Inside Apple: How America's Most Admired--and Secretive--Company Really Works (11 page)

C
ook and each of Jobs’s other key lieutenants embody different elements of what it takes to survive and thrive in the Apple ecosystem. Jobs was smart in surrounding himself with a crew who could function as extensions of himself yet had their own superpowers. He did not hire CEOs-in-training. He let people’s talent define their jobs, not the jobs define the people. Cook was a ruthless systems guy but one who grew to understand that logistics had to serve some higher mission. Jonathan Ive was a talented designer who long before he came to Apple obsessed over making technology beautiful. Since he had no designs on running the company, he enjoyed some of the greatest freedom of any Apple employee. Scott Forstall, an empathic engineer who could channel Jobs, was able to keep his ambition in check long enough to gain control of the two hottest product groups—iPhones and iPads. Whether Forstall will happily remain a supporting player will be one of the great internal dramas of Cook’s tenure.

To succeed in a company where there is obsessive focus on detail and paranoid guarding of secrets, and where employees are asked to work in a state of permanent
start-up, you must be willing to mesh your personal ambitions with those of the corporation. You have to forgo your desire to be acknowledged by the outside world and instead derive satisfaction from being Cn fse a cell in an organism that is changing the world. It is not for everyone. Like the officer candidate who can’t endure the abuse of the drill sergeant, some don’t make it. Even Apple’s board of directors—made up of voluble heavyweights, including former vice president Al Gore, former Genentech CEO Art Levinson, and J.Crew CEO Millard “Mickey” Drexler—toe the line when it comes to Apple. All played a supporting role to Jobs.

If the business consultant Michael Maccoby’s description of a “productive narcissist” perfectly captures the personality of an ascendant Steve Jobs and his profound impact on Apple, his analysis also sheds considerable light on the rise of Tim Cook. Maccoby writes:

Many narcissists can develop a close relationship with one person, a sidekick who acts as an anchor, keeping the narcissistic partner grounded. However, given that narcissistic leaders trust only their own insights and view of reality, the sidekick has to understand the narcissistic leader and what he is trying to achieve. The narcissist must feel that this person, or in some cases persons, is practically an extension of himself. The sidekick must also be sensitive enough to manage the relationship.

Business history is full of such sidekicks. Frank Wells famously played second banana to Michael Eisner at Disney, so much so that Disney-watchers trace Eisner’s
decline in the job to Wells’s untimely death in a 1994 helicopter crash. Donald Keough played the same role to the legendary Roberto Goizueta at Coca-Cola. Sheryl Sandberg, a former top Google executive and Treasury Department chief of staff for Larry Summers, has made herself indispensable to Facebook CEO Mark Zuckerberg by running all the aspects of the company that don’t interest the young founder—while not challenging her boss on the areas that do.

For his part, Timothy Donald Cook, who is fifty-one, played the trusted aide to Steve Jobs for nearly fifteen years. He was the perfect casting for Apple’s long-running buddy movie. Where Jobs was mercurial, Cook was calm. When Jobs cajoled, Cook implored. Jobs eviscerated volubly; Cook did so with so little emotion that one observer likened the experience to a dressing-down by a seethingly quiet parent: “You wished he’d scream instead and just get it over with.” Jobs was larger than life; Cook faded into the woodwork. Jobs was the epitome of right-brain vision, Cook the embodiment of left-brain efficiency. Jobs bore the exotic Middle Eastern hues of his biological father and a kinetic aura that excited those around him. Cook is the prototypical Southerner: square-jawed, broad-shouldered, pale-skinned, with graying hair and an overall blandness to his appearance and demeanor. Jobs wore distinctive round spectacles. Cook wears barely noticeable clear, rimless glasses.

Critically, Cook wasn’t threatening to Jobs, there being no question who was the rock star and who was the bloke on bass guitar. Jobs’s ego could tolerate Cook’s rise because Cook’s ego was impossible to discern.

Yet while Apple’s visionary was busy changing the
world, its taskmaster quietly was accumulating a tremendous amount of power inside Apple. Cook grabbed responsibility after responsibility so gradually that almost until he became CEO no one seemed to notice. An Apple outsider—worse, he was a longtime PC man who bled IBM blue—Cook was the last member to join Jobs’s post-1997 executive team. He had grown up in Robertsdale, Alabama, a small town Ca sM bl“on the way to the beach” in southern Alabama, and attended Auburn, where he studied industrial engineering. After college he took a job at IBM, where he stayed sixteen years, working in the division in Research Triangle Park, North Carolina, that manufactured PCs. While at IBM, he picked up a night school MBA at Duke. In 1997, after a stint as the operations chief of a computer distributor, Cook took a logistics job at Compaq, then a hot PC maker with an expertise in just-in-time manufacturing methods.

He didn’t last long at Compaq, though, because shortly after he started Steve Jobs came calling. Jobs recognized that Apple’s manufacturing was a shambles. It owned factories and warehouses spread out around the world, from Sacramento, California, to Cork, Ireland. By 1998, when Cook joined Apple, the company was in the process of pruning everything—from its product roster to its executive ranks. Jobs knew enough about operations to know that first, Apple’s were badly broken, and second, overseeing their repair didn’t interest him.

In Cook, Jobs found someone with whom he had little in common other than musical tastes: They shared a fondness for the rock-and-roll greats of the 1960s. Yet he knew Cook could help him slim down the company.
The new recruit quickly closed all of Apple’s factories, opting instead to mimic industry leader Dell by outsourcing manufacturing. The goal was to strengthen Apple’s balance sheet by cutting down on the wasteful practice of carrying on its books more parts than were needed. Inventory, Cook would later explain, “is fundamentally evil. You want to manage it like you’re in the dairy business: If it gets past its freshness date, you have a problem.”

Cook quickly developed a fearsome reputation at Apple as a Mr. Fix-it who blended in but didn’t take no for an answer. Recalled a senior colleague from that era: “Tim Cook is the kind of guy who just doesn’t get flustered.” His meetings were legendary for their length and the breadth of detail he’d require from his staff, many of whom he recruited from IBM. Cook’s palette was a spreadsheet, and he’d study each line before meetings with his vice presidents. “They’re nervous going into that meeting,” said an employee who knew Cook’s group. “He’ll say, ‘What’s this variance on column D, line 514? What’s the root cause of that?’ And if someone doesn’t know the details, they get flayed right there in the meeting.” Unlike Jobs, though, Cook was even-keeled. “I don’t recall his once raising his voice,” said Mike Janes, who worked for Cook. “His ability to go from forty thousand feet to nose-against-the-windshield is amazing.”

Like Jobs, Cook accepted no excuses. Early in his tenure, Cook remarked at a meeting with his team that a certain situation in Asia was a real problem and that one of his executives ought to be in China dealing with it. The meeting continued for another half hour or so, when Cook stopped abruptly, looked up at one of his executives, and
asked in all seriousness: “Why are you still here?” The executive stood up, drove to the airport without a change of clothes, and flew to China.

Cook was known for his prodigious memory and command of the facts. “The man can process an insane amount of data and know it down to the technical level,” said Steve Doil, who also worked for Cook. “Other CEOs and COOs will tell you ‘I have people who can tell you that.’ Not Tim. He knows. He can walk around campus and know in great detail enough to ask something like: ‘How are iPod repairs going in China?’ ”

Over time, Cook picked up one after another of the responsibilities from the original members of the Apple management team, consolidating his authority over every operational aspect of the company that wasn’t considered “creative.”

First he took over sales, which before Apple opened its retail locations primarily meant selling through retailers and other resellers. Next he took on customer support and later Macintosh hardware, already a maturing business by the time the iPod surged in popularity. When the iPhone came out, Cook spearheaded negotiations with wireless carriers around the world.

He had his first taste of running the company when he filled in for two months in 2004 after Jobs had surgery to remove a cancerous tumor from his pancreas. He again covered for Jobs during the six months in 2009 when he received a liver transplant, and again in early 2011, when Jobs stepped aside for his final medical leave. It was a popular parlor game in Silicon Valley during 2011 to wonder if Cook would succeed Jobs, but insiders knew he already was running the company—even as Jobs contin
ued to weigh in on important decisions and to nurture major initiatives. Six weeks before Steve Jobs died, Apple’s board of directors named Cook CEO as well as a member of the board.

I
t is no coincidence that the more responsibility Cook took on in the nuts-and-bolts parts of Apple, the more Jobs was freed up for his creative endeavors. Released from worrying whether customer service was operating smoothly or if retail outlets were receiving inventory to match customer demand, Jobs spent the last decade of his life dreaming up the iPod, iPhone, and iPad—and then marketing them. Jobs could make his impossible demands—longer battery life, flash memory where a disk drive had been—and move on to the next task while his orders were being implemented.

Though not a product designer or a marketer himself, Cook fit in culturally at Apple. In an organization that frowned on talking about money, Cook was extraordinarily frugal. Well after he had sold more than $100 million in Apple stock, he rented a modest home in Palo Alto, a little over a mile from where Jobs lived. (In 2010, Cook finally bought a house of his own, not far from his previous rental, but hardly an extravagant one. Public records indicate he purchased the house for $1.9 million, which in Palo Alto qualifies as a modest abode.) Asked why he lived so humbly, he once said: “I like to be reminded of where I came from, and putting myself in modest surroundings helps me do that. Money is not a motivator for me.” (Motivation or not, upon elevating him to CEO, Apple’s board awarded Cook a million shares of restricted
stock, half of which vest in five years and the balance in ten. Assuming Cook stays the full decade, the grant was worth $400 million at the time the shares were issued.)

In a company chock-full of workaholics, Cook stood out for his all-work-no-play reputation. Single and, as far as any of his colleagues knew, unattached, his idea of a fun vacation was hiking in Yosemite National Park. Cook cycled for recreation and often turned up at an upscale Palo Alto fitness club for 5:30 a.m. workouts. Asked at Apple’s 2011 annual shareholder meeting if he had seen a one-man play in Berkeley, California, that depicted Apple’s outsourcing practices in an unfavorable light, Cook replied: “Unfortunately if it’s not on ESPN or CNBC I don’t see it.”

Cook took naturally to the requirement that anyone working for Steve Jobs needed to have a Ced p hlow profile. He gave money to Auburn, where alumni association officials noted his lack of a need for recognition. But Cook was allowed to take certain steps that showed he was being groomed for a bigger role. Apple executives generally are prohibited from non-Apple assignments, but Cook joined the board of Nike, seen as a broadening experience for him as well as an opportunity to observe another iconic founder, Phil Knight. Even at Nike, Cook remained low-key. “He never discusses Apple personalities or his accomplishments at Apple,” said John Connors, a fellow board member and onetime chief financial officer of Microsoft. “He’s the General Petraeus of the corporate world, the kind of guy who lets his results speak for themselves.”

Logistics is in fact a key aspect of military planning, and Cook is responsible for Apple’s operational excellence. For example, when Apple knew it would move away
from disk drives in its iPods and MacBook Air notebooks, it invested in billion-dollar forward purchases of flash memory. Cook’s supply-chain organization executed this masterstroke, which accomplished the trifecta of securing Apple’s supply, locking in the lowest price, and hobbling the competition’s access to components. Such back-of-the-shop excellence at a company known for its creative flair is a rare example of what researchers Charles O’Reilly of Stanford and Michael Tushman, a professor of organizational behavior at the Harvard Business School, refer to as “ambidexterity as a dynamic capability.” In other words, it reflects the ability of a top-performing company to be simultaneously efficient and innovative. As noted, Cook’s efficiency is what freed up Steve Jobs to be so innovative. After all, the two ways a company makes money are by growing revenues and cutting costs. Apple does both, and the operations machinery that Cook built is the engine that drives down costs while enabling the products that lead to growth.

The obvious question about Cook, though, is whether he has the personality to lead an organization created in the image of Steve Jobs. In public, Cook has a winning smile and a dry wit. Back when Apple had to try harder to convince PC users to buy Macs, it added the capability to run Windows on a Mac. Demonstrating the function at a Mac event, Cook displayed the hated Microsoft’s software and deadpanned: “It sends shivers up my spine, but the fact is it’s working.” He once told a group of investors that “the iPhone was just below food and water on Maslow’s hierarchy of needs,” according to Sanford Bernstein research analyst Toni Sacconaghi, who witnessed the quip.