Moneyball
by Michael Lewis is a must-read for anyone who likes baseball, and it's
one of the best business books of recent years.
I wish Steve Jobs a fast return to full health, but I believe there
is no good reason for him to return as Apple's CEO. Even in glowing
full health and backed by the board and top executives, the uninformed
speculation will continue. He seems to make little use of his public
role at Apple and Disney for high profile socializing, preferring to
spend his private time with his family - and no family man will subject
his wife and children to this kind of crap.
Jobs' Health
There is a lot of attempted self justification in the press by
talking about the effect of Jobs' health on Apple's share price. Almost
any talk about Apple has an effect on the share price.
The stock is a speculator's dream. It is widely held, there are a
large number of shares, the fundamentals are strong, and yet the price
moves strongly on rumor as well as news. Speculators now know that
planting a rumor about Jobs health can make them serious money. They
will look for other targets. The SEC could sensibly devote a team to
investigating who profited from the rumors and how the stories were
planted.
The measured, human response of
Walt Mossberg of the Wall Street Journal is much rarer than
the tabloid approach of
Joe 'slime bucket' Nocera in the New York Times. The latter
article does have a useful comment from a research note by Charles
Wolf, the analyst at Needham & Co., that "investors were likely to
assume the worst". This is because Steve Jobs not being able to come
back as full time CEO will be priced into Apple stock.
The Moneyball Approach
Let's take a Moneyball approach to replacing Steve Jobs. In
other words, let's break down what he brings to Apple and see how and
when those skills need to be picked up.
As stated in his email
(reproduced below), Jobs plans "to remain involved in major strategic
decisions" while out, so not all of this has to be sorted immediately.
Mike Abramsky (analyst, RBC) is concerned about the strength of the
executive team and downgraded the stock, stating, "Jobs is widely
viewed as Apple's chief innovator, dealmaker, leader, deeply involved
in minute decisions, inextricably tied to Apple's brand."
Much of this is perception. When Jobs came back to Apple, it needed
a hero. How else would it get positive press? In Steve Jobs, who
founded Apple, made it successful, and then engineered bringing it back
from near death, the journalists have one. However, a hero in business
isn't just about one man slaying a dragon; he needs great lieutenants
who share his priorities.
Clearly they believe in the importance of detail. Otherwise they
wouldn't be able to stand working with a perfectionist like Jobs, let
alone deliver what he wants. Over time this becomes part of the DNA of
the company, and the need to be "involved in minute decisions" -
arguably essential in a company facing extinction - becomes less and
less.
Steve Jobs at Pixar
From Pixar it can be seen that with the right people in place, they
are trusted to deliver. Even though Jobs controlled Pixar by holding a
majority of its shares, nobody has suggested he made the movies. He
bought the seeds of
Pixar from Lucasfilm and funded
it for 10 years before it made a profit. That required faith in his
vision of the future of computer animation and faith that he was
working with the right people.
Jobs made the crucial deal with Disney to distribute Pixar's movies
when it was in the middle of an animation hot streak of its own. He
renegotiated the deal after two successful films and finally sold Pixar
to Disney, making far more than he has from Apple. Yes, his role was
crucial, but everyone accepted that the creative talent was elsewhere
in Pixar. This is why John Lasseter and Ed Catmull run Disney Animation
while Jobs sits on the Disney board.
Leaders at Apple
Apple clearly has at least some of the right people in place too or
it wouldn't be the industry leader in so many important areas:
- Better supply chain management than Dell or anyone else in the
industry. This is down to Tim Cook and his team.
- iTMS - near seamless ramp up to 2 billion songs per year, 500
million apps sold in the last 6 months. Eddie Cue and his team.
- Product design - but they do have the great advantage of designing
for one man, Steve Jobs, not a committee. Jonny Ive and his team.
- Retail - record ramp up of sales, sales per square foot etc. Apple
is generally recognised as a retail industry leader. Ron Johnson and
his team.
With time, the strength of this executive team will become better
known.
In some ways, Phil Schiller has the hardest act to follow.
Steve Jobs is easily the best at product launches. He is great at
putting on a show for journalists. If you want to compete for the
hearts and minds of consumers, you need to wow them. I suspect this is
part of his makeup. After the launch of Lisa in Paris, an old friend was flying
back with the representative of the English General Electric, who was
talking about the number of DEC minicomputers he could replace. Over 25
years ago, the Reality Distortion Field was in place.
The Future of Steve Jobs at Apple
I can't think of anyone else who could have persuaded the heads of
the major music companies to license content to a startup internet
distributor as the iTunes Music Store was. Nor is there anyone else who
could have persuaded Cingular (now AT&T) that it should part with a
slice of its monthly customer revenue so it could be the exclusive US
distributor of a phone it hadn't seen.
Deals like these show Jobs to be a master dealmaker at the top of
his game, but these are not everyday deals. Jobs could easily handle
these, if he chooses and is well enough, as Chairman of the Board. The
new distribution deals for the iPhone are already sorted out by Tim
Cook's team.
Although he may be looked on as "chief innovator", it is his vision
of the paths worth following that counts. In any company, resources are
constrained, and for a project to succeed, it needs focus. The iPod was
brought in from the outside but has been continually refined and built
out. Indeed, for as long as he is involved with Apple, I expect Jobs to
be discussing designs with Jonny Ive and hardware engineering - but he
could still do this as Chairman of the Board.
The next six months can be treated as a transition period, a time to
change perceptions. If Steve Jobs doesn't go into Apple every day and
more and more of the external communications are done by others, the
state of his health will be less and less of a story. Whatever role he
chooses, paying him $1 a year plus health benefits will be good
value.
Tim Cook is the new iCEO, but in the same way that John Lasseter
doesn't need to be Walt Disney, Cook doesn't need to be Steve Jobs now
or in the future. 
