Apple must have known what sort of reaction investors would have to news that the company’s much-loved chief executive is taking a leave of absence for health reasons – after all, they decided to drop the bombshell on a day when US markets were closed for trading.
However, after-hours trade on European markets must have given the company a taste of what it can expect when trade resumes in the US tonight – Apple shares dropped 8% on the news, similar to the fall experienced when Jobs last went on sick leave back in 2009.
The fall highlights the sort of esteem that Jobs is held in by the investment community.
But it also highlights a looming problem Apple must deal with – who can succeed as the company’s leader after Jobs departs?
Apple is one of the many successful global companies built around a charismatic and brilliant entrepreneurial figure. Microsoft, Facebook and Google are all examples in the tech sector, while Australia has got a few examples too – Westfield, Harvey Norman and Linfox all spring to mind.
While the entrepreneur is building their company, their presence is invaluable. They are the face of the company, the person who sets the culture, the person who decides the strategy and the person who manages the business. Investors and financiers take comfort from the idea that one person has their wealth – and their life – totally invested in the business.
But when you build a business around a personality, you run into the problem that this person casts a long shadow over the actual business they have created. Apple would appear to have that problem with Steve Jobs.
The reality is that Apple has, and will, run well with Jobs on leave. However, the slump in Apple’s shares overnight suggests that investors don’t feel that Apple has made its succession plan clear enough.
This is something it can and should do during Jobs’ leave of absence. Explain how the company’s management structure works without Jobs. Show how the product development cycle will run (without giving product secrets away). Highlight a number of the top internal candidates who could replace Jobs.
Perhaps Apple could even take a lesson from Microsoft. By the time Bill Gates had stepped away from that company’s day-to-day operations, Steve Ballmer was entrenched as the carrier of the company’s entrepreneurial flame.
Who is Apple’s rising entrepreneurial figurehead?
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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