Is Apple Prepared for a Succession?

Shockwaves rippled across the Mac community and among investors when news surfaced of 49-year-old Apple (Nasdaq: AAPL) CEO Steve Jobs' bout with pancreatic cancer this past weekend.

In an e-mail to employees at the Cupertino, California-based computer maker, Jobs revealed the news of his medical condition and suggested he would be back at the helm after a 30-day recovery period from the surgery.

In the interim, Apple Executive Vice President of Worldwide Sales and Operations Timothy Cook is running the company.

The company is known for its protective veil, often remaining quiet about the machinations and people behind Steve Jobs and the Apple brand. As such, any crisis it might be facing could be one only of lack of communication of succession planning.

A Wake Up Call

Still, Steve Mader, CEO of executive search firm Christian & Timbers, told MacNewsWorld that events like these are wake-up calls to some companies who may not have well thought out plans in place.

"I wouldn't be so sure that there is a well thought out plan in any company," Mader said.

Mader said he believes that those watching Apple would assume Tim Cook would be the most important person after Jobs, the next in line. However, the company has not publicly discussed succession.

"Companies have an obligation to help the world understand that they have talented managers," Mader added.

Peter Kastner, executive vice president at Aberdeen, played down the news and said he believes a 30-day medical leave will not impact Apple.

"The head of sales is now running the company during the big back-to-school season. Under these limited duration circumstances, I don't foresee any major management issues," Kastner said.

Public Is Watching

In an interview with MacNewsWorld, Lee Hecht Harrison Senior Vice President Delphia Craft suggested a company's public persona is a critical part of the succession planning process, and it starts with the board of directors.

"Boards are starting to realize more than ever how important succession planning is, and they have a huge responsibility in the process," Craft said. "There needs to be buy-in for future leadership by the board, employees and investors."

Craft said in Apple's case, the company is run by a visionary, and regardless of how successful its products might be, if the next-in-line cannot carry that same vision, the public could lose faith.

"Who is driving innovation at Apple? Who else could if Mr. Jobs was not there?" Craft asked. "Apple buyers may love the products, but investors want to see a management team that can execute."

Wheels of Ascension

Mader, whose firm put Carly Fiorina and Hewlett-Packard (NYSE: HPQ) together, contrasts Apple with the momentus but calm succession of General Electric's (NYSE: GE) Jeffrey Immelt, who took the reigns of the company from Jack Welch in 2001.

"The succession was clear and communicated," Mader said.

In a case where plans for future leadership are unclear, Mader said he thinks a board would want multiple pathways for succession to choose from.

"Analysts and observers create a second rhythm about a company and often know who is who. However, companies could be more aggressive in communicating this to the public," Mader said.

Analysis of Future Leaders

For Craft's part, she indicated she thinks this is a good time for Apple to perform an internal analysis on its leadership needs over the next 2 to 5 years.

"What are the competencies needed, who are the future leaders, or, who is being groomed to have the leadership qualities necessary to run the company?" Craft added.

Mader said public discussions of succession planning remains a gray area, with two schools of thought.

"On one hand, a company may think the public does not deserve what is private information, and on the other hand, publicizing the management team can be a marketing tool," Mader said.