In technology, strong leadership is an important aspect in the creation of successful products, and through its acquisition of Nest Labs — a home automation company founded by Apple’s (NASDAQ:AAPL) former Senior Vice President of the iPod Division, Tony Fadell — Google is hoping to lay its hands on a leader who can keep replicating his product successes.
However, aside from co-founder Steve Jobs, Apple is “not known for producing leaders — it produces products,” Ram Charan — a management consultant who has acted as an adviser to former General Electric (NYSE:GE) Chief Executive Officer Jack Welch and former Verizon (NYSE:VZ) CEO Ivan Seidenberg — told Bloomberg. Jobs brought Apple back from the edge of bankruptcy and transformed it into the world’s most-valuable company. That transformation led an upheaval in the consumer technology market that left many companies — BlackBerry (NASDAQ:BBRY), Google’s soon-to-be-sold Motorola unit, Nokia (NYSE:NOK), and Hewlett-Packard (NYSE:HPQ) — playing catch up.
As one would expect of a company as successful as Apple, a lot of thought has gone into the creation of the brand’s cachet. Apple built up its reputation by delivering products that revolutionized how humans communicate with each other, how they consume media, and how they live, on a day-to-day basis, making technology a part of everyday life they way it never was before. It helped that the company tended to under-promise and over-deliver. But even more important was Jobs’ ability to mesmerize audiences by charismatically creating a “reality distortion field,” a science fiction term that has often be used to describe his belief that wanting and willing something could make it happen. His persona, and the products were created with that belief as a guide, made Apple a brand with huge cachet. But keeping and building upon that cachet requires a great leader.
Current Apple Chief Executive Officer Tim Cook has faced his share of criticism. When the iPhone maker’s stock was tanking in the spring of last year, as part of its fall from an all time high of $705.07 to the current 52-week low of $385.10, he took the brunt of the blame. After the company recorded its first quarter-over-quarter earnings decline in a decade last April, Jim Cramer said on CNBC’s “Squawk on the Street” that Apple’s management was despised. “What people wanted was some growth, what people wanted was new products and what people wanted was a change of discourse,” he added.
The main concern was that Apple had lost its innovative touch. While it was long seen as a company capable of creating one category-defining product after another — and in fact, Apple build its reputation on that type of creativity — analysts put forward the thesis that Jobs’ absence was evident in the company’s product pipeline, which, according to their assessments, was populated by nothing but product refreshes. In essence, shareholders and analysts thought Cook was not up to the leadership task.
However, Google announced in early January it was purchasing Nest Labs for $3.2 billion in hopes that Fadell’s start up will help the tech giant to transition from software and services into a new generation of connected household items, Bloomberg reported Monday. It was during Fadell’s tenure that the iPod, Apple’s portable music player, helped the company transition from a niche computer manufacturer to one of the most predominate maker of mobile devices.
But former Apple have infamous record of failing to replicate Apple’s success at their new companies. Ron Johnson — a former Apple executive who went on to led J.C. Penney (NYSE:JCP) through its tumultuous rebranding — is but one example. One reason that explains their failure to create product-creating categories as the iPod or orchestrate turnarounds comes down to environment; former Apple leaders, who were forged in the iPhone maker’s secretive corporate culture and were used to focusing on a few products, rarely flourish in more traditional corporate structures.
Many other high-profile defectors from Apple have not continued their illustrious careers. Take, for example, Jon Rubinstein, who left Apple to lead product development at the handheld computer maker Palm. He became chief executive in 2009, but its smartphone attempt failed and the company was sold in 2011 to Hewlett-Packard, where the device was discontinued. Rubinstein then left HP. Intel’s (NASDAQ:INTC) Mike Bell — who previously worked at Apple and Palm — is leading the company’s new Device unit, where he is looking to carve a niche for the its chips in the market for connected devices, which is known as the Internet of Things. It is that sector that Google is targeting with its Nest acquisition. Intel’s rival in personal-computer chips, Advanced Micro Devices (NYSE:AMD), has also seen little benefits from its Apple hires, whom were hired to help rebuild its business after years of market-share losses.
Fadell could break the trend. In keeping with the company’s design method, many Apple leaders succeed by focusing one area; when they took on broader roles at new companies, they struggled. But Fadell has a different story. At Apple, he had a variety of responsibilities, ranging from design to customer support, as former Apple marketing executive told Bloomberg. “Fadell was more well-rounded than most,” he said. “Apple doesn’t really develop well-rounded leaders, because Steve always wanted people who were narrow and deep.
Former Apple executes were also hampered by Apple’s secrecy. As Jeff Sonnenfeld — a professor at Yale University School of Management, told the publication — Jobs created a “we versus they” mentality that stressed secrecy in the development and market of products. According to Sonnenfeld, that mindset makes it much harder for former executives to collaborate at other companies. “With Apple, some of the important qualities might actually be detrimental at other companies,” Sonnenfeld said.
Operations at Apple were also guided by its near-bankruptcy in 1997. Ditching digital cameras, CD players, speakers, and personal digital assistants were left behind to allow designers to focus on a narrow line of new products, which included the iMac. As a result, design teams were managed with a sense of urgency. “Apple was starting with a clean slate in a lot of the things that it was doing in the last 10 years,” David Yoffie, a professor at Harvard Business School, told Bloomberg. “Some of the people who left Apple were going into operations that could never operate at the speed or creativity that Apple was able to accomplish.”
That is the history that Fadell left behind when leaving Apple. But the failings of his fellow former Apple employees is not solely the result of the iPhone maker’s corporate culture. As TalentSky CEO Rick Devine, who helped Steve Jobs recruit current Cook, told the publication, change must come from the top. Without a leader committed to the company’s evolution, importing outsiders can have little effect, he continued. “You can bring in Jony Ive to Dell, but is he going to get things done there if Michael Dell doesn’t agree with him?” said Devine. “You need a leader who believes constant change and that looking for the next act is important.”
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