According to Jewish tradition, the prophets are gone forever; thus, attempting to predict the future is for the stupid.

Nevertheless, since the motto of this blog is “with no fear,” I will dare to add my thoughts to the dozens of others’ in the media, about the potential impact on Apple of Steve Jobs’ departure.

In the analysis that follows, I will use Adizes lingo (1). otherwise this blog would have to be a book.

Years ago, in 1985, when Jobs was let go and his co-founder, Steve Wozniak, left the company even before him, what happened was a predictable, if abnormal and avoidable, syndrome for Apple’s stage in its lifecycle: (E) was kicked out and replaced by a (PA), John Sculley, who went on to almost destroy the company; A (PA) style leadership in a “young” industry is a prescription for a failure.

Fortunately, (E) was eventually brought back (i.e., Jobs was rehired), and the company regained its position as an innovative leader.

This time, Steve Jobs is not being fired. He will remain as Chairman of the Board which is a lower level of involvement at Apple, and Tim Cook, Apple’s COO, is taking his place as the leader.

What do I believe will happen? Not much, for a couple of years. Surely there are lots of Jobs-initiated projects in the pipeline that are still working their way to fruition.

But what about two years from now?

High-tech companies are subject to a very high rate of change. It is easy for a company that loses its (E) to be overtaken and surpassed by more innovative and aggressive companies.

Why do I say Apple is losing its (E), which has been the source of its phenomenal success?

Because it seems to me that the (E) role at Apple was personified in Steve Jobs.  Sure, he was not alone in providing entrepreneurial, innovative, leadership to the company. But according to reports in the media, he was a very dominating force. He personally would cancel an already finished new product if he did not like it. He personally would abort a project if it did not have the ingredients he approved of.

In (E), not every decision can be articulated and even explained. It is “ the taste buds “, the intuition that causes the decision maker to go one-way or another.  And apparently this intuition was not a result of a team process (the way for instance the Japanese innovate, as the Japanese as individuals are not known to be (E)’s).

And who is taking his place? The former head of Operations, who is undoubtedly very good at what he did or he would not have been promoted. But what was he good at? Not (E), because that would have created conflict with Jobs. He was most likely good as Jobs’ right hand, working to execute Jobs’ strategies, an excellent (PA) who must have had only a minor (E) in his style or he would not have survived under Jobs.

May be, may be, he is a big closet (E) who will come roaring out of the closet, but I doubt it. If he were, he would have been very frustrated under Jobs, having his own “taste buds” competing with those of the domineering Jobs.

But look what happened to Applied Materials when Dan Mayan, who was the company’s big (E), retired. He was replaced by a (PA), and Applied Materials has been stepping in place ever since. Maydan was replaced by Michael R. Splinter, who had previously been at Intel as Exec Vice President of Sales & Marketing and we know from Adizes theory that it is wrong to have such a structure because (P) and (E) should not be mixed. When they do, sales orientation,  (P), wins and marketing, (E) suffers.)  Also, he was General Manager of the Technology and Manufacturing Group, (another mix of (P) and (E) where the  (P) orientation wins.)  My prediction, when he was hired, was that he would cause the exit of any remaining (E) in the company, which is what he caused to happen and Applied Material has suffered ever since.  The company lost in revenue and the stock has not moved. Innovation at AMAT has practically stagnated although the company needs a paradigm shift in its strategy due to the aging of the industry.

At Apple, the situation is not as acute.  The new CEO is not coming from the outside. The danger to (E) is not that predictable.

I would be much more comfortable, however, with Apple’s future if Jobs had been replaced by the head of Marketing or the head of R & D, thus keeping (E) in the leadership position. The fact that it did not happen, I believe, is because these people were minor players to Steve. He dominated the (E).

What should Apple do now?

There is still time. Apple must institutionalize its (E), something they should have done already; Jobs departure has been predicted for a long time. His disease was not news to anyone.  It still has time to restructure so that the (E) leadership is provided by the heads of the (E)-function departments.  (Unfortunately, I do not know the structure of Apple to name them but I assume the idea is clear.) Those department heads should report to a single head, thus grouping (E) into a mass that cannot be ignored politically, coached by the Chairman of the Board, Jobs, while approving or disapproving initiatives.

What company might step into the leading position, replacing Apple in leading the industry, if it’s (E) is irreplaceable? It is certainly not going to be HP; HP has been losing its indigenous (E) for a very long time, relying on acquisitions to replace its source of innovation. What about Google? Might Google start eyeing this market, now that Apple has lost its main “steering wheel”? It is not in the hardware business but it has shown an enormous capability to explore markets and technologies it has not been the initiator in. And just imagine SanDisk and Google getting together…

It is too early to sell Apple short. But I would not buy the stock, either. My recommendation: Hold position and see what happens with the (E) role at Apple.

Sincerely,

Dr. Ichak Kalderon Adizes

(1) For those not familiar with the Adizes PAEI model, see: Ichak Adizes: Managing Corporate Lifecycles, available from www.adizes.com/store