Earlier this week, I came across a widely circulated article from Steve Blank articulating why Tim Cook is effectively Apple’s own version of Steve Ballmer, which is to say that Cook is a non-visionary who is adept at increasing sales but not much else. On a superficial level, the comparison is an easy one to make and, if you’re not one who cares about nuance, it might even seem like a fair analogy.
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The gist of Blank’s argument is simple. Ballmer is a sales guy who helped Microsoft grow but was unable to leverage the company’s existing success into new innovative products. Stepping into Bill Gates’ shoes, Ballmer was patently incapable of filling them. Cook, in a similar vein, is an operations guy who has taken Apple’s financials to record-levels. But, much like Ballmer relative to Gates, Cook is no Steve Jobs and Apple’s innovative spirit has struggled as a result.
For Microsoft to have tackled the areas they missed – cloud, music, mobile, apps – would have required an organizational transformation to a services company. Services (Cloud, ads, music) have a very different business model. They are hard to do in a company that excels at products.
Ballmer and Microsoft failed because the CEO was a world-class executor (a Harvard grad and world-class salesman) of an existing business model trying to manage in a world of increasing change and disruption.
Indeed, Ballmer’s failures as Microsoft’s CEO center mostly on his inability to anticipate and take advantage of any number of important technological revolutions. Two quick examples include Microsoft not being able to compete in the digital music space and in the smartphone space. In a broad sense, Ballmer’s fundamental failure as a CEO was his inability to appreciate that the technological landscape that Microsoft grew rich on was changing rapidly underneath its feet. Ballmer’s ultimate mistake, to be more specific, wasn’t that Microsoft didn’t come out with an iPhone-like device first, but rather that Ballmer was unable to grasp that the iPhone was, right of the gate, where the future of mobile was headed. In short, Ballmer and Microsoft completely missed the boat.
Looking at Cook, it’s hard to draw any parallels between his tenure as the CEO of Apple over the past five years and Ballmer’s stint as Microsoft CEO.
Tim Cook has now run Apple for five years, long enough for this to be his company rather than Steve Jobs’. The parallel between Gates and Ballmer and Jobs and Cook is eerie. Apple under Cook has doubled its revenues to $200 billion while doubling profit and tripling the amount of cash it has in the bank (now a quarter of trillion dollars). The iPhone continues its annual upgrades of incremental improvements. Yet in five years the only new thing that managed to get out the door is the Apple Watch. With 115,000 employees Apple can barely get annual updates out for their laptops and desktop computers.
This argument simply doesn’t hold up. For starters, Blank is comparing Ballmer’s entire tenure at Microsoft to Cook’s 5 years at Apple. Even so, Cook’s achievements are for more impressive from a financial perspective. Cook officially assumed the CEO position at Apple in late 2011. From 2012 to 2015, Apple’s revenue increased from $156 billion to $233 billion. Without question, Apple’s most impressive period of growth has come with Cook at the helm.
Steve Ballmer retired in 2013, but from 2010 to 2013, Microsoft’s revenue increased from $62 billion to $77 billion. That’s impressive, sure, but it’s nowhere on par with what Cook has managed to do.
As for “annual upgrades of incremental improvements”, well, that’s how innovation typically works. Revolutionary products like the iPhone, almost by definition, are once in a lifetime products. Nonetheless, the iPhone has improved tremendously with Cook at the helm. Touch ID is a complete game-changer and it was implemented with Cook as CEO. Over the last few years, the iPhone has set new standards of excellence for mobile photography. What’s more, the company’s in-house team of hardware engineers consistently turn out increasingly impressive A-x processors that routinely leave competitors in the dust.
Blank continues:
But the world is about to disrupt Apple in the same way that Microsoft under Ballmer faced disruption. Apple brilliantly mastered User Interface and product design to power the iPhone to dominance. But Google and Amazon are betting that the next of wave of computing products will be AI-directed services – machine intelligence driving apps and hardware. Think of Amazon Alexa, Google Home and Assistant directed by voice recognition that’s powered by smart, conversational Artificial Intelligence – and most of these will be a new class of devices scattered around your house, not just on your phone. It’s possible that betting on the phone as the platform for conversational AI may not be the winning hand.
This is where Blank’s argument effectively falls off the rails. There’s absolutely no question that Microsoft missed a number of important technological waves. The same, however, can’t be said for Apple. Will AI directed services be the next big thing as Blank suggests? Maybe it will. Maybe it wont. The simple reality is that the next big thing hasn’t yet revealed itself. Maybe it will be AI, maybe it will be virtual reality, maybe it will be augmented reality, or maybe it will be something else entirely different that’s not even on anyone’s radar at the moment. The important takeaway here is that Apple has historically never been first to a given market. On the contrary, when Apple gets a read on what the next big wave in consumer electronics will be, it dives in head first, often late to the game, but with a product that’s better and more intuitive than the competition.
Admittedly, Apple is lagging behind in the current battle for AI supremacy. Nonetheless, it’s so early in the game that to declare a winner today is on par with proclaiming in 2000 that Apple had already lost the digital music race because it didn’t have an MP3 player.
Blank, in a way, acknowledges this, but also adds that he doesn’t have faith in Tim Cook to grasp when the next technological wave will hit.
It’s not that Apple doesn’t have exciting things in conversational AI going on in their labs. Heck, Siri was actually first. Apple also has autonomous car projects, AI-based speakers, augmented and virtual reality, etc in their labs. The problem is that a supply chain CEO who lacks a passion for products and has yet to articulate a personal vision of where to Apple will go is ill equipped to make the right organizational, business model and product bets to bring those to market.
No one is going to argue that Tim Cook’s innovative vision is on par with Jobs’. Still, we have yet to see Apple make a serious misstep in the tech space that has caused the company to fall completely behind the rest of the industry. This is in stark contrast to what we saw with Ballmer when he was the CEO of Microsoft.
If Apple misses the next big thing and is left watching helplessly on the sidelines, then sure, one could reasonably call Tim Cook a second coming of Steve Ballmer. But until that happens, such proclamations amount to nothing more than bold and eye-catching statements resting precariously on dangerously little evidence.
And as a final point, to the issue of releasing innovative new products, it’s easy to forget that Microsoft’s innovations during Gates’ tenure as CEO were various iterations of Windows. Software update after software update after software update. In other words, let’s not try and pretend that Microsoft back in the late 80s and 90s was a beacon of innovation with forward-thinking new products coming down the pipeline every few years.
