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Jobs Resignation Reignites Succession Debate

The business world will shortly learn whether there is something called the “indispensable man,” as Apple navigates in a new post-Steve Jobs world. Few leaders are as closely identified with their industry, let alone their company, as Apple’s Steve Jobs. But what happens following his departure as CEO will reveal his true legacy.

The resignation of Steve Jobs from Apple after 14 years, when he returned to the company he co-founded, marks a milestone for both technology and company leadership. Jobs has been battling a rare form of pancreatic cancer for years, forcing two sabbaticals from the company. Perhaps no other enterprise leader, save GE’s Jack Welch, has been as closely watched. The encomiums are not just flowing, they are gushing forth with the ferocity of a fire hose. He is said to be both a genius and a technology guru, having the temerity to ignore market research and push bold new products well ahead of the market and the comfort zone of his senior managers. In classic entrepreneurial style, Jobs took big risks, was passionate about his products and pushed technology beyond the expected envelope.

We will shortly learn whether there is something called the “indispensable man.” If Jobs feels his health—the widely accepted view for his resignation—is such that he cannot continue as CEO, how will he be able to pursue his duties as chairman? He has selected a highly capable successor in Tim Cook who has stepped in before during his earlier leave of absence and has been running day to day operations since the beginning of this year. How Apple will function without its guiding force will be scrutinized in great detail and will serve to keep the business school researchers busy for a decade. How a perfectionist like Jobs will handle his duties as chairman, a job that didn’t previously exist, will be interesting to watch. Cook will likely face a long “onboarding” process.

Mike Mannor, assistant professor of management at the University of Notre Dame, says “with the exception of a short term period of mourning for a great leader, this should help to usher in a breath of fresh air for Apple in the form of executive stability… Tim Cook is a proven leader who is ready to lead Apple forward. I believe this is the best thing that could have happened to Apple at this point. The reality is that Apple has had a huge cloud hanging overhead for the last few years due to the rampant speculation and uncertainty regarding Steve Jobs’ health. For a company that has defined itself on the bleeding edge of one technological frontier after another, the compounding level of uncertainty from market forces and the executive suite has become an ever present burden on an otherwise stellar firm.”

The mark of an organization’s health and of a leader’s ultimate responsibility is how well the company survives after the key leader departs. The textbook case study surely belongs to McDonald’s, which lost not one but three leaders within 18 months. Jim Cantalupo had recently retired when in early 2003 the board called him back to replace Jack Greenberg. Cantalupo himself died from heart failure and was replaced with his protégé Charlie Bell, a charismatic leader widely beloved throughout the restaurant chain, who developed cancer and died seven months later. Jim Skinner, who was tapped to replace him, was largely unknown to outsiders but turned the company around in amazingly short order and was selected Chief Executive of the Year in 2009.

The bench strength of McDonald’s was obviously of a high caliber to recover from multiple leadership changes. When Roberto Goizueta, an inveterate chain smoker, died of cancer in 1997, Coca-Cola wasn’t so lucky. Coke’s CFO, Doug Ivestor, succeeded him and then encountered turbulence over the company’s handling of tampered Coca-Cola in Belgium. Ivestor was subsequently forced to step aside and the company struggled for years to right itself.

Apple’s shares have taken a hit dropping $5 a share upon the announcement. The company will not likely face the immediate decline it suffered when Jobs was forced out of the firm in the mid-1980s, but the aimless period it endured at the time should serve as a warning. The real test will come later when we see how Cook leads his team. Cook joined Apple in 1998 and was promoted to chief operating officer in 2007, overseeing the day-to-day operations. Below him are several capable people including marketing chief Phil Schiller and chief designer Jonathan Ive. Unfortunately, the company’s former head of retail, Ron Johnson, recently departed to succeed Mike Ullman at retail giant JC Penney.

While Cook may not have the personal magnetism of his predecessor, he has had 4 years on-the-job training working loosely with Jobs and brings a “strong supply chain perspective,” to his duties says Seth Harris, EVP and managing director of the technology practice at Cook Associates, an executive search firm. “The culture cannot replace such a charismatic figure but it doesn’t have to as long as Cook maintains a steady hand and shepherds Apple’s new products to market. It will be interesting to see what happens in the third quarter of 2011 when the new products now in development such as the iPhone5 and the iPad3 are expected. Those will be judged as Cook’s,” adds Harris.

Cook will likely not be the charismatic dervish that Jobs was. But that may be the best thing for Apple. Jobs was brilliant and had a relentless drive to outperform all competitors. His habits of mind, however, have been at times mercurial and reports of his cajoling and harassing subordinates led observers to question his managerial balance. Jobs is rightfully famous for his breakthroughs and for his role in creating the disciplines that lead to these breakthroughs. He will be forever associated with the iPad and iPhone, but the question remains whether his impressive machine will outlast him and his highly personal style of leadership.

About J.P. Donlon

J.P. Donlon
J.P. Donlon is Editor Emeritus of Chief Executive magazine.