledgement that no-one can fill Steve's shoes".
Sports fanatic Cook, 50, and Jobs are opposites in many ways. Jobs is the classical college drop-out who bunked off to meditate in India before starting a business in his garage. Cook followed a degree in industrial engineering with the MBA and a career at big corporations. Jobs grew up in an affluent home in California; Cook's father was a shipyard worker in Alabama – an area blighted last year by BP's oil spill. "I grew up on the Gulf coast and my family still live there," says the new Apple chief, speaking to an audience at Auburn University.
While Jobs has a reputation for innovation, his successor is a number-cruncher. When he joined Apple in 1998 Cook ruthlessly cut costs, closed factories, outsourced production and slashed stock levels. "Engineers are taught to make decisions analytically and without emotion," he says. But he admits: "There are times in our lives when the careful consideration of cost and benefits just does not seem the right way to make a decision". Joining Apple was one of those moments.
"No more than five minutes into my initial interview with Steve I wanted to throw caution to the wind and join Apple," he says.
Cook had spent 12 years at IBM plus a spell as chief operating officer at Intelligent Electronics and was at Compaq when Jobs called. Jobs had returned to Apple after being ousted in 1985.
"The decision to come to Apple which I made in early 1998 was not so obvious," explains Cook. "It was very different to the Apple of today. Apple did make Macs but the company had been losing sales for years and was commonly considered to be on the brink of extinction."
Michael Dell, founder of his own computer company, said at that time that the way to fix Apple was to shut it down and return the money to shareholders. "He had the courage to say what so many others believed," accepts Cook.
Compaq was the world's leader and much healthier. "Any purely rational analysis of costs and benefits lined up in Compaq's favour. The people who know me best advised me to stay at Compaq," he says. "One CEO said I would be a fool to leave Compaq for Apple."
For once Cook shunned the logical decision. "I listened to intuition – not the left side of my brain or even the people who knew me best. I knew Apple was a once in a lifetime opportunity to work with a genius."
The old and new Apple chief executives do have some things in common though. Jobs may prefer black polonecks while Cook unbuttons his shirt collar, but they both wear blue denim jeans in the office at 1 Infinite Loop, Cupertino, California. Cook is a fitness freak as slim as his ill chairman is gaunt. And they share an obsession for detail and hard work.
Auburn University in Alabama is better known for its football team than its academics – though Wikipedia founder Jimmy Wales followed Cook there. The second sentence of its creed is "I believe in hard work", and Virginia Thompson, one of the college's trustees, says: "Tim Cook not only motivates and inspires his fellow employees, he has been known to show his Auburn pride and spirit around Apple HQ."
One anecdote concerns a management meeting at which it was decided that Apple needed someone in China. Half an hour later Cook asked Sabih Khan why he was still there. The colleague went straight to the airport without packing and bought a single ticket to Beijing.
Cook survives on little sleep and is as likely to phone staff late at night as when he rises before 5am to go to the gym. A Californian gay magazine has him high on its power list. "Those who try to achieve success without hard work ultimately deceive themselves – or deceive others," he says.
He was rewarded last year with $52m in stock options, on top of his $5m bonus and $800,000 pay. According to Joe Wilcox of US Apple watcher Betanews, Cook earned that money: "He is a logistics genius who has made Apple's manufacturing and supply chain one of the world's most efficient. He is a tactician who took risky bets pricing Apple products high, thus preserving markets and a premium brand. But he is not Steve Jobs."
Apple's share price dipped when Jobs resigned but quickly bounced back. Sacconaghi at Sanford C Bernstein says: "It is recognition of how iconic Steve Jobs is. I don't think there's a lack of confidence in the succession plan; people widely expected – almost universally expected – Tim Cook to become CEO."
Bill Kreher at US broker Edward Jones says: "Over the course of last year, investors have become more comfortable with the idea of life after Jobs. It is encouraging that he will remain with the company as chairman but the real story is that Tim Cook has emerged as a capable successor."
Jobs has been synonymous with Apple however, publicly presenting each new product to purchasing managers and the press. Cook has run Apple while his boss was ill – including a stint that began in January – but he has not displayed the founder's showmanship. However, he may have to prove his presentational abilities as soon as next month when Apple is expected to launch its iPhone5.
Selling the products emerging from Apple's pipeline could be the least of Cook's problems, however. New developments must go into that pipe to ensure Apple's future and justify a market value of $350bn that is five times last year's sales.
In its latest quarter, revenues and profits were double their level a year earlier, and the profit margin increased to 42 per cent. Some 62 per cent of sales are outside the US, and iPhone orders in the three months were 20m – half the total for the whole of 2010 – while iPad purchases jumped 183 per cent to 9.25m. But the sales growth of Macs slowed to 14 per cent and the 7.5m iPods was down by a fifth. Companies have life cycles and Apple has done well to delay the maturity stage so long.
Benedict Evans of media specialist Enders Analysis, says: "The products they have now are locked in for the next few years as they take a long time to come to fruition. So there is no immediate impact, but does Apple require periodical inputs of genius to keep it going? The challenge will be not next year or even in five years; it will be when there is the next strategic disruption in the sector."
Cook may well be the right man to run Apple, but the fruit is likely to have a different flavour.
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