Friday, August 26, 2011

What Steve Jobs Did Well

I guess I should join the chorus of commentators eulogizing Steve Jobs' tenure as CEO of Apple.  Regardless of what you think of Jobs or of Apple products, you cannot deny that Jobs created substantial wealth for Apple shareholders, as well as for a slew of customers and suppliers.  Many of the latter would not even exist were it not for Apple.  There is an excellent op-ed in the WSJ today extolling Jobs' virtues as a man who created his own markets.  This, I think, is one of his greatest strengths.  He was not an inventor of much, but he was an innovator in that he could take new technology and find a way to make it palatable, even cool, to the everyday consumer.  This allowed him to reap economic profits from industries that had become commoditized for all his competitors.  He realized that he wasn't selling computers, he was selling a lifestyle.  This realization allowed him to expand from computers into MP3 players, phones, tablets, etc., because he was just bringing the value proposition he offered to a wider range of vehicles.  He has been compared to Thomas Edison in recent days, and I think that is fairly apt.  At least, it is in the sense that Jobs' genius was not in inventing technology, but in finding ways to market technology (and I don't just mean advertising) so that it would really add value to people's lives.

I had previously written that I thought Jobs had done a terrible job of preparing his organization for his eventual exit.  I believe this was true when he took medical leave in 2009, but I no longer think so.  Since then, he has groomed the new CEO, former COO Tim Cook, for the job.  Cook has effectively been running Apple since Jobs took on a diminished role in January.  This has eased the transition, and allowed the incoming CEO to hit the ground running.  The market knows Cook, the employees know Cook, and I think that Jobs will be effective in his new role as Chairman, providing some of his ingenious marketing insights, but otherwise staying out of managing the company.  As evidence of Jobs' effective succession planning, note that even though Apple's stock price dropped 5% in after-hours trading when the succession was announced, by the time trading opened the next morning, that drop had been cut in half.  That's as it should be.  A good leader prepares for his eventual exit so that the organization barely notices when he bows out.  Clearly everyone noticed, but I think that the questions about Apple's future will soon abate.  This is all the more remarkable given the suddenness of Jobs' announcement.

So, here's to Steve Jobs, a man who in the last decade and a half created, out of nothing, roughly $350 billion in shareholder wealth.  Not a bad track record for a career.

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