Everything Is Obvious_ _Once You Know the Answer - Duncan J. Watts [103]
THE MYTH OF THE CORPORATE SAVIOR
If separating talent from success seems difficult, it is especially hard when performance is measured not in terms of individual actions, like an investment banker’s portfolio, but rather the actions of an entire organization. To illustrate this problem, let’s step away from bankers for a moment and ask a less-fashionable question: To what extent should Steve Jobs, founder and CEO of Apple Inc., be credited with Apple’s recent success? Conventional wisdom holds that he is largely responsible for it, and not without reason. Since Jobs returned in the late 1990s to lead the company that he founded in 1976 with Steve Wozniak in a Silicon Valley garage, its fortunes have undergone a dramatic resurgence, producing a string of hit products like the iMac, the iPod, and the iPhone. As of the end of 2009, Apple had outperformed the overall stock market and its industry peers by about 150 percent over the previous six years, and in May 2010 Apple overtook Microsoft to become the most valuable technology company in the world. During all this time, Jobs has reportedly received neither a salary nor a cash bonus—his entire compensation has been in Apple stock.20
It’s a compelling story, and the list of Apple’s successes is long enough that it’s hard to believe it’s all due to chance. Nevertheless, because Apple’s history can only be run once, we can’t be sure that we aren’t simply succumbing to the Halo Effect. For example, as, I discussed in Chapter 7, the iPod strategy had a number of elements that could easily have led it to fail, as did the iPhone. Microsoft CEO Steve Ballmer looks silly now for scoffing at the idea that consumers would pay $500 for a phone that locked consumers into a two-year contract with AT&T and didn’t have a keyboard, but it was actually quite a reasonable objection. Both products now seem like strokes of genius, but only because they succeeded. Had they instead bombed, we would not be talking about Jobs’s brilliant strategy and leadership that simply didn’t work. Rather, we would be talking about his arrogance and unwillingness to pay attention to what the market wanted. As with all explanations that depend on the known outcome to account for why a particular strategy was good or bad, the conventional wisdom regarding Apple’s recent success is vulnerable to the Halo Effect.
Quite aside from the Halo Effect, however, there is another potential problem with the conventional wisdom about Apple. And that is our tendency to attribute the lion’s share of the success of an entire corporation, employing tens of thousands of talented engineers, designers, and managers to one individual. As with all commonsense explanations, the argument that Steve Jobs is the irreplaceable architect of Apple’s success is entirely plausible. Not only did Apple’s turnaround begin with Jobs’s return, after a decade of exile, from 1986 to 1996, but his reputation as a fiercely demanding manager with a relentless focus on innovation, design, and engineering excellence would seem to draw a direct line between his approach to leadership and Apple’s success. Finally, large companies like Apple need a way to coordinate the activities of many individuals on a common goal, and a strong leader seems required to accomplish this coordination feat. Because this role of leader is by definition unique, the leader seems unique also, and therefore justified in receiving the lion’s share of the credit for the company’s success.
Steve Jobs may in fact be such an individual—the sine qua non of Apple. But if he is, he is the exception rather than the rule in corporate life. As sociologist and Harvard Business School professor Rakjesh Khurana argues in Searching for a Corporate Savior, corporate performance is generally determined less by the actions of CEOs than by outside factors, like the performance of the overall industry or the economy as a whole, over which individual leaders have no control.21 Just as with the hubs and influencers that I discussed in Chapter 4, Khurana concludes that conventional explanations