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Does the shuffle of CEOs portend stagnation for Apple?

When Apple announced yesterday that Steve Jobs was resigning as CEO to become chairman of the board of directors, the company鈥檚 new CEO sent an email that caught the attention of a Lehigh management professor.

鈥淚 want you to be confident that is not going to change,鈥 Tim Cook wrote to employees as he assumed leadership of the tech giant. 鈥淲e are really looking forward to Steve鈥檚 ongoing guidance and inspiration as our Chairman.鈥

Cook鈥檚 strategy, says Tim Quigley, assistant professor of management in the College of Business and Economics (CBE), may not bode well for the future of innovation at Apple.

鈥淭he genius of has been his ability to innovate, evolve and change the firm,鈥 says Quigley. 鈥淎pple today looks little like the Apple of even five or 10 years ago.

鈥淣o one knows for sure how Steve does it. Presumably, he has a keen eye for scanning the environment for market trends, consumer preferences and technology developments, and then putting them all together into new and amazing products people want to have.

鈥淢y concern is that, as Jobs takes more time to deal with other issues in his life, he will have less time to monitor what鈥檚 going on and agonize over every last detail of product design. If Jobs sticks around for a long time but declines in his ability to do these things, people might still defer to him rather than push forward precisely because he is still chairman.

鈥淎nd his presence might keep someone else from stepping into that void.鈥

A freezing effect on future strategic change

In a forthcoming article in Strategic Management Journal, Quigley and coauthor Donald Hambrick of Penn State University鈥檚 Smeal College of Business suggest that Jobs鈥 ongoing presence as chairman could result, over the long term, in stagnation rather than innovation.

Their article is titled 鈥淲hen the Former Stays on as Board Chair: Effects on Successor Discretion, Strategic Change, and Performance.鈥

By moving from CEO to board chairman, Quigley says, Jobs may be 鈥渇reezing the firm from making subsequent strategic change.

鈥淥ur study shows there are fewer strategic changes and fewer swings in firm performance when the predecessor sticks around as board chair. The place stays like it was at the time of succession rather than evolving. That would be a huge problem for Apple.鈥

鈥淢ost interesting, however, we found in supplementary analysis that the predecessor as chair has a disproportional effect on performance.

A possible impact on the next blockbuster device

鈥淣amely, his continued presence as chair decreases the likelihood of large gains in performance but has no impact on the chances for steep declines.鈥

In Apple鈥檚 case, Quigley said, his study leads him to conclude that corporate strategy will remain the same.

鈥淲hile this might sound like a positive, it might mean Apple will stagnate rather than continue to innovate.

鈥淚nstead, Jobs鈥 continued presence as chairman might restrict Apple from making the strategic changes or investments the company needs to make, which could lead to a greater chance for severe declines in performance.

鈥淪o, while some are arguing that Jobs鈥 ongoing presence might nullify concerns about Apple鈥檚 immediate future, our study suggests that there might be cause for heightened concern precisely because he is sticking around.

鈥淲e know iPhone 5 and iPad 3 are coming. Apple will sell millions of these over the holidays and probably have a record-breaking quarter. Analysts will say Jobs鈥 stepping down as CEO had no effect or even was a good thing. 

鈥淏ut these products are already in the pipleline. My concern is the next generation of products鈥攊Phone 6, iPad 4 and, more important, the next big blockbuster device Apple has yet to invent.

鈥淚f Jobs spends less time on these issues and his presence as chair blocks others from filling the void, you will see a problem in one year or 18 months, and few will make the connection then.鈥

Provided by Lehigh University

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