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31 August 2011, Gateway House

Steve Jobs: America’s greatest innovator

“What Now?” asked the headline on the front page of the San Franciso Chronicle, the day after Steve Jobs stepped down as CEO of Apple. After more than a decade of technological ascendancy by Jobs and Apple, where and who now will the world look towards for the next creative breakthrough?

Editorial Advisor, Gateway House

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We landed at San Francisco airport only two hours after Steve Jobs resigned as the leader of Apple. Most people on the plane already had the news.  It flashed over the television monitors on board. In the airport, the ads lining the walls are for companies like Oracle, Juniper and SAP. Apple doesn’t have to advertise here. Everyone knows its headquarters 50 miles down the road in Cupertino, California, makes it the dominant player in the region.

The next morning a friend who works for Apple’s competitor Google, and didn’t want to be identified, went to Cupertino. Google and Apple are competitors in mobile phones but Apple is also an advertiser and customer for Google. “Everyone was talking about Steve and the future. But they all believe Apple has so much going on that it will be several years before anything could hurt the company with Steve’s leaving. For insiders this wasn’t a surprise. And like everything at Apple, Steve’s departure will be handled with the utmost attention to detail,” my friend told me.

Sure enough. The next morning’s papers were full of admiring stories about Tim Cook, Job’s successor. “What Now?” asked the San Francisco Chronicle in black type that would usually be reserved for Presidents or the Pope. The paper then went on with seven full stories, most pointing out Cook’s behind-the-scenes skills, ability to provide continuity and his genius at designing Apple’s manufacturing process.

While lesser known globally, Cook, 50, is a brand name in Silicon Valley. He was, according to insiders at Hewlett-Packard (HP), the unanimous choice to lead HP after CEO Mark Hurd resigned under pressure from a sexual harassment probe. Cook, then COO of Apple, flatly refused the offer. HP has now decided to exit the consumer electronics business – Cook’s signature success at Apple. Cook’s success lies in integrating physical manufacturing with digital delivery. His work made Apple, again, the No.1 supply chain company in the world, as ranked by the American Management Association.  This is why: two days after Apple gets an iPhone order, the phone gets delivered to the customer’s door from China. Because Cook’s name had been widely circulated as Jobs’ successor, no one blinked at the news. But it was also like trading a rock star named Jobs for a guy who makes the trains run on time.

Even as Cook’s organizational brilliance was lauded, stories also rolled out about Jonathan Ive, the British-born Apple designer who produced everything from the PowerBook G4 to the MacBook series to the iPod, iPhone and iPad. In other words, Ive, known as Jony, is credited with creating all the beautiful brushed-aluminium Apple products that you want to own. He has been at Job’s side since 1997 after Jobs came back to remake Apple.

By the weekend, the New Apple story was pretty clear.  The company’s success is based on a manufacturing genius named Cook and a design genius named Ive who will both be on board no matter what, and who have a history of working well together.

Steve Jobs was the maestro waving the baton over the orchestra.

That spin quieted investors who had driven the stock down 1% on the resignation news but quickly brought it back to $383 by the end of the week. Market commentators named it “the sell-off that didn’t happen.” Nearly all of the analysts, who follow the company, called the dip a ‘buy’ signal and have an average price target for the company of $497 a share over the next 12 months, according to Factset Data, which tracks Wall Street opinion.

Keeping a positive view on Apple’s stock isn’t just a Wall Street interest. As the second most valued company in the America – only Exxon is larger – Apple’s capital weight makes it a bellwether for the U.S. economy. It is the first or second most widely held stock  by U.S. hedge funds which have to own it to make their results competitive with the benchmark S&P500 and the NASDAQ stock indexes, where Apple is a dominant stock. If there had been a sell-off, adding to U.S. economic gloom over housing, jobs, debt and economic growth, Apple’s decline would have been a hit to Americans’ already sagging confidence in their future.

Still, no matter what the order book and stock outlook, Job’s departure as the founder and ranking genius of Apple will hang over the company in the months to come. Over the weekend, TMZ, a tabloid Hollywood website, posted a picture of a pencil-thin Jobs in a black robe. The grave image angered fans but reinforced the view that the totally-in-control Jobs only resigned because he clearly had no fight left. No one knows Job’s real medical condition, but as a patient with a transplanted liver who must take anti-rejection drugs, his suppressed immune system means he would risk death if he tried to fight his previous cancer with toxic chemotherapy treatments.

By the weekend, Job’s fans and critics were alike in praising a tech vision that went well beyond the beautiful Mac and iPads. He was the first to see the value of Pixar, the digital animation company he sold to Disney, making him Disney’s largest shareholder. As a young 27-year-old he was the first to see the value of icons for digital navigation. He created the $.99 a song iTunes, freeing the digital music industry. The New York Times pointed out that he has 313 patents in his name, compared with nine for Bill Gates and 12 between the two founders of Google.

The biggest question being asked now is: where will breakthrough innovation come from? – Not just for Apple but for American tech land in general. No single company dominates American innovation, of course, but after Jobs returned to save Apple in the 1990s, his success became symbolic of the best in design and seamless innovation. He was one of the few leaders unafraid to destroy his own profitable products to get better ones – an act of creative destruction that many CEOs preach but few actually practice.

The next creative breakthrough that captures the world’s imagination could come from anywhere – Japan, India, China, Russia, Brazil or the innovative tech shops in the Nordic countries. But dozens of digital consumer companies – from IBM to now Hewlett-Packard, have given up the product fight. Heavyweight Valley players such as Google may try to raid Apple for talent, and investors will be interested in backing Apple dropouts who throw up the Next Great Idea. So as Apple works through its rich pipeline of orders in the next two years, there will be a global search to find the new Apple and the new Steve Jobs.

This weekend in the Valley, televisions kept playing the words from a speech Jobs, himself a college dropout, gave in 2005 to graduates of Stanford University after he learned about his cancer:

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

It’s almost as if people, while Jobs is still alive, are writing an obituary of his era like it is a case study in American innovation. Strange feeling indeed.

Bob Dowling is an independent international journalist and adviser to Gateway House.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

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