Here's Why Apple Will Never Be What It Was Under Steve Jobs

Former Wall Street Journal reporter Yukari Iwatani Kane caused quite a stir in the Appleblogging world with her book, "Haunted Empire: Apple After Steve Jobs ." It paints a picture of a company settling into a kind of ideological stasis since the death of its revolutionary leader.

Anything that even slightly hints at Apple
fading from glory gets certain people annoyed.
But, what she's saying is not that crazy. Apple
under Steve Jobs had an unparalleled run of
success. From the iPod to the iPhone to the iPad,
Jobs was almost perfect in his product delivery.
But nothing lasts forever. At some point a
company runs out of ideas, or the competition
improves, or its execution comes up short.
Apple was going to bump up against the law of
averages even with Jobs around. With him gone,
it's going to be even harder to continue its
excellence.

Kane thinks that Apple will most likely never be
the king of innovation that it once was and that
its current leadership could be steering it to a
significantly lower level of cultural importance.
In her book, Kane quotes Harvard Business
School professor Gautam Mukunda, author of
"Indispensable: When Leaders Really Matter,"
who explains that not even Apple is immune to
what he calls "business physics."
Mukunda's theory is that businesses cannot
grow forever, and that at some point they have
to plateau.

Referring to factors like internal complacency
and pressure from competitors, Mukunda told
Kane, "There are just forces in any environment
and any market that constantly drag companies
to the mean. What Apple did was essentially in
violation of business physics for an extremely
long time. They created this beautifully
optimized machine."

Jobs transformed Apple from a has-been into a
giant by introducing the world to brilliantly
designed and revolutionary products like the
iPhone and iPad, and marketed them on stage
with mesmerizing presentations that only he
could deliver.

Now, under the leadership of CEO Tim Cook,
Mukunda said: "Apple can be an excellent
ordinary company or a genuinely extraordinary
one. But it can't be both."
Under Cook's watch, Apple reported $58 billion
in revenue for the first quarter of 2014, its
biggest quarter ever, and it brought in $170
billion in revenue last year. For all of 2010, the
company did $65 billion.

But the numbers can be misleading. Look at
Microsoft. Sales under CEO Steve Ballmer grew
while the company became increasingly
irrelevant in the broader tech industry.
Apple is reportedly developing an iWatch,
which would be a health and fitness tracking
device. If it's a big hit, it would prove Kane, and
other naysayers wrong. It would show that
Apple, in a post-Steve Jobs era, can still
innovate in new technology categories.
If the iWatch is a flop, it's really bad for Apple.
The competition isn't sitting on its hands,
waiting for Apple to do something. Facebook is
investing in virtual reality headsets , and
Amazon is looking into delivery drones. At the
TED2014 conference, Google CEO Larry Page
talked about self-driving cars and curing
disease.

Cook has consistently said Jobs told him to run
Apple as he sees fit, not as he thinks Jobs would
have run Apple. However, he's done little to
change the company's operations.
In an interview with Business Insider, Kane
said that most of Apple's executives have been
around for 15 years and that "no one can
remain cutting edge forever."

Working at Apple no longer stands for what it
used to, Kane argues. Silicon Valley's young
talent would rather start their own companies
or work elsewhere, and competitors have been
poaching Apple employees who, she says, would
not have considered leaving during the Jobs
years.

Apple has made some interesting hires recently,
like Burberry CEO Angela Ahrendts to be its
retail chief, but Kane thinks that Cook is too
comfortable projecting the image that Apple is
the same as it's ever been. She wants Apple to
publicly recognize that 2014 is very different
from 2010, the last year Jobs was leading it.
In the epilogue of "Haunted Empire," Kane
writes that under Jobs' brilliant second run at
Apple, "with each new triumph, the company
rose higher and higher. But," referring back to
Mukunda's point, "sooner or later gravity
always wins."

So far, the majority of critics and analysts find
Kane's assumptions to be much too pessimistic.
But, what if she's right? Apple has been the
leader for 15 years. Is there any other instance
of a company sustaining excellence for that
long?

Of course, Apple is far from doomed. It has $146 billion in cash. It's not going to suddenlyhave to shut down operations. But, if it goes sideways like Kane predicts, it will be as good as done. In the technology industry,
if you're not making giant moves, you're as good as toast.