Apple = Sony

Apple will decline in the post Steve Jobs era. Here's why.

Sociologist Max Weber created a typology of organizations in his 1947 book The Theory of Social and Economic Organization. He described three categories: 1) Legal/bureaucratic (think IBM or the U.S. government), 2) Traditional (e.g., the Catholic Church) and 3) Charismatic (run by special, magical individuals).

Charismatic organizations are headed by people with the "gift of grace" (charisma from the Greek). "He is set apart from ordinary men and treated as endowed with supernatural, superhuman, or at least specifically exceptional powers or qualities." Followers and disciples have absolute trust in the leader, fed by that leader's access to nearly magical powers. "Charismatic authority repudiates the past, and is in this sense a specifically revolutionary force."

Sound familiar? Quoting from Adam Lashinky's book Inside Apple: "...Jobs made all the decisions." "He was the final arbiter on matters of taste." Lashinky points out that Apple was an entrepreneurial company, "...but its people generally are not entrepreneurs -- and they are not encouraged to be." In other words, there was one charismatic entrepreneur at the center (note Lashinsky's org chart from Fortune magazine, above) with followers connected via "...an emotional form of communal relationship" in the words of Weber, with the leader.

One of the primary challenges with charismatic organizations is succession. In bureaucratic organizations codified processes like elections yield new leaders. In traditional organizations, long-held rituals (smoke emitting from the Sistine Chapel) elevate the new head. In charismatic organizations, the magical leader must be succeeded by another charismatic -- the emotional connection of employees and (in the case of Apple) customers demands it. Apple has chosen a proven and competent executive to succeed Jobs. But his legal/bureaucratic approach will prove to be a mismatch for an organization that feeds off the gift of grace. What about Apple University, Jobs' attempt to prepare the company for when he was gone? Back to Weber: "Charisma can only be awakened and tested, it cannot be learned or taught."

Without knowing them personally, I would look to Apple executives Jon Ive or Scott Forstall to be CEO. From on far they appear to have some of the charisma and outspoken design sense to legitimately lead the company.

When Steve Jobs departed, he took three things with him: 1) singular charismatic leadership that bound the company together and elicited extraordinary performance from its people; 2) the ability to take big risks, and 3) an unparalleled ability to envision and design products. Apple's momentum will carry it for 24-48 months. But without the arrival of a new charismatic leader it will move from being a great company to being a good company, with a commensurate step down in revenue growth and product innovation. Like Sony (post Morita), Polaroid (post Land), Apple circa 1985 (post Jobs), and Disney (in the 20 years post Walt Disney), Apple will coast, and then decelerate. 

Comments

This is very wrong thinking.

This is very wrong thinking. Jobs went to great pains to instill in his management team his vision, the Apple culture and made sure they have a rich eco system to build on for generations. They also live on the mantra that says only build the best products of the category they dare to innovate in and do not stray from that. Apple has long gone past its cult status. It is now meeting the needs of a mass market audience and as long as they keep cranking out insanely great products, which Johnny Ives and team is more then capable of delivering, Apple will continue to confound its critics and competitors.

You've nailed it...

"...cranking out insanely great products" won't be possible without a charismatic running Apple. Because Jobs built walls between many parts of the company, the system won't work without a powerful and gifted person at the center -- making nearly all of the final design and strategic calls. Do you really think that the iPhone or iPad could have been designed by committee?

Apple's next generation of products will be fine -- Steve's hands are all over those products. The real test will come on the subsequent generation -- that's when the company will have to engage in true post-Steve innovation.

I disagree

Sir Jonathan Paul "Jony" Ive is very talented at fulfilling others, Steve Jobs, vision. I don't see any examples of the creative spark that Jobs demonstrated time and time again. I can't think of anyone else in the tech industry that could fill Jobs' position in full. While the culture at Apple may still innovate into the next generation, will it be the correct innovations? Time will tell. I hope so. Jobs was central to so many aspects of Apple's business, micromanaging the landscaping and deals with record companies and just about everything in between. It would take a small group to replace all these responsibilities. That would be OK, if each were so charismatic and persuasive as the late Steve Jobs.

Yep and Steve Jobs said a

Yep and Steve Jobs said a whole bunch of other things since his death and in that short timeframe, the new Apple CEO has ignored them, looks like another blind-fooled Apple fanboi. I agree with everything this blog article says. Spot on.

I agree, except for the

I agree, except for the unnecessary language to make your point. However, I do get and agree with your basic point. I have never thought Apple (Steve Jobs) to particularly that "innovative", nor brilliant. Sometimes, people/companies actually just get lucky and folks buy into it. That momentum carries them, along with the simple shills that are really cult like, and that "message" gets to many of the masses. Charisma only gets you so far... lucky, a little bit further... sooner or later- the gig is up, the curtain is pulled and the "wizard" is rather lame.

curious

I am curious then why most of the consumer tech industry has been chasing Apple since the iPod? CES every year since the iPhone has been a display of other companies trying to emulate Apple products. First they copied the phones, then they copied the tablets, and this year everyone was trying to make a Macbook Air that runs Windows (and humorously, they all had lesser specs and bigger price tags).

I will be interested to see what Apple releases for the next iPhone and next iPad. The 4S and iPad3 are exactly what everyone should have expected because it matches the previous release cycles. You guys are humorous though....you apparently think that when Apple doesn't redefine products every year then they are falling behind. And even funnier, the company that everyone (other than Microsoft at this point) is trying to copy is not innovative at all.

:)

If Apple can't innovate

If Apple can't innovate faster than its competitors, it is just a matter of time that it will lose market share.

Apple produced very good personal computers, and Sony still has "Walkman" trademark in many jurisdictions.
Being the first one to produce a new good product does not mean perpetual victory, no matter how "magical" it may be.

You're ascribing to genius

You're ascribing to genius what is better explained by hard negotiation.

The iPod was helped along greatly by the iTunes library. The music industry has essentially drawn a line in the sand and said -- iTunes will be the last time we let our content go that cheaply. Nobody has been able to match the iTunes package put together a package remotely close to iTunes since then. Not Amazon. Not Microsoft. Not Google. And those are some heavyweight companies.

The pricing of the iPad and the Macbook Air depend a great deal on squeezing suppliers. Many suppliers have stated off-the-record to industry journals that they're producing components for Apple at breakeven, or at a loss. Guess where their profit comes from? Selling the same components to other companies at a higher price!

Except for Apple, all of the other smartphone markers (except Samsung) are operating close to breakeven, or at a loss. But now look closer. The iPhone receives twice the operator subsidy as other smartphones. That difference accounts for much of Apple's profit margin.

--

Much of Apple's success is due to good engineering and design.

But their financial success comes from getting a sweeter deal than competitors. And a great deal of that comes down to Steve Jobs' negotiating savvy. Who else could've pulled off the iTunes deal? Who else could've gotten Cingular to agree to an iPhone deal that no other cellular carrier was willing to agree to?

Apple basically has had *all* the stars aligned in its direction for the past decade. But what if only half the stars align? Can Apple beat the competition on equal terms?

Because Apple never chased?

iPod is simply a digital reinvention of the Sony personal stereo AKA the Walkman. Apple added a flash to the camera iPhone 2 because users were pi55ed that other smartphones had flashes.

Apple chases just like the rest.

Why do Apple addicts have such a blindspot to their view of the world?

Eco system to build for

Eco system to build for generations?

In this post-PC age (a term used by Steve) inspiration & vision counts.

There is no ecosystem for that.

If there is, Apple won't decline after Jobs left in 1985.

Apple is an American company

Apple is an American company which was founded back in the 70s. Its estimated worth is about equal to that of Sonys but they are active on less markets. Most famous products they make are iPods, iPhones, MacBooks and the iMac. What makes this company different is their eye for design and details. Everything they make seems to be successful (except for apple tv) and as a result their annual profits are getting higher and higher.

Tech Quickens Decline

"Like Sony (post Morita), Polaroid (post Land), Apple circa 1985 (post Jobs), and Disney (in the 20 years post Walt Disney), Apple will coast, and then decelerate. "

The speed at which technologies rise in the current era ensures that Apple will decelerate faster than others mentioned on this list. Having spent the last decade building ravenous demand for their products, the first disappointment is going to hit hard. Apple will be forced to regroup in less than a year. The double edged sword of rapid product iteration cuts both ways.

This is a thoughtful post,

This is a thoughtful post, still, despite lots of compelling argument... the prediction that the number one technology company on the face of the earth is more likely to slip than move up is, with no disrespect, not exactly a visionary, counterintuitive insight.

And to say that Disney was at a loss after the death of Walt Disney is, I believe, just plain wrong. The company did flounder for a while it's true, and today many think of Michael Eisner's long tenure as CEO for for the troubles in its latter phases, but let's not forget that in the first half or more of his time at the helm Eisner oversaw the company reaching a global prominence that Walt Disney himself might have dreamt of, but certainly was never able to reach.

Again, I don't mean to be snippy, but do we really need a careful analysis of why number one might not be number one forever?

Disney...

Eisner revived the company, but that came after 20 years of difficulties following the death of Walt Disney. Which is why, in my post, I stated "...for the 20 years post Disney"

Disney is an interesting example for Apple. Weber does write about the transition of a company from charismatic to bureaucratic/legal. This is a potential path for Apple, but it may take more than a decade to navigate that transition.

WWWD?

I joined Disney in 1983 when Ron Miller was on his way out and "Trenchcoat" marked the studio's latest box-office flop. “What Would Walt Do” was the creative/business mantra holding everyone back – until Eisner, Frank Wells, and Jeffrey Katzenberg performed the CPR necessary to resuscitate the company.

In the true spirit of thinking different, Apple should be asking itself "What WOULDN'T Steve Do?"

"the number one technology

"the number one technology company on the face of the earth"

Oh my... so many, too many 'number ones' have come and fell, and quite a few have *disappeared*.

The iPad will be apples

The iPad will be apples biggest product of all time. It is 10 times more valuable than the iPhone. That will at least take 5 years to play out. Then they will release macbooks and iMacs that are touch. Computers that are better than the competition, maybe not by as clear a gap as in the past, but everyone who has bought an iPhone or iPad will consider it. They have retail store in malls, they have shops in China, they are not going anywhere. This type of article and many of the comments are so presciently dumb, in true analysis ape style. Take the most obvious answer from history and apply it to the future. The future will be more than that.

Ahh remember Palm?, or when

Ahh remember Palm?, or when every employee was carrying a Blackberry? These inventions weren't 20-30 years ago, it was merely 4-5 years ago. Every company has it's day in the sun. The iPad will not be Apple's biggest product of all time, because Windows 8 will ARM will ship within the next 12 months and it will hurt Apple. Windows is like 90% of the PC market (1 billion installations). oh btw, Samsung sold more smartphones this quarter than Apple.

Palm & RIM

They died because they stopped innovating (and I was a an early Palm fan). They rested on their laurels. I don't think Apple will do this.

As for Win 8 I think we'll all have to see how successful they are at making ONE OS work on both a mouse-based input (PCs) and touch-based input (tablets) -- AND how the apps behave in these two different environments. It's not as simple as just getting the OS to run on a portable device as Microsoft had Windows on tablets for years before iOS. It was a failure. That said it's very possible MS will give Apple a run for its money. As an iOS user, I WELCOME IT. Competition keeps everybody hungry!

"Microsoft had Windows on

"Microsoft had Windows on tablets for years before iOS. It was a failure."

Perhaps, a failure in sales and profitability. Although, I see the Windows tablets as being under marketed and ahead of their time. Microsoft has one of the worst advertising/marketing departments/agencies I have ever seen in such a wealthy company. Microsoft, in many ways, is a prime example of "coasting" and milking fat juicy cash cows. However, don't count them out quite yet. As Apple has shown- a lot of people love being simple and being led, many folks love technology but not really understand it nor want to. So many "tech enthusiasts" around now, but not true geeks... geeks don't really use Apple products. Hello, Windows 8. It can be simple and geeky... and cross hardware and platforms. I think the real fight is just beginning, and even Apple owners should be happy about that... a real "tech enthusiast" would be.

i grant that MS was probably

i grant that MS was probably ahead of their time, hardware-wise (bulk, battery life) but going the pen-input route was a hassle and not properly adapting the Windows user interface to the tablet form factor were mistakes I assume (hope) the can overcome.

As for geeks not really using Apple stuff, while they have designed an easy and safe hardware platforms and ecosystems do note that OS X (and iOS for that matter) run on UNIX. That's as geeky as it gets! One can open the Terminal app on a Mac and do just about anything.

Windows 8 is Dead on Arrival

All you have to do is install the public beta. Dead, Dead Dead.

Smart remark. I will go

Smart remark.

I will go further: there is something about trends that will make people loose interest in Apple faster than in other companies.

Something that is true for every brands or trends is that the higher and more popular something is, the faster it will decline and the hardest it will be to go back.

Apple has built a fidelity among a smart customer base for years, mainly because their product were indeed of quality, innovation in design and UI.

At first some tech elite sensitive to design and art, then professional worker close to art, then some young people who worked in art, then hipsters, and now the mass consumer market adopted Apple. It means that not only Apple has no need to innovate to seel to stupid mass consumer, but also that their product will dramatically lose in edge, functionnality and quality to meet the stupid mass of sheep.

So other people, the ones who made the trend for relevant reasons, will and have already started hating Apple, not for their price (never), but for the lowering quality of the OS, the material (a Powerbook or old Macbook Pro could last 6 to 8 years, now they barrely pass the 2 years mark), and more over the innovation and openess. They will eventually switch to Windows 9 (W8, it's not "there" yet) or a future version of Linux that has reached enough maturity to be better and more open than OSX.

Apple Will Look Like Other Companies

I like Tim's point (hi, Tim!) about Jobs' very intentional efforts to institutionalize his vision across the Apple management team before his death. But there are a few reasons to think that George is correct overall:

1) Apple almost has no place to go *but* down. "Decline" isn't the same as "death spiral"; George's point is that Apple will struggle to remain, essentially, *peerless* in the post-Jobs era. This would make Apple more like a Sony or a Disney, as George notes -- still around, still an important company, but no longer in a class of its own.

2) To cite a pre- Max Weber concept, Michel's Iron Law of Oligarchy (from 1911; see the wiki at http://en.wikipedia.org/wiki/Iron_law_of_oligarchy) suggests that large organizations will inevitably become more bureaucratic over time. This bureaucratic tendency (think of Microsoft) inhibits dynamism and innovation. A charismatic leader (Jobs) is able to over-rule the bureaucracy and cut through the dysfunction, allowing exceptional innovation to occur. Absent the charismatic leader, bureaucracy tends to prevail, though.

3) Following the four-year (give or take) window that coasts off of Jobs' legacy, Apple isn't without some *agency* here -- they can make moves to be successful in the future. But they will do so in the same way other companies do; Apple will likely look like other peers in Silicon Valley. Apple can be extremely successful far into the future... but probably will find it hard to be peerless, never again sitting at the top of the mountain in such an untouchable way as they do today.

Right on target regarding oligarchy

Apple's biggest challenge will be freeing itself from becoming bureaucratic and therefore ordinary. I agree that a charismatic leader may be the only way past that. The test: do they create something that makes you say "wow" at least one year from now.

I think you made some good

I think you made some good points in your comparison of Apple to Sony. What you did not mention at all is the cultural differences between an American company and a Japanese company. Japanese companies have sometimes been criticized as slow to adapt to change and not being as innovative as their, at times, more nimble American counterparts. From an outside perspective, it seems as though Apple has accomplished a lot to brand themselves as being extremely innovative, a trait often associated with American companies.

Do you think this cultural difference may aid Apple in not suffering from Sony's fate?

Sony versus Apple

In equating the two companies, I was only focused on the impact of the departure of a charismatic leader. My intention was not to make an East/West comparison.

What kind of company is Forrester?

George - What will happen to Forrester succession once you decide to retire? And having no knowledge of your plans, that could still be a while.

Great question...

Hey Jamin.

I'm flattered that you would equate me to Steve Jobs and Forrester to Apple, but the comparison, unfortunately, does not hold.

Tim Cook famously stated that you could put all of the products of Apple on a medium-sized conference table. The point is that Apple makes very few things -- so the charisma and genius of Jobs could be hyper-focused in just a few places.

For companies like Forrester (in which value is being generated by hundreds of analysts out of the sight of the CEO), or Microsoft (which takes on highly complex enterprise solutions), a bureaucratic/legal organization (perhaps with a little charisma mixed in for good measure) is the best path.

Oh, and one last thing. There are a lot of people at Forrester who are smarter (and more charismatic) than me...

Discipline is key

"Tim Cook famously stated that you could put all of the products of Apple on a medium-sized conference table. The point is that Apple makes very few things -- so the charisma and genius of Jobs could be hyper-focused in just a few places."

That's quite true, and that's the key. I'm not going to argue that Jobs' charisma, intelligence and influence weren't important. But beyond -- and yes, to a large extent because of -- these personal attributes, Apple consistently embodies an ideal of product discipline that is deeply rooted in its very fabric.

That Jobs' attention could be hyper-focused in a few places wasn't the *reason* for this discipline, it was its main benefit, owing to years of spectacular revenue growth and an enviable immunity from the blighted whims of shareholders. Apple has long been and can remain hyper-focused because that's how it's built, and because it has been handsomely rewarded for this approach in spite of the fact that it flies in the face of the "conventional wisdom" that continues to call for Apple to saturate the market with products for everyone at all price points.

Of course, Jobs had a lot to do with that, but product discipline is far a more communicable corporate value than personal charisma.

Really? What happened to

Really? What happened to that fabric the first time Jobs left Apple. Didn't take long to fray did it.

Fray

I agree. Those who ignore history are destined to repeat. I never agreed with a majority of Steve Jobs decisions, but the proof is in the pudding. The lawsuits will subside, the 4.3" screen on the iPhone and the 7.85" iPad mini is coming too. I think its smart. But with Apple I'm stupid. I don't use any Apple products today, because I can't make any money supporting them. I do miss my Mac IIc. It's still running somewhere. I doubt we will be able to say that about the iPhone 6 3 years after it is introduced.

Fray

I take that back about not using any Apple products. They will pry my iTouch from my cold dead hands 50 years from now, assuming the battery still performs like new as it has so far (only a few years old now). Already trying to limit my music library to 2 days worth, but I learned my lesson with that Mac IIc in the late 80s (?). Sometimes limiting yourself to 2 days worth of music is worth it.

Really?... Jobs was responsible for that.

Steve Jobs himself recruited what ended up being his removal from the company because of the direction that the CEO and its stock market minded board diverged from his. Jobs could not convince them take his path. Charisma failed. When he returned, the company was desperate enough to go with his vision.

Bottom line: the companies fabric was already failing and the removal of Steve Jobs was the conclusion. The fabric did not fail because Jobs left – it was already gone.

You, and George, miss a key

You, and George, miss a key piece of information with respect to Apple after Steve left in the 1980s: He was ousted by the company because management had already decided to follow a distinctly different path (i.e., try to make macs just another windows clone, focus on the needs of corporate customers, etc.) than the one laid out by Steve (i.e., make products which are not just better but different, focus on the needs of Users at large, make products uncomplicated from the Users' perspective, etc.) and felt Steve was too undisciplined to do it. Does Anyone have any verifiable evidence Apple is departing from the 'Steve plan' again in the same fashion?

I think Apple will be able to

I think Apple will be able to continue having great success with its iPhone and iPad, but I would very surprised if they created another revolutionary product again without someone like Jobs.

That different?

:-)

I think our companies are more similar than at first blush.

Like Microsoft and Apple, Forrester employs hundreds smart people to create value. In our case, we write code; in your case, prose and analysis. We then monetize that IP via some type of sales/licensing arrangement.

Yes there are differences, but our respective paying customers pay for the value they derived from not only an individuals' smarts but also the systems the provider has built to make that individual contibution accrue to a greater whole and solve their particular need.

Apple will not decline for at least the next decade

Certainly, Apple's position can theoretically be lost. But Steve Jobs could have lost it just as much as Tim Cook may. Apple no longer needs his charisma, his product design, or his strategic thinking and entrepreneurial execution skills in order to hold its place. Apple is becoming an eBay-like natural monopoly. And like eBay, that is happening simply by being first and executing competently. Public facing "genius" no longer required.

The Apple monopoly

I would agree with you if it was 1995. In those days, a tech ecosystem could be built which became a corporate standard, boxing out other systems because they were "incompatible." These ecosystems (e.g., Novell Netware) could use their monopoly position to their advantage for 10-15 years -- because corporations wouldn't deviate from the standard.

Roll the tape forward to 2012. Three things have happened: 1) corporations have much less power over standards (if they still had power, RIM would be the number one smartphone), and 2) the velocity of technology change is much higher -- e.g., tablets coming out of nowhere, 3) there is now a standard network that all devices can cheaply use -- you don't have to invent SNA, or DECNet to make your ecosystem work.

So yes, the Apple ecosystem is elegant and high value. But tech monopolies have a much shorter shelf life because of higher market dynamism.

Probably Samsung will be the

Probably Samsung will be the next Sony.

More like

More like Panasonic?

Panasonic might not be a good example - but what I'm trying to say is, Samsung's success in phone market, is largely because it taps on Apple's success.

They are manufacturer for iPhone/iPad parts - it's not a surprise if the 'idea' was borrowed into their line of products. That's how the industry works anyway.

And being Android phone, which priced cheaper than iPhone - it's no wonder that this factor pushed for more sales.

Don't get me wrong, I'm an Android phone user :)

I agree, except for the

I agree, except for the unnecessary language to make your point. However, I do get and agree with your basic point. I have never thought Apple (Steve Jobs) to particularly that "innovative", nor brilliant. Sometimes, people/companies actually just get lucky and folks buy into it. That momentum carries them, along with the simple shills that are really cult like, and that "message" gets to many of the masses. Charisma only gets you so far... lucky, a little bit further... sooner or later- the gig is up, the curtain is pulled and the "wizard" is rather lame.
http://www.4insure.us

Not very knowledge

It's easy to randomly grab two examples and expect history to repeat itself but you need to learn about the ndustry before spouting off. The old Sony days was a different era where manufacturing prowess was not shared via commodity factories ... Where Sony lot it's way is the overpilfiration of skus after the death of it founder ... Something apple did once and will be cognizant to not repeat if u knew anything about apple 1988 to 1998. Apple is one of the few companies around today where innovation is not blocked by 50 vp and product manager turf wars as most company's like Sony and Samsung are. (Sony discovered they hd 3 separate tablet product groups) ... And Steve jobs left a system in place not to overelyon one product ... So while u state a lotof random facts, you come off as ome one who has no understanding of the world of CE.pc.business pre 2010 except from a book u read on the changes t only since the founder died ... Not to mentioned he died like 30 years so at minimal, you're arguing apple will bein trouble by 2040?

The exact opposite is true.

The exact opposite is true. Microsoft === Sony ≠ Apple.

I completely agree. Not

I completely agree. Not solely for the departure, but for the fact that past experience has showed us that most tech companies can only maintain their peak for so long. Apple is less of a brand post jobs, and the company in itself can only maintain its edge for so long over its sat accelerating competitors (android,win 8 based devices).

Accelerating competitors...

Accelerating competitors... Android? Windows 8? Seriously? You really don't know much about technology do you. Dumbest comment of the month.

Others will catch up to 2012 by 2014 - Who owns 2014?

Apple is fine working off the Jobs pipeline, but for a simple prediction, in two years Kindle Fire (Android) will have all the functionality of today's iPad for $200, on Amazon's equivalent or more profitable content/shopping "ecosystem" patched into phones and desktops and probably color e-ink readers. The big rec-room screen is the only "next big thing" anybody seems to come with as a final Jobs pipeline inspiration, and after that, what? The Apple tax on premium hardware / OS is only justified by innovation and the aesthetic discipline Jobs brought to the product line, and we're a couple of years from seeing whether it survives.

Silly pudden-head, most Apple

Silly pudden-head, most Apple users do *not* know all that much about technology... they don't care. Just because someone can turn on a phone and download an app, does not make them technologically superior... please. They may consider themselves tech sophisticated, more like- tech "fashionistas", but most are *not* really technology endowed. Apple has done a great job of exploiting that very fact.

History repeats itself

Haven't we already seen the compromise in regards to patent battles and now the 7" iPad coming this fall? Less than a year and the vision is gone. If history repeats itself, we will see a struggling apple within 24-48 months. Maybe sooner. Greed alone can't yield a 94% profit rise. A company has to believe in something other than profits to attract that type of following.

This will be good claim

This will be good claim chowder for later... comments like this have been coming out for years now, yet Apple continues to steamroll. Why? Because they don't fit the "history repeats itself" mold. If they did, they wouldn't be there they are today.

P.S. Only idiots believe in the 7" iPad. Nuff said.