April 25, 2012
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.