Losing Jobs: The Problem of Succession Management

Apple CEO and co-founder Steve Jobs recently announced that he will take yet another medical leave of absence with an unspecified return date. His announcement was followed by much discussion and debate about when and whether he will return. This news re-awakened the debate among worried stockholders and industry analysts who are sweating out the question of whether or not the Sultan of Silicon Valley can be replaced. As reported by the LA Times, Apple’s shares fell 6.45% immediately after markets opened the day following Jobs’ announcement. Consequently, stockholders are putting the pressure on the board to publicize a succession plan. Why the sudden iPanic? Many believe that Jobs’ vision and innovation is integral to the success and brand image of Apple, and that he simply cannot be replaced. Admittedly, Jobs’ uncanny ability to predict, or even create, market demand for consumer technology products has catapulted Apple to undeniable success over the years. So the question remains – can Jobs be replaced?

Jobs’ announcement got me thinking about the problems inherent to succession management, and some recent industry research that has shed some light on the issue. In a December 2010 research report published by Towers Watson, a survey of over 700 global companies indicated that the top two workforce challenges facing businesses today are (1) loss of talent in key positions and (2) lack of succession planning/management. An online survey from the American Management Association of over 1,000 senior managers and executives revealed that only 14% of respondents reported being “well-prepared” for a sudden loss of the organization’s key leaders. In addition, 61% reported being “somewhat prepared”, while one in five admitted to being completely “unprepared.”

After reflecting on the realities of this issue, the public clamoring for Apple to release a succession plan seemed misguided in a few ways. First, what the stockholders seem to actually want in reality is a successor to be named, which is far from establishing a true succession plan. Identifying a successor or even a pool of successors is only a fraction of the battle. What is more important is the need to develop the talent by exposing them to relevant experiences, training activities, or other developmental opportunities. For example, Jobs designated Apple COO Tim Cook to step up to the plate during his first medical leave of absence. Jobs remained involved in major strategic decisions, while Cook oversaw daily operations. Business seemed to go smoothly during Cook’s time in charge. This certainly qualifies as relevant experience, and the truth may be that Jobs and his team are indeed grooming several high-potentials internally at Apple in preparation for Jobs’ eventual retirement. However, a quote from Cook published in Forbes magazine reads, “Come on, replace Steve? No. He’s irreplaceable.”

Second, succession planning is a long-term, organization-wide initiative. It takes time, considerable planning, and an overall talent management strategy to function properly. For example, the downstream effects of each staffing event must be considered – for every promotion or transition, a well-developed talent pool should be prepared at each subsequent level. If it turns out that Cook is the apple of Job’s eye, a successor must also be prepped and ready to take over Cook’s responsibilities to ensure a smooth transition.

Third, succession planning requires defining what constitutes exceptional performance within each key leadership level, and then finding the talent that will fit the bill. For example, Jobs is celebrated for his creativity, relentless attention to detail, and keen eye for aesthetic appeal. Hogan might measure these characteristics using the Inquisitive, Prudence, and Aesthetic scales. He is also known for his charisma, mischievous business strategies, and ability to convey effective and persuasive messages. Jobs and Cook both share a passion for the Apple brand and a tendency to make extremely bold statements on record. By contrast, Cook is not known as a compelling public speaker, is not seen as a visionary, and does not wear the signature black turtleneck. He is the unflappable operations specialist with a logical mind and an engineering background, and does not spend much time on the creative side of the house. Jobs is an intense, creative mastermind whose vision and aesthetic focus guides all aspects of the product design process. The conundrum of succession planning is that plucking an operations master from his perch and placing him in the chief executive chair often means you lose a great COO and gain a mediocre CEO. Would naming Cook as the successor simply be a case of going after low-hanging fruit? Is comparing Jobs to Cook as useful as comparing apples to oranges?

But seriously folks, all pomological puns aside, the succession planning issue is a relevant one, and personality plays a key role in the ability to effectively fill the holes in the talent pipeline. Cook obviously has talent and a strong track record. However, having the right mix of skills, experiences, and innate personality characteristics provide the necessary foundations for making an effective succession decision. However ambiguous the succession planning issue, one thing is certain: whoever eventually becomes Jobs’ successor will undoubtedly have big New Balance 992’s to fill.