Over the past few years, Apple (NASDAQ: AAPL ) has been on a hiring spree, picking up high-profile professionals for senior management positions. As an Apple shareholder, this concerns me. Despite gold-plated resumes, it's unclear whether the new hires will be effective. But, more importantly, I don't understand why Apple needs hired guns. Historically, the company has been successful with homegrown talent. Does Apple lack the ability to develop future leaders? Is Apple going to become a company led by highly paid, highly qualified corporate-types? On both counts, as an Apple shareholder, I hope not.
Historically, Apple's success has driven by homegrown leaders
During the second Steve Jobs era, a period of incredible success (iPod, iTunes, iPhone, iPad), Apple's leadership team remained fairly consistent. Most of the leaders were promoted internally. Consider some of the members of the executive suite during the period who had the greatest impact -- Jony Ive, Scott Forestall, Bob Mansfield, Ron Johnson, and Tim Cook. They all joined Apple with solid experience and skills, but none of them were high-profile hires. None of them parachuted directly into top jobs at Apple -- they worked their way up over time.
The architect of Apple's incredible design, Jony Ive, joined Apple in 1992, only a few years out of design school. Scott Forestall, a driving force in Apple software, started working with Steve Jobs at Next in 1992. Bob Mansfield, who led Apple's hardware engineering for the iPod, iPhone, and iPad, joined Apple in 1999 when it acquired his employer, Raycer Graphics. Ron Johnson, who built Apple's retail business, joined Apple in 2000, leaving his position as head of housewares at Target (NYSE: TGT ) . Tim Cook joined Apple in 1998 to clean up the supply chain. Previously, he was VP of corporate materials at Compaq, where he was described as "not very senior or visible."
And of course, Steve Jobs was the ultimate homegrown leader at Apple. With literally no credentials or experience, he founded the company along with Steve Wozniak and Ronald Wayne. Before Apple, Jobs had a resume that included the following major points: dropping out of Reed College, working as a "valuable but difficult" technician at Atari, a spiritual quest to India, and using lots of LSD. Not exactly a sterling corporate resume, but he had tremendous vision for creating "insanely great products." To fulfill his vision, he used an unconventional (and often unprofessional) management style, which turned out to be highly effective.
Why is Apple bringing in hired guns for senior management?
Apple's amazing success over the past decade has been driven by internal talent. So why is the company so focused on pulling in external leaders? As an organization, is Apple unable to develop leaders and innovative thinkers? Has Apple's culture become so stale or dysfunctional that its needs an injection of outside thinking? Does Tim Cook think buying talent is more effective than developing it? Honestly, I hope the answer to all those questions is no. But it certainly causes me concern.
Foolish bottom line
Apple is an amazing company, and I'd like to see it succeed. After all, like many Fool members, I'm a shareholder. I'm also a dedicated Apple customer, but as an investment analyst, I can't be blindly loyal to the company. I need to dispassionately assess its business practices, and this new hiring strategy raises some concerns for me. I'd prefer that the company relied on internally developed leaders. On its own, this concern doesn't make me bearish on the company. After all, Apple still has a great brand, loyal customers, excellent products, and solid financials. But it does make me question Tim Cook's management practices, and I'll continue to monitor the situation.
Maybe it's just my personal bias, but I'm skeptical of highly qualified corporate hires. Conventional people and strategies generate conventional results. Since I'm looking for extraordinary investment returns, I prefer radical or non-conventional people. If Steve Jobs has taught me anything, it's that.
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