Steve Jobs' Perception Problem

Apple's post-1997 business is very much about appearance—good design—and smartly managing perceptions. Under CEO Steve Jobs' leadership, people look for that delightful, eye-pleasing "one more thing" at each showcase event.

So, there's an irony that his physical appearance would become such a hot topic this week, following the Worldwide Developers Conference on Monday. The blogosphere exploded with speculation about Steve's health. Yesterday, one of my editors described Steve as "gaunt." In seeing him on stage, later reviewing the archived keynote and watching a CNBC interview, I've got to say that Apple's co-founder looked mighty thin and, well, aged.

They say a picture is worth a thousand words. What story, if any, do these pictures from Yahoo News tell you: One (Reuters/Kimberly White; WWDC 2008 keynote); Two (Reuters/Kimberly White; WWDC 2008 keynote).

The Appearance That Mattered
The appearance that had the biggest impact on Monday was the thin-looking presenter, not the iPhone 3G or other new products. Steve's thinness set off a cascade of perception problems about his possibly being in poor health and what that might mean for Apple. Steve kept secret pancreatic cancer diagnosed about five years ago, which in context had some people wondering if he might again be ill.

As I've repeatedly asserted: In business, perception is everything. Much of Apple's past success is about managing perceptions. But for the first time in years the company has got the worst kind of problem managing them. Because to many outsiders, Steve Jobs is Apple.

Yesterday afternoon, several editors and I discussed what we should write about Steve's "gaunt" appearance. I strongly encouraged caution writing anything. Stories about charismatic CEOs should be carefully handled, particularly when the someone is so strongly identified with his company. The stories or blogs we write can have enormous impact on companies like Apple. I've written plenty of stories over the years that negatively moved a company's share price (It's one reason why I don't own any stock).

Not 20 minutes after concluding the discussion, I saw a story in the Wall Street Journal about Steve's health, with official comment from Apple. Official response changed my position. I immediately contacted Apple for the statement. I'm still waiting. Earth to Apple: That's the wrong way to manage perceptions about Steve's health.

According to the Apple statement given to the Journal, Steve suffered from a "common bug," for which he has been taking antibiotics. What bug would that be? As one of my editors said this morning, antibiotics don't work for the flu.

Health Questions
I wondered about Steve's health even before WWDC. Wall Street Journal's D Conference takes place annually in late May. Steve is a regular guest, but not this year, presumably because of preparation for the developer conference. Yet he went last year, to appear on stage with Microsoft Chairman Bill Gates, just weeks before the original iPhone launch. Surely, iPhone 1.0 preparation then was even bigger than iPhone 3G preparation now.

But my questions about Steve's health go back further. I've been wondering about his stamina for about two years now. I remember a time when he did these keynotes solo, even for a couple hours. Sure, Steve would engage marketing chief Phil Schiller in some demo antics, but the CEO drove the keynote. That's not the case with recent keynotes, where Steve spends less and less time on stage, and people conduct different product demos.

On Monday, Steve spoke for about six minutes, then there was a video. He stayed on stage for about another minute before handing over the iPhone 2.0 demo to Scott Forstall, who stayed on stage (with developer guests) for nearly an hour. Scott and Phil then spent the majority of the keynote making the presentations. Steve spent about 9 minutes on stage between Scott's and Phil's presentations, then came back at the end, 20 minutes on stage, to debut the iPhone 3G. So, Steve presented for about 35 minutes out of the 1 hour 43 minute keynote.

Maybe he's just getting older, and his stamina has diminished. Maybe he looks thin because of that vegetarian diet. Maybe he loves tomatoes, which are scarce right now in California; supermarkets and even McDonald's have chucked the fruits because of a salmonella outbreak. Heck, I'd lose weight if pasta and tomato sauce were removed from my diet.

Let's assume for a moment that Steve is sick—that even the cancer has returned. What has been the impact on Apple? In life, health is everything. Living, let alone working, is difficult without good health. I have to assume that if he were sick, and really so, Steve couldn't invest as much in Apple. Yet Apple is flying high. Mac sales are way up; iPod is still hot; iTunes has more content and content tie-ins to new movies or TV shows; and iPhone 3G is ready to launch in 22 countries on July 11, supported by a new application store, Microsoft Exchange Support and the MobileMe Web site/service. If Steve Jobs isn't healthy, the company he co-founded surely is.

There's perception, particularly on Wall Street, that Apple couldn't go on without its charismatic leader. But if he is unhealthy and not fully up to the leadership task, Apple is doing well without full-time Steve—and that says something good about the leadership team he has put in place.

Problems of Succession
Still, there are legitimate questions about succession, who will lead Apple whenever Steve Jobs leaves. He's, what, 53 years old? Age discrimination is real, and that's something Apple, which sells hip products with youth appeal, shouldn't ignore. Even in good health, Steve can't go on running Apple forever.

Transition from charismatic founder leaders burdens any company. Microsoft has taken eight years moving from Bill to another Steve—Ballmer—the CEO. Bill will step down from day-to-day Microsoft operations in just a few weeks. Microsoft's Steve has his own succession problems—there is no one to replace him. I can think of no one in Microsoft's upper echelons that could replace Steve Ballmer. Many people feel even more strongly about similar succession problems at Apple.

But charismatic leaders can step aside, and without taking eight years doing so. For a long time, there seemed no good replacement for Sun's charismatic co-founder Scott McNealy. Between 1999 and 2002, Scott shared a kind of co-presidency with Ed Zander. Ed managed operations while Scott drove, and espoused, the vision. Scott stayed on as CEO until April 2006, when Jonathan Schwartz assumed the role after being predident and COO for about two years.

Maybe I didn't follow Sun closely enough during the early 2000s, because Jonathan struck me as such an odd replacement for the charismatic Scott. Jonathan's manner is much softer, and yet he's proved to be an effective, if quite different, visionary.

Some successions fail, and charismatic founders must return, as did Michael Dell (Dell) and Ted Waitt (Gateway). But Steve Jobs is living his return already. Booted in 1985 from the company he cofounded, Steve Jobs unexpectedly returned nearly a decade later when Apple bought NeXT.

Whenever his exit, I expect it will be Steve's final departure. Can Apple survive without him? Probably. Should it have to? Probably not. But unless Apple develops some mechanism for transferring consciousness to iPhone, Steve will go that path for which we all are destined. May that day be many years away.

Posted by Joe Wilcox on June 11, 2008 2:09 PM