Tim Cook Slowly Begins Defining his Leadership of Apple

Tim Cook was well regarded as a behind-the-scenes operations guy, but he was a relatively unknown quantity outside the company. (Photo: Reuters)
Tim Cook was well regarded as a behind-the-scenes operations guy, but he was a relatively unknown quantity outside the company. (Photo: Reuters)

Tim Cook, Apple’s chief executive, was an adolescent boy in a small Alabama town in the early 1970s when he saw something he couldn’t forget.

Bicycling home on a new 10-speed, he passed a large cross in flames in front of a house — one that he knew belonged to a black family. Around the cross were Klansmen, dressed in white cloaks and hoods, chanting racial slurs. Mr Cook heard glass break, maybe someone throwing something through a window. He yelled, “Stop!”

One of the men lifted his conical hood, and Mr Cook recognised a deacon from a local church (not Mr Cook’s). Startled, he pedalled away.

“This image was permanently imprinted in my brain, and it would change my life forever,” Mr Cook said of the burning cross, in a speech he gave last December.

In the speech, he said his new awareness made him feel that no matter what you do in life, human rights and dignity are values that need to be acted upon. And then came the segue: his company, Apple, is one that believed deeply in “advancing humanity.”

Mr Cook, who is 53, took over leadership of Apple nearly three years ago, after the death of Steve Jobs, the company’s revered founder. Like Walt Disney and Henry Ford, Mr Jobs was intertwined with his company. Mr Jobs was Apple and Apple was Jobs.

At the time, Mr Cook was well regarded as a behind-the-scenes operations guy, but he was a relatively unknown quantity outside the company. He can be intensely private; for instance, the details of the cross-burning episode, like his reaction and the appearance of the deacon, he has shared with friends but not publicly. Even offering the outlines of that story in front of an audience, however, indicates how he is slowly beginning to reveal his own personality and style, and to define Apple leadership in his own image.

This is happening as Mr Cook, who declined to be interviewed for this article, finds himself not only in the limelight, but also under scrutiny. Of late, the company has hit a snag that was years in the making: its sales now are so large that many investors worry that it can’t continue to match the growth that brought it from $US65 billion in sales in the 2010 fiscal year to $US171 billion in 2013. In fiscal 2013, sales grew a mere 9 per cent, far below an average just shy of 40 per cent a year from 2004 to 2013. Profits slimmed. And the stock price fell nearly in half from its 2012 peak to the middle of 2013, vastly underperforming the market.

WHERE’S THE MAGIC?

Investors have clamoured for Apple wizardry — a much-anticipated iWatch or iTV, perhaps. To these critics, Mr Cook is uninspiring, his social views window dressing, when what they want is magic.

“Where is the grand design?” asks Laurence I. Balter, chief market strategist at Oracle Investment Research. Mr Balter credits Mr Cook as having great skills in operations and in managing the supply chain, which entails getting the raw materials and machinery in place to build things — but not with having the vision to design them. “All we hear from Cook,” Mr Balter says, “is there are some great products coming down the pike.”

Mr Balter calls Apple a financial “Rock of Gibraltar”— it is sitting on $US150.6 billion of cash — but he says he has serious questions about whether it can continue to be a hypergrowth company. Is it a stock for growth investors, he asks, “or widows?”

“Show me the product,” he says. “Show me the ingenuity.”

To shore up shareholder faith, Mr Cook split the stock, increased the dividend and engineered a $US90 billion buyback — steps that helped shares rebound almost entirely. He has taken other steps to strengthen the company, like pushing Apple products into China, a potentially huge market, and acquiring talent, most recently spending $US3 billion to buy Beats, a music company that brings Apple two major music-industry shakers and deal makers, Dr Dre and Jimmy Iovine.

Reflecting his personal views, Mr Cook is trying to broaden Apple’s brand, too, taking to Twitter and other public venues to express support for environmentalism and gay rights (and for Auburn University football). He has also emphasised the use of sustainable products at the company. Early in his tenure, playing catch-up with other corporations, he established a program to match employee charitable contributions; he has upped the company’s own giving, too.

Jonathan Ive, the head of design at Apple and a name nearly as adored by its followers as Steve Jobs, says Mr Cook has not neglected the company’s central mission: innovation. “Honestly, I don’t think anything’s changed,” he said. And that includes the clamour for some exciting new thing. “People felt exactly the same way when we were working on the iPhone,” Mr Ive added.

“It is hard for all of us to be patient,” Mr Ive said. “It was hard for Steve. It is hard for Tim.”

SPIRIT OF HARDWARE PAST

There is a mythology, with some part of truth, that Mr Jobs was the soul of the design process, the company’s innovator-in-chief. For the original iPhone, Mr Jobs checked in weekly with engineers, according to Francisco Tolmasky, a former Apple engineer who worked on the phone’s browser.

“Steve was really adamant,” Mr Tolmasky reflected, adding that Mr Jobs would say: “’This needs to be like magic. Go back, this isn’t magical enough!’”

Almost daily, employees would spot Mr Jobs having lunch on Apple’s campus with Mr Ive. These days, Mr Ive said, he meets three days a week with Mr Cook, generally in each other’s offices. But Mr Ive said the design processes are essentially unchanged.

“Steve established a set of values and he established preoccupations and tones that are completely enduring,” Mr Ive said. Chief among them is a reliance on small creative teams whose membership remains intact to this day. The philosophy that materials and products are intertwined also continues under Mr Cook. For instance, when the company decided to use titanium to build a laptop, Mr Ive said, he and Mr Cook and Mr Jobs thought about how to push the boundaries of the metal to get the look and feel they wanted. And Mr Ive pointed to another enduring value: a complete focus on the product.

If Mr Jobs was maniacal about design, Mr Cook projects “quiet consideration,” Mr Ive said. Mr Cook digests things carefully, with time, which Mr Ive said “testifies to the fact he knows it’s important.”

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SOURCE: MATT RICHTEL AND BRIAN X. CHEN
NYT / Financial Review

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