George Colony isn't very popular with diehard fans of Apple Inc. (Nasdaq: AAPL) right now. Many in the electronics industry refuse to agree with Colony's long-term prognosis for the company, but you have to give the Forrester Research Inc. CEO credit for taking an unpopular stance on the world's most successful technology company.
In a blog posted on Forrester's home page on April 25, Colony laid out the business and sociological reasons why he believes Apple will "coast, and then decelerate" over the next "24 to 48 months." This rather negative opinion, published only one day after Apple announced record profits and sales, has sparked a lot of debate on the Web. On Tuesday, Apple reported a 94 percent increase in March-quarter net profit (to $11.6 billion from $6 billion) and revenue of $39.2 billion, compared with $24.7 billion in the year-ago quarter.
Just to be clear, I agree with Colony's conclusion. In fact, if there are any areas where I don't exactly see eye-to-eye with the Forrester boss, it would be that Jobs's death isn't the only trigger that I believe would result in slower growth for Apple eventually. Neither of us is saying Apple will decline or stop growing, but the current pace of expansion is not sustainable.
Apple's revenue more than doubled to $108 billion at the end of fiscal 2011 from $37.5 billion in fiscal 2008. The company's current growth rate, if maintained, will push Apple's annual revenue pass the $200 billion mark by fiscal 2013 or even earlier. Where will it go from here? I know many people in the industry believe Apple is infallible, but even if Jobs was alive, the company was bound to hit a wall eventually.
Forrester's Colony focused in his blog on how the departure of a charismatic leader often results in the slow decline of the organization. Jobs, the Forester analyst said, was at the core of almost everything that Apple had done in the last 10 years. Without him and the passion he ignited both within and outside the company, the enterprise was bound to slowly begin to lose momentum.
"In charismatic organizations, the magical leader must be succeeded by another charismatic -- the emotional connection of all employees and (in the case of Apple) customers demand it," Colony said.
He expanded further:
When Steve Jobs departed, he took three things with him: 1) singular charismatic leadership that bound the company together and elicited extraordinary performance from its people; 2) the ability to take big risks, and 3) an unparalleled ability to envision and design products. Apple's momentum will carry it for 24-48 months. But without the arrival of a new charismatic leader it will move from being a great company to being a good company, with a commensurate step down in revenue growth and product innovation.
Do you agree with Colony? If you take a look at the comments on Colony's post, there are some thoughtful, high-level, and interesting viewpoints. Joe Wilcox of Betanews also makes a compelling argument. I encourage you to share your own opinions on the message board below.
Yes, Apple is keeping mum about the products it is developing but I wonder what groundbreaking product the company has in reality rolled out in the last 10 years. The digital music player already existed and so did smartphones and tablet PCs long before Apple broke into the sector. It won for various reasons, including the fact rivals were not innovative in product design and ease of use. Please let me know what new markets it plans to go into.
None of us should underestimate the guru factor. Products are important but take another look at the smartphones, tablet PCs and digital music players in the market and tell me why Apple outshines them all. The Apple mystique is one explanation and that mystique was wrapped around Steve Jobs. We shouldn't ignore this fact.
It is like fashion trend to predict fallacy and eagerly await that it will happen so. But Murphy's law make it other way. No one predicted 2008 crash!
Apple may keep mum, busy in developing new product (Apple TV?). With this, Apple may have few more prime years. But it is nascent to make one's chimerical dreams as fallacy.
Yes, the company should move forward, but what if the talent of the company meant Steve Jobs? I didn't mean to say that Apple has to wait for another Steve Jobs, on the contrary, the company needs to work fast in finding the way to keep Jobs' talent working for Apple.
I am pretty sure there are at least a few people at Apple who were Jobs' disciples and could continue his work, just like in the old days when there was a great master and his disciples followed his teachings and examples.
Apple needs to deliver the same quality of innovative products without having Jobs guiding its moves. If the company manages to do this Apple will keep its position, and will not decelerate.
That's right; studying the life of a great personality, and by this I mean someone who accomplished more than what is normaly accomplished by means than are not common, we can not only learn a lot about how and why they became who they were, but also we can get inspired and motivated to follow the example of the ones we believe did something good and we admire for what they did, and most importantly, for how they did it.
Given that there are seven basic leadership styles, I believe Steve Jobs was a mix of charismatic and transformational leader, and Gandhi a mix of transformational and servant leader.
The transformational leader inspires his followers, creating a comfortable and friendly atmosphere, whereas being a good listener making others feel they have a voice is a characteristic of the charismatic leader; and a servant leader feels he needs to serve and guide by example rather than forcing his followers to do what he wants taking care of the needs of the followers first, rather than his own.
One of the principles I most admire from Gandhi is Satyagraha, or firmness in Truth, as it is translated from the Sanskrit. When I look at a leader, I try to find this principle that I consider fundamental.
The essential characteristic of a successful 'organization' is that it doesnt depend on individuals. Then why is CEO important. I look at CEO's as an outer image of the organization and its spokesperson. When there are too many minds who think effectively about product improvement and R&D in an organization besides CEO, the organization is bound to succeed even if there was no CEO at all. Its a team effort. Not to undermine the charisma of founder though.
To extend your point of view, I find both possibilities present. One being the one talked about over here i.e. the slow downfall of Apple Inc in post-Jobs era. The other not being thought is that may be Apple might perform better after Jobs. May be there are factors which Jobs was missing in order to lead a corporation. I am not talking about innovation and product development; Jobs was best at it. I am talking about investor relations etc in which analysts used to criticize Jobs. With Tim Cook running the show and making improvements on that part, may be Apple Inc is up in the running for longer term leadership.
"As much as Jobs had achieved guru status, though, the company is still about products."
You are right, the company's viability will depend on new and innovative products, and I am sure Apple's management understands that well. Analysts are doing their job by pointing out factors that could weaken the company, but Apple new and future leaders don't need to achieve a guru status to run the company.
There is a truth in what you said about Jobs' life. He was certainly a good business leader, visionary and innovator. But the company should move forward and use the talent it has rather than waiting for another Jobs who may never come. I think that there are out there many people who can continue Jobs works.
I also agree that Apple's growth will not be forever. But my question is whether this will be because of the lack of a charismatic leadership or just because of the market shift that will be inevitable (we all expect that another company will come up with better products to counter Apple's hegemony)? Either way, the company had better listen to the warning and take a paliative action.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
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Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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