Don’t miss the latest developments in business and finance.

Creative construction

Image
Robert Cyran
Last Updated : Jan 20 2013 | 2:28 AM IST

Jobs succession: Losing a visionary like Steve Jobs as chief executive is reasonable cause for shareholder concern. But Apple wouldn't be the first large and innovative company to weather a difficult succession. IBM, Wal-Mart and General Motors show how an obsessive focus on design, customer needs and tight control over supply chains can be ingrained in a culture by its creator. But these examples also provide warning signs about how those who follow Steve Jobs could go wrong.

Thomas Watson was a similarly iconic figure at IBM. When he joined in 1914, he established a near religious atmosphere. Salesmen wore buttoned-down vestments, engineer priests toiled away in labs and there was even a corporate mantra - THINK. This virtuous combination helped the company churn out high-quality equipment and gain a hard-won reputation that IBM couldn't be the wrong choice. Post-Watson leaders stuck to the formula with great success for several decades.

Wal-Mart also showed the value of wash-rinse-repeat. The mega-retailer didn't skip a beat when founder Sam Walton stepped down in 1988. New CEO David Glass wisely didn't tinker with the recipe: set up shop outside a small town not well served by rivals, embrace economies of scale to sell goods cheap and use technology to keep inventory at remarkably low levels. Wal-Mart's sales are 26 times as large now as they were when Walton stepped down.

Even General Motors thrived for a time after Alfred Sloan gave up the reins in the mid-1950s. Under his rule, the carmaker set up a system of distinct brands, dealers to support them and a systematic approach to management befitting its engineering culture. GM stayed on autopilot after Sloan left - and the company retained its solid position in the U.S. car market in the ensuing years.

While all three enjoyed success after their larger-than-life figures retired, their playbooks also paved the way for stagnation. IBM's buttoned-down culture and focus on big business meant it was slow to the PC revolution. GM's technocratic system failed when the firm became increasingly sclerotic and bean counters took over from the engineers. Wal-Mart has struggled to export its model and has experienced persistent labor problems at home.

As the new Apple boss, Tim Cook will have his work cut out avoiding such pitfalls. But history also suggests that trailblazers like Jobs leave behind some worthy blueprints to follow.

Also Read

First Published: Aug 27 2011 | 12:10 AM IST

Next Story