Yesterday Steve Jobs announced that he is taking a leave of absence as CEO of Apple until at least end of June. Apple shares fell 7%. Why? Investors’ confidence in the company is heavily based on Steve Jobs’ unique ability to envision new consumer products and drive innovation, R&D, and marketing to drive them to market. As most Apple followers know, Jobs has established the Mac, iPod, and iPhone as some the world’s most exciting and sought-after products in consumer electronics.
Apple's situation is similar to many executive transitions taking place in corporations today. A company built around a single CEO cannot last forever. In fact, our research clearly shows that "enduring organizations," those that survive through tough times, take time to carefully develop succession plans at all levels – including the CEO.
The Apple situation points out the multi-dimensional role which top leaders play. While Jobs surrounded himself with a highly capable team who can certainly run the company after he is gone, how do we know that the company will continue to innovate and lead the market? We sense that Steve Jobs himself drives the passion for continuous innovation and the ability to take new technologies and "consumerize" them in a unique way.
The CEO’s role goes far beyond operational leadership. A successful CEO shapes the company’s culture, define its values, and drive the way people are managed and developed.
Tim Cook, who filled in for Jobs in 2004 when he was fighting pancreatic cancer, clearly has great business skills and long-standing tenure. His expertise in operations, manufacturing, and quality is well known. But is this enough to fill the role of the CEO permanently?
When a CEO transition occurs, there are three urgent priorities:
- retain the high performing employees;
- maintain the business's success;
- uphold the company's perceived value on Wall Street.
The latter two goals can not be realized without achieving the first one – retaining high performing employees. And what many companys take for granted is the culture created under the current CEO. If the culture shifts too dramatically, employees will begin to question their values and their commitment to the company.
What do you believe should be the key requirements in a succession plan for Steve Jobs? Tell us what you think.