Tim Cook shines as Apple CEO
Taking over for Steve Jobs would be difficult for anyone, but Tim Cook's leadership of Apple has been workmanlike and highly effective.
Like many investment strategists, I watched the iPad presentation by Tim Cook this month. It was a workmanlike presentation, which is to say it was nothing near what Steve Jobs would've done. While plenty of adjectives were offered about the new iPad, the "reality distortion field" seemed a little less thick in the room.
That's okay; Apple (AAPL) products seem to need less sell than most as innovation rolls along; the need for showmanship seems to have diminished.
Let’s state the obvious; it’s clear that Tim Cook is no Steve Jobs. But maybe that's okay; maybe Tim Cook being Tim Cook is good enough.
Cook took over at Apple with a very big set of shoes to fill. Steve Jobs was a formidable presence not only as a business leader, but as a presenter. Many questioned if Tim Cook was up to the job. "Would he be flashy enough? Would he capture the imagination of the Apple loyalists?" the critics asked. Perhaps these were the wrong questions to be asking. Perhaps Tim Cook had his own unique value proposition he was ready to bring Apple.
In our view, the Cook era of Apple is here. As evidence of the so far successful transition, there have been 2 major issues he has handled effectively and with transparency.
As the person directly responsible for fulfilling the tremendous demand from consumers for Apple product (even during Steve Jobs tenure as CEO), a major launch of a product under Tim Cook occurred this last Friday. As usual, the Apple faithful lined up to be the first to grab the latest version of the iPad. And after the doors opened, their needs were met with many purchasing 2 iPads figuring that the usual shortage would develop.
But something strange happened. There was actually supply available for those interested in buying the product. A check with Apple locations around the country, as well as Best Buy outlets, showed that inventory was still in stock. And surprisingly, virtually all models were available; something unheard of in previous Apple launches.
Was this new iPad somehow a flop?
How could there be a ready supply of product?
In my view, the answer is simple; Tim Cook and Apple made sure product was available. No longer would scalpers take advantage of the huge demand for Apple product. Instead, Apple would capture that profit by having enough inventory available to satisfy demand. And when the sales numbers are released from the 1st weekend of iPad sales, I expect shocking sales numbers greater than most analysts imagine.
It could be a coincidence that supply availability for a launch is now the norm for Apple under Cook’s watch, but I doubt it. I suspect that CEO Cook's belief that having adequate inventory is now the new normal at Apple. We consider this a great move forward for Apple and their supply practices. Scalpers now are not the ones to benefit from the demand for Apple product; that demand consequence now goes to Apple shareholders.
Secondly, after years of debate, Apple decided today to pay a dividend and buy back stock as a way to reduce the 100 billion dollars in cash currently held by the company. The announcement regarding their cash reserve was made just a couple months after a statement made during an earnings call that the board was mulling over the best course of action and an announcement would be forthcoming.
Isn't it comforting when an executive at a company says something is being thought about, and then an announcement is actually made regarding the results of the deliberations? It’s not so much that a dividend was declared, more about how it was done; orderly, thoughtful, and transparent. Follow through builds credibility.
There is something to be learned by all business leaders from the Apple's management transition. The key is not to blindly mimic a predecessor but instead to build off the strengths of those that laid the groundwork for your leadership. This self-acceptance is a welcome change from the bravado we often see in corporate America particularly when following an iconic leader. In some ways, it reminds me of when Bob Iger ascended to the CEO position at Disney. Iger exuded a workmanlike confidence; not flashy or brash. It is a lesson that I expect will be followed at IBM as Virginia Rometty succeeds Sam Palmisano.
For Apple, the question still remains as to who will drive innovation at the company going forward; that's the significant issue that needs to be addressed by Apple in the years to come. But at least for now, the company seems to be in steady hands. And considering how it could've gone so terribly wrong, that's probably why the stock has traded close to $600 a share rather than gapping down because investors were uncertain if Tim Cook could cut it.
Cook isn’t trying to impress us; he just seems to be focusing on moving the company forward in a thoughtful way. There's a long road ahead for Mr. Cook. But for now, he deserves credit for handling one of the most watched leadership changes in the history of corporate America with a calm demeanor and a seemingly steady hand.
We will continue to watch but, in my view, he's off to a good start.