Potential pitfalls in Apple CEO transition, say experts

Steve Jobs, Apple's new Chairman of the Board. Apple's new CEO faces a challenge putting his own imprint on the company as long as Steve Jobs sticks around, a management expert said today.

Jobs, who resigned from the CEO spot yesterday, was immediately given the title Chairman of the company's board.

On Thursday, Apple named Tim Cook, formerly the chief operating officer, as the new CEO.

"It's going to be extremely difficult for the new CEO to go his own way and succeed in a context like this," said Peter Cappelli, a professor at the Wharton School and the director of its Center for Human Resources. "It's going to be difficult [for Cook] to do anything different with Jobs as chairman."

It's unclear what Jobs' role will be as chairman, but reports yesterday and today, including from long-time Apple observer Walt Mossberg of the Wall Street Journal, hinted that Jobs will continue to be involved in product development.

Most transitions of this kind -- when a CEO moves to the chairman role and a new CEO is appointed -- are fraught with trouble, but Apple is a special case, Cappelli said, because of Jobs' iconic stature in the industry and his perceived value as the firm's product development guiding hand.

"Every former CEO who becomes chairman says he will intervene only when it's something important, but then decides all kinds of things are important," Cappelli said.

If Jobs regularly overrules Cook, that puts the new CEO in a tough position, Cappelli continued. "Replacing someone like Jobs is a regression to the mean," he said. "There's no way to go but down."

Most, however, see Jobs' decision to remain with Apple, if only as its chairman, as a win for the company.

Today, for example, investors took Jobs' retirement in stride, with the news pushing Apple's stock down less than 1% by late afternoon during a day when the market overall was off 1.3%.

That was a minor blip compared to the nearly 11% drop Apple's stock experienced in October 2008 after a false report that Jobs had a suffered a heart attack made the rounds on the Internet.

And analysts yesterday were nearly unanimous that Apple is in great shape for the next two or three years -- or even longer -- simply because of the product road map that Jobs laid out before Wednesday.

Cappelli tacitly acknowledged the value of Jobs' remaining active with Apple. "The trick for them going forward is to persuade customers that they have enough of the Jobs' fairy dust even if he's not physically in the role of CEO," said Cappelli.

Michael Robinson, a senior vice president at Levick Strategic Communications, a Washington, D.C. consulting firm, pointed to other pitfalls in the transition to a new CEO.

"This is a change without parallel in business," Robinson argued, citing Jobs' reputation as the personality that drove Apple. "What Apple wants to avoid here is any sense of confusion or panic at the change. They need to avoid any perception that this wasn't something that was not long planned. They want to make this seem like a plan in a box."

Apple can do that by keeping to its schedule and keeping quiet, something the company is notoriously good at doing.

"There should be a relative period of radio silence," Robinson advised. "Get rid of the corporate noise and let the products drive the news cycle. The best thing they can do is consider [the transition] over and done with and move on to news to drive more sales, like the announcement of the next iPhone."

To Robinson, Apple has done a good job so far handling the transition news by keeping its announcement of Jobs' resignation short and sweet. "They need to remind everyone that all is on schedule, that there's nothing to see here, move along. They've made a good first step under the circumstances."

Robinson also saw little to lose by Apple appointing Jobs as its new chairman.

"It's going to be largely up to him to define [his new role]," said Robinson. "He may best serve the company and customers by not having a formal management role [because] his talent wasn't in operations, but in understanding the creative and being the company's visionary."

Robinson said that other former CEOs have gone that route, including Bill Gates, who when he erased "Chief Executive" from his business card, replaced it with the created-just-for-him title of "Chief Software Architect."

"Who cares what title he has," Robinson added, talking about Jobs. "It's his ability to have input into product development that will be important."

But Robinson saved his loudest praise for Jobs' timing. "Give Jobs credit for saying, 'I gotta go.' Most people do not go gentle into that night."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His e-mail address is gkeizer@computerworld.com.

See more articles by Gregg Keizer.

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