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Lesson From Apple and Microsoft: Give Your Culture the Leadership It Needs

When the world changes, your company must as well in some fundamental ways.
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Talk to many Apple investors and watchers and you'll hear some moans and groans about the company under CEO Tim Cook. "Apple has lost its way," you might hear, "its advantage of innovation is gone." Such people long for the good old days, when profits could grow insanely from one quarter to the next.

Thing is, times are now different than even a few years ago. Apple has of necessity shifted its business model and, to achieve that, its culture. A cultural shift requires a change in leadership, whether the particular people in charge finding new ways to behave or new blood at the top to relate to employees, customers, partners, and markets in a fresh way.

As the Wall Street Journal just noticed, Apple has become a significantly different company under Cook. Steve Jobs, known for his "mercurial" temperament, cared only about products.

"The company, the employees were only there to facilitate that goal," said another former employee. "Tim is much more worried about everything at the company."

Sometimes you need a different approach

Jobs would dismiss people and ideas he disagreed with, sometimes savagely. He focused the company on just few projects, turning many down. Senior managers found themselves at times pitted against each other.

Cook builds consensus, allows more potential projects room to develop. He's slower to making decisions and does not assume that if a product doesn't strike him well, it cannot be successful.

Companies change under different leaders, but just as true is that at times in their development, a business can need a new leader to change its culture when market conditions demand. For example, Apple is no longer an underdog coming back from the dead, where a relentless and sure hand was necessary for survival. Now the company has the largest market capitalization in the world. Big percentage jumps in sales and profits are difficult to obtain because the baseline numbers are enormous.

The device market itself is also changing. Sales growth is slowing on tablets. Smartphones have quickly become a fairly mature market. You can't realistically expect a blockbuster new product concept on a regular basis. In fact, people who bemoan the lack of innovation at Apple forget that the first iPod came out in 2001 and the first iPhone, 2007. Not that Apple did nothing in that six year stretch by any means. But it also wasn't the machine that turned out an annual innovation miracle.

New culture becomes a must

Apple isn't the only recent example of a company that had to change its approach to business. Look no further than its rival, Microsoft. For years, it seems to struggle under CEO Steve Ballmer. Mobile devices were slow to hit the market and weren't up to snuff when they did. There was too much dependence on Windows and Office sales. The result was turning into a great example of the Innovator's Dilemma, where reliance on the cash cows that innovation created in the past made a company a sitting duck for disruptive technology.

Eventually Ballmer changed some basics of strategy to take the company in a new direction, but he was too associated with the previous business approach. So Microsoft chose Satya Nadella to replace Ballmer and make room for a change in strategy. There was a stronger focus on turning as much as possible into cloud-based services. Customers would have access to Office 365 clients that would run on iOS and Android. The idea of a Windows -centric world had to be pushed to the side.

New conditions demand new culture, which can require new leadership. In the long run, a company only succeeds if it can adapt to new conditions and demands. Entrepreneurs must be ready to become new leaders, or to bring in new leadership, as the company needs. It can be emotionally difficult to give up direct control, but think of how much harder it would be to see your company marginalized.

Last updated: Jul 8, 2014

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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