Reference no: EM131432802

Case Study: Well Seeded Orchard

Steve Jobs dropped out of college. And he was forced out of Apple less than a decade after starting it with Steve Wozaiak, having lost his fight to promote new Macintosh computers instead of more profitable, less capable machines. But these moments of change proved central to his later success. In a 2005 Stanford commencement address, Jobs talked of how, for example, calligraphy classes he took after dropping out of college influenced the design of the Macintosh, arguably Apple's first world-changing device.

He was always ready to move on. He called being fired from Apple the best thing that could have ever happened to me." It's easy to forget that Jobs built Pixar. the astonishingly successful computer animation company, while in exile from Apple. Even before Pixar, he founded Next Computer. making devices with an operating system far ahead of its time. This played a role in Apple's success after 1996 when it bought Next. bringing Jobs back into the fold.

Few companies are as indelibly linked to an individual as Apple is to Steve Jobs. Not only one of the founders. he led the company from near bankruptcy to become one of the most valuable companies in the world. News on Wednesday of his retirement from running day-to-day operations is a blow - even if it was both inevitable and expected. But investors haven't yet wrapped their minds around the powerhouse Jobs built.

Apple's history certainly helps. Digital revenue has been one of the few sources of growth for music companies. And the company led by Steve Jobs has played a huge part. The iTunes store has sold 15 billion songs since its inception in 2003. And Apple's U.S. share of legally downloaded music is about 70 percent, according to NPD, Whether Match will be a hit remains to be seen. But Apple may again be the recording industry's best chance for another platinum seller.

For the time being. Apple will still be able to call on Jobs' uncanny sense of consumer tastes and shrewd marketing skills. He was elected chairman of the board and will presumably guide and advise the company as long as he is physically able. it's nevertheless reasonable to surmise his illnesses, first disclosed seven years ago, are taking a harder toll. Meanwhile. his replacement. Tim Cook. is not just capable but has had several stints in the CEO's seat. during which there were no noticeable hiccups.

Cook may not have Jobs' ability to marry design with technology or to inspire engineers to extraordinary heights. Nobody does. But the fact Jobs anointed him successor should add a bit of luster to his persona. More importantly, Cook has proven he can manage astonishing growth. Despite that Apple now sells more per quarter than it did per annum just a few years ago, it is still increasing revenue at an annual rate of more than 80 percent.

This growth, in a way, shows how hard it has been for investors to separate Jobs from Apple. Despite its extraordinary expansion in sales and profitability, the company is valued at about the same earnings multiple as the S&P 500. That makes little sense. unless it reflects worries about Jobs' health or, worse, a repeat of the troubles Apple experienced after Jobs left back in 1985. What's more. following the news that Jobs resigned as CEO. in after-hours trading Apple shed some $20 billion of market value.

Once the initial shock wears off, however, investors should be able to focus on just how good Apple is. Each of its stable of iPads. iPhones and Macs feeds the growth of the others. Apple's customer base is growing and loyal. The smartphone and tablet markets have yet to hit their full stride. New ground in TV is bound to be broken.

Having Jobs around to lead the $350 billion company through this next phase would be preferable. But soon enough, it ought to become apparent that Cook and Jobs' legacy will be a pretty potent combination.

Maybe investors simply can't fathom so large a company. A $1 trillion Apple would mean adding all of Microsoft, Google, Intel and Amazon - and more - to the firm's current market capitalization. Perhaps Apple is correctly priced, the market too expensive, and growth stocks grotesquely so. But something doesn't add up. In relative terms, Apple should be worth far more.

Steve Jobs has died at 56. He was no ordinary chief executive, and he leaves no ordinary company. The force behind the iPod, iPhone and iPad not only co-founded and then rescued Apple, building it into the most valuable tech company on the planet, worth some $350 billion. He also changed the way people live. Its a rare entrepreneur who leaves that legacy - and a company that can thrive without him.

QUESTIONS:

1. How would you evaluate the effectiveness of Steve Jobs Leadership? Explain in detail the challenges of change leadership to measure organizational behavior practices at Apple.

2. Explain how each of the leadership theory classifications applies to this case and which one is most relevant.

3. What did you learn from this case study to practice in your role as a leader?