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

So Apple started as the

So Apple started as the underdog with a completely different vision than the major marketplayer of its time, thanks to SJ unique vision: with a great and wide open view on what other people were doing and how it thought it could be better and all concentrated in one product, he created the Apple computers. Because his vision was different, and the products focused on qualitative Industrial Design and efficient human-friendly UIs, not everybody understood the point, but those who did, people already using computer but who had understood a certain vision of interactivity between man and computer, were seduced.

These people adopter Apple Computers at a time, most people in the world didn't have a computer yet, so you can say they were pretty smart and knowledgable, but they also understood Apple's edge.
Then in the 90s SJ is fired, the company fails (also a sign of what should happen to Apple now) but he comes back and releases the iMacs and Powerbooks. Again the unique vision seduces people who use and know computers but also have this sensitivity about design and interactivity, thus it touched clearly mainly marketer, artists, designers, advertisers, media people etc...i.e pretty knowledgable people who know enough about both computers and design to choose the right alternative for them.

Then in the early Apple releases the first iPod and iTunes. No only are they seducing even more people using computer with an art sensitivity but they also started building that unique and better constructed eco-system, that started touching more people through music and big sisters/brothers. Indeed, those of us who had older brother working in the media or advertising and use Macs and iPods were introduced and started understanding the Apple touch.

Then in the mid 2000s, Apple releases the Mac Minis and Macbook along its own iWork suite, reaffirming their ecosystem how it's is all tied together why the iPod started hitting the mainstream. People who were already seduced by Apple continued having an innovating, good quality product to look up too, while younger early adopters started adopting what their parents or older bros/sis showed them. Which was still fine.

But then Apple released the iPhone, which indeed was a revolution, alongside new iPod for factor and new unibody Macbooks that revolutionnized the Industrial Design, while Snow Leopard was the best OSX this far. But what always sign the end of a trend happened: the beginning of Apple as a trend itself. And it's all fine while Apple remains true to it's main customer based by making quality products, UI & Material, and continues innovating a lot. But the iPhone and iPads drew attention from the wrong kind of people.

Not only did Hipsters who understand lately the edge of Apples product, but also these ones, and their media started showing it off to people around. And greedy investor on one side, mainstream medias as well, and stupid followers from the mass market on the other hand started being aware (because they are not really knowledgable, it takes time) of Apple. So for me the end started a few years back, in between the lame iPhone 4 update, the lack of innovation in Macbook, OSX Lion, and the still useless iPad (although the iPad 2 really impressed me).
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Now what is happening is that

Now what is happening is that Apple has become a trend. And like all trend, it means it will eventually end. But the reason, I have not summoned yet, that Apple has success in the first place, it that no other company has a better combinaison of computer power X design form factor WITH a coherent eco-system around, thus the Apple customer retention is the highest and this is super important.

Now that there is crisis, and Apple has hit the mainstream market, this is no mystery why the board of director appointed Tim Cook, who was the senior stock manager, instead of Scott Forstal or Jon Ive as a CEO: Tim Cooks knows how to manages stock and sell a lot efficiently, that's all he knows, and that's all the greedy pig investors want.

On the other side, the new customer base of Apple aka the mass market doesn't know shit about technology, has no creativity or desire about innovation, and just discovered the Apple form factor. Add to that the exceptionaly mind twisting PR and marketing from Apple, and you have a company that doesn't need to innovate, make better or even quality product to sell a lot of them at an higher than normal price. But because mass market sheep are...impressionable sheep without knowledge and personnality not only will they not remain faithfull to Apple, but more importantly the people who made Apple success by telling their friend are turning more and more into the people who will make Apple loss.

The thing that makes me think however that Apple has more than 2 years, is something really critical that the writer forgot and I already mentionned: Apple customer retention. Apple ecosystem and products are so unique in their form factor, unmatched by any competitors from Google to Microsoft, that when you had an iPhone or Macbook, even if you hate Apple it's hard to switch cause there's nothing better or "next step" yet. Which will make people even more hungry, likely to talk bad about Apple, and never come back to hit once they will switch. But for now they're "stuck" with it and the only ingredient that is missing to predict a close Apple death is a new better competitor, that manages to combine good quality and powerful technology and a better interactivity through Industrial Design, User Experience and Ecosystem, and maybe something else, something new...

Max Weber published in 1947????

Max Weber died in 1920. The book you cite, about Max Weber, was written and published by Talcott Parsons, et al in 1947.

Weber

Thanks for the clarification.

George

Max Weber published in 1947????

Correction: In 1947, Parsons et al "translated" and published Weber's much earlier work from German to English. Surprising it took so long.

I guess it was the Nazis and

I guess it was the Nazis and the war and stuff.

Missing Key Fact

The missing key fact is that Steve Jobs' goal became to build a great and lasting company, not just great products.

This is truly a secret sauce. And if one looks at CEO tenures, it is quite different to be a hired CEO, than a founding CEO and owner and a visionary. (I dont know George, and am not referrring to him, rather just Steve Jobs.)

It is very likely that the reason Jobs picked Cook as CEO rather than Ive or any of the great folks at Apple, is precisely knowing that building the great lasting company he envisioned is a continuous and complex discovery beyond what he learned at first at Apple, then at Pixar then back at Apple.

While succession is always a concern, I hope sensationalism is not starting to get into research/opinions.

Apple = Sony

While this might happen (it does happen to many companies) your reasoning would not lead me to the same conclusion?

Apple is not a start-up and the idea of a charismatic leader such as Steve Jobs doing everything is flawed, to much span of control necessary and the Apple management model, with clear lines of authority and responsibility show they have been working for years to make sure this doesn't occur.

Suppose it does happen? If it does, it will be sometime as the real product development cycle is long as the supply chain connections and capabilities they have built are the real enablers here.

Amateurs look at strategy and professionals at logistics - is a military model that comes to mind.

I'll give you a choice...

It's obvious that Apple must have great products and extraordinary logistics to serve its customers.

But I'll give you a choice of two companies...

Company One has incredible products but only a so-so supply chain.

Company Two has mediocre products but has an amazing supply chain.

Which one would you invest in? As it turns out, conceiving of amazing products is much harder than building a great supply chain.

Coaching.

For Forrester's CEO, it's amazing you fail to see the Supply Chain Genius in Tim Cook and the Amazing Geniuses Product guys in Scott, Ivy, Schiller, et al still at Apple! So your Two Companies 'Case' holds no water.

Disney died...

In 1966.

Disney died 46 years ago, in 1966.

I think it is fair to say that Walt Disney changed the face of entertainment. Then he died. Unfortunately, since his death, the company has gone downhill. In fact, without Disney's leadership, all those disasters like the expansion of DisneyWorld; keeping Disneyland open; all those big budget box office hits; buying Pixar; etc have brought Disney even further down. To, say, lower levels than most producers of porno films...

Ring the bell, sell your Disney stock. DisneyWorld is now closed... Damn, I've always wanted to go there...

Oh, wait, that's not true?

Give me a break. Jobs was a part of Apple, not all of Apple. Maybe there will be some drop off in innovation in Apple. Then, again, Apple could stop innovating and still be ahead of most IT oriented/consumer electronics companies selling really bad Windows HARDWARE, Android phones/tablets and other POS products.

Apple is the most valuable company in the world in terms of market cap. They, consistently break their expectations of profit and income. The innovate better than any other 50-100 companies. Their products are still 'insanely great'. Tim Cook was Jobs handpicked successor.

Apple will be fine. Meanwhile, deprived of any viable management that can do anything but follow the market, without innovation; I look for the face of Microsoft to change. They really NEED a charismatic leader like Gates...

You're right, Apple is dead without Jobs.

Correct to a point

there are actually two types of apple customers. the die-hard apple followers that know the history of the company and pretty much everything else "apple". as this article points out, steve was their hero and everytime he took the stage it was like a religious experience to these folks. these customers will forever be apple fans, most likely always were, and will continue to be going forward. however, this is a very very small portion of apple's current customer base! these people existed "before" apple/iphone became a household name. the majority of apple's current customer base are people who are buying apple products because they're the "it" thing to have -- how many of those 10yr old girls in the mall carrying iphones know who steve jobs is ? anyway, unfortunately, "it" things come and go as we all know.

the iphone and ipad were/are indeed a good blend of hardware design and software at a time when there were no competition that exhibited similar qualities. however, as we all know, being first to a market does not mean, and frequently, being last to remain or staying dominant. in terms of the smartphone os side, we saw android showed up and did really well, but the hardware design side was/is definitely not on par with an apple unit. microsoft, always seemingly late to every game, now realize that the required pieces in this space are: 1) a great looking operating system, and 2) very well designed hardware. in comes nokia ... and we have the lumia 900, the first incarnation of the blending of these two features. this leaves the big question posed by this article -- given that the "formula" is known and the market is no longer devoid of competitors whose products exhibit similar qualities, can apple, by mere brand power -- not the name apple, but "iphone", "ipad", remain dominant ? if we were to judge based on history, then the answer would be no.

ultimately, the market from producers to middlemen (carriers for instance) to customers end up going for the best value for the dollar. competition works this out. apple "was" the only show in town and, hence, charges quite a bit for everyone who wants to be a part of it. this is reflected in their astronomical growth over the past few years. you might say: big deal ... android has been around for the past few yrs and grew quite a bit, but apple still remains king, why wouldn't it remain the same going forward ? well, there is one big problem with android -- above i stated that there are two key ingredients for a succesful mobile product -- a great os (experience), and great hardware design. unfortunately, though android presented an alternative that "worked ok", it never combined these two elements. the os is fragmented and there is no control over the user experience at all. this is where microsoft and its oems come in, particularly nokia. unlike apple, they're providing, not only the two key elements mentioned, but also a critical third -- value! so, unless apple departs from "greed mode" and start to provide better choices and value for customers, microsoft and its oem's will eventually take over as the "mainstream" mobile platform.

As long as Jonathan Ive is

As long as Jonathan Ive is still working at Apple, I think that they can still deliver amazing products. And yes, may be he should have succeeded Steve Jobs as CEO.

I've been saying this for months..

We've had a glimpse of Apple without Jobs before and it wasn't very pretty. I can't imagine our top business schools cranking out anything different today than they did ~25 years ago. Apple will go back to making "safe" decisions and being driven by bean counters instead of a visionary.

It's easy to beat up George

It's easy to beat up George for pointing out that Apple has nowhere to go but down, but honestly, the "Apple to $1000" articles do cry out for a little sanity. George's main point is about the corporate culture of the company and that it needs a charismatic dictator to deliver truly revolutionary products that invent new markets. The comparison of Apple to Palm is not at all appropriate (I worked there). We tried but Palm never really got past the startup phase to form a lasting corporate culture as a large consumer electronics company. The Sony comparison is wrong for opposite reasons (I worked there too). Sony's strong culture of product autonomy and blindness to outside influence meant that there was nobody to say no across the company, and the result has been endless decline.

But I think George is selling the value system Jobs provided Apple quite short. Those values include putting the (consumer) user first, while making technology invisible. Let's take the example of the cloud. Everyone knows it is huge, and companies like Dropbox get a lot of attention for their quick uptake. But they have only about 50 million users after five years. iCloud launched a year ago and it already has 125 million users. It doesn't have as many features and is limited in many ways compared to its competitors, but it is easy to use and very closely tied to all the iDevices people actually use. Dropbox wants people to think about the cloud, and in particular companies to think about it a lot and use Dropbox. Apple doesn't want users to even know the cloud is there. Big difference.

Totally unconvinced by the 'Apple = Sony' argument

Just like Jean-Louis Gassée, who more or less destroyed the article's reasoning in his 'mondaynote' blog, I am not at all convinced by the facile 'what goes up, must come down' reasoning.

Of course, Apple's success will not last forever. But as an investor, I see the need for a more careful analysis. The commercial success of recent years is the result of the happy marriage between Steve Jobs' focus on making only the best products possible, including making really sure they 'just work' for everyone and Tim Cooks phenomenal execution.

Although Tim Cook probably is overburdened now, after Jobs' death, the execution only seems to be getting better. And, to replace Jobs, there surely are many at work at Apple whose life's mission is exactly what Steve Jobs enjoyed so much: dreaming up wonderful things and trying to make them perfect. Just like they did before. Anybody who is technically inclined would likewise enjoy the opportunity.

That leaves only one really important faculty of Steve Jobs unaccounted for: saying no to all those very nice 'also ran' ideas. And I indeed seriously doubt that Tim Cook can do as well as Steve Jobs there. But, to compensate that, Apple now has so much money that a slight loss of focus won't hurt too much.

So, what will end Apple's reign? Tim Cook leaving would be a mortal blow, I think, because HE is the irreplaceable one. He embodies discipline, integrity, humility and relentless attention to detail. Tim Cook is 51 now, so as an investor I'm looking forward to at least a successful decade still for Apple.

Colony Comments

I would like to thank this author for ensuring that Apple employees like Tim Cook remain highly motivated to disprove his thesis that Apple was ever a 1 man show. Obviously the author didn't bother to read the great W Isaacson bio that clearly showed the level of frustration many of the top executives, esp Jonny Ives, felt over the amount of credit Jobs took for the success of the company. It's amazing- so now we are looking 4 years out to prove that Apple will inevitably fail and people actually pay someone for analysis like this? Forget minor competitive details like a fortress balance sheet,no debt, the most efficient distribution network ever created and a pipeline full of pending product releases. Why bother with fundamentals when you can get paid to provide speculation like this

sooner or later we all die,

sooner or later we all die, so companies as well :)

Not So Innovative

Your article did have some very good points on Apples business skeleton and how it will hurt them in the end. Myself, not being a tech savy person, just started doing research on hearing aids and to my surprise Apple came up in my search. I have come across stories that they are creating a blue tooth hearing aid that will have a user interface that one can control their hearind aid via blue tooth. However, this proves a point to your story that Apple is not as "innovative" as some think. The reason being because of my research I came across a company called Audiotoniq who has a blue tooth smart phone user interface hearing aid and they have been around since 2009. They have developed a software that lets the user control their hearing phone thru smart phone applicaitons both with Android and I Phones. It just goes to show that while Apple tries to take on new and different markets, they should be focusing their time on their speciality. Just some interesting points I came across that I wanted to share. It will be interesting to see how this all turns out.

I see since Steve Jobs Dead

I see since Steve Jobs Dead no innovations from Apple but only the technical improvements. Take a look on new iPhones 4S/5, iPad3 and Mac OS X Mountain Lion. I had a Apple MacBook Computer and Apple iPhone 4. I must say, Steve made a good Job and a good Startup for the company Apple but why i am back to Microsoft Windows and Samsung Google Android?

Windows offers me more, better and newer Software, Games and i can choose better Hardware for better Performance. Also the Security of Windows 7 is better than Mac OS X. Apple has here the benefit, that their operating system is not so popular than Microsoft Windows.

On Microsoft i must say, that Steve Ballmer is to old for his Job. Microsoft needs a new structure and new young Boss with absolutly new ideas.

Windows 8 is not bad, but it is not really a innovation from Microsoft.

Greetings, Alexander

You were right George

The recent maps release and abrupt new iPad is proving all what you said.

Apple

what is supposed to happen now with apple now that their stocks have been so hyped up... How many more people are going to really need an ipad or iphone...Their stock is going to drop soon dont u think?

Haven't we already seen the

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.
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I hope Appleiphone repair

I hope Appleiphone repair manchester does not go down the same way as Sony.

Mind you Sony was the leader in their respective field but as the world advances companies loose their edge and start to tumble down.