Apple after Steve Jobs? Shareholders press, but the board pushes back.
With Apple founder Steve Jobs again on medical leave, shareholders vote down a resolution demanding a public succession plan, but observers say the depth of investor concern is clear.
On Wednesday, with Mr. Jobs again on leave, this time since Jan. 17, Apple shareholders voted down a resolution demanding that the technology giant create a public succession plan for the firm’s top executive. The board of directors had voiced strong opposition to such transparency about its management bench, but many with long experience in the art of “Steve-watching,” say the vote was an important indicator of the depth of investor concern, adding that the publicity around this latest organized effort to press the board underlines the importance of resolving the uncertainty about the company’s future.
Apple is a wonderful company in many respects, Professor Post says, “but corporate governance is not one of them.” Jobs's central and critical role at Apple makes the state of his health a “material fact,” he notes.
Investors buy and sell based on such information, which, he says, “puts the board in the position of having to be transparent and consistent in their disclosure policy and practice.”
Reasons to refrain from disclosure
However, there are good reasons to refrain from such a disclosure, says Patrick Maggitti, director of the Center for Innovation, Creativity, and Entrepreneurship at Villanova University School of Business.
Many strategists believe it is a good thing to have a “tournament atmosphere” among top managers, he says via email, “so they will work their hardest and perform their best as they compete with each other to gain the out-sized rewards that go to the person chosen to be CEO.” From this perspective, he adds, those not chosen will either not work as hard or will seek opportunities outside of Apple.
Additionally, in a world where perceptions can drive a company’s value up or down in a matter of minutes, he says, establishing a succession plan at this point may also serve to validate rumors regarding the seriousness of Jobs's health problems. So the decision to announce a succession plan might drive Apple's stock down, he points out.
Such a corporate culture of privacy begins at the top, says Carmine Gallo, author of “Insanely Different Principles for Breakthrough Success,” who points out that Jobs is a very private person.
“He may have taken the mantle for one of the world’s most reclusive CEOs,” he says, which influences the culture of the entire company. “The lack of transparency starts with that attitude.”
'Think like Steve'
Add to that an obsessive desire within the company to “think like Steve,” he says, and you can understand why the company does not embrace what many might consider a standard management move of publicly anointing a successor for the top post.
Far from shaking the influence of their founder, the legions of Jobs acolytes within the firm seek to emulate his vision. And of course, the company is heavily invested in sending the message that the vision will endure beyond Jobs’s presence.
“He set a gold standard … for simple, elegant design that delights the user,” says Mr. Gallo. Thinking like Steve is the creative heart as well as the financial engine of the company’s future, he adds.
Therein lies the rub for companies created by a charismatic founder, says Prof. Joel Goldhar of the Stuart Graduate School of Business at the Illinois Institute of Technology. No matter how deeply the culture has been infused by its original leader, eventually the company either moves on or closes its doors.
Professor Goldhar points to one of his favorite examples of a highly creative and influential company founder, ad executive Leo Burnett.
“The company even published a little book of Leo’s rules,” he says with a laugh. And for 20, even 30 years, many people said Leo ruled that company from the grave, he adds. But, finally, “there were no more people who were trained by anyone who actually knew Leo, and the company became something else.”