Apple's Tim Cook leads different
Tim Cook assumed he was ready for the harsh glare that shines on Apple’s AAPL CEO. He had, after all, filled in for Jobs three times during the Apple founder’s medical leaves of absence. Cook ultimately became the company’s chief executive six weeks before Jobs died, in October 2011.
What Cook found out instead is that there is no preparation for the scrutiny that comes with succeeding a legend. “I have thick skin,” he says, “but it got thicker. What I learned after Steve passed away, what I had known only at a theoretical level, an academic level maybe, was that he was an incredible heat shield for us, his executive team. None of us probably appreciated that enough because it’s not something we were fixated on. We were fixated on our products and running the business. But he really took any kind of spears that were thrown. He took the praise as well. But to be honest, the intensity was more than I would ever have expected.”
Cook’s reflection on his trial by fire comes at an other-wise triumphant moment. On this sunny Sunday in March, he is taking a breather from rehearsals for the event the next day in which he will reveal details of the Apple Watch, the first all-new device of his tenure as CEO. Sitting under a canopy at an outdoor café in San Francisco, steps from the auditorium where Apple will put on the product-reveal spectacle, Cook, 54, nibbles on snacks as he reflects on the 31/2 years that he has run Apple. He’s heard the repeated refrains that “Apple can’t innovate under Tim,” that the company needed a low-cost iPhone to thwart the progress of Google’s Android, that Cook never could replicate the Jobs magic—and therefore that Apple never again would be “insanely great.”
Cook taught himself, he says, to block out the noise. “I thought I was reasonable at that before, but I’ve had to become great at it. You pick up certain skills when the truck is running across your back. Maybe this will be something great that I’ll use in other aspects of my life over time.”
Already there is tangible evidence that the tread marks left no permanent scars. No one will be able to say for quite a while whether the Apple Watch or new services like Apple Pay or the $3 billion acquisition of headphone maker and music service Beats last year will prove financially successful. What can be said is that each in its own way constitutes proof that Apple is moving forward under its first nonfounder CEO since Gil Amelio got the ax in 1997. What’s more, those moves and others speak volumes about Cook’s leadership, at least measured against the widespread assumption that he would simply mind the company Jobs left in his custody.
In fact, there’s little debate that the state of Apple under Cook is fundamentally sound. Its stock has soared from a split-adjusted $54 to a recent $126 since Jobs died, translating into a market capitalization well north of $700 billion, the first company to cross that level. Indeed, its market value is more than double that of either Exxon Mobil or Microsoft. At the same time, Apple’s cash hoard has tripled since 2010, to more than $150 billion. (That’s despite the fact that Apple has spent a total of $92.6 billion in dividends and buybacks under Cook, all the more noteworthy because Jobs frowned on distributing cash to shareholders.) Apple has defended its high-end turf in smartphones, especially in China, where it sold $38 billion of merchandise overall in 2014. Cook has handled the occasional product snafu—Apple Maps comes to mind—with candor and humility. As well, he largely has held together the long-tenured management team he inherited from Jobs, augmenting it with a few key players and owning up to the occasional hiring blunder.
Remarkably, Cook has come into his own as a high-profile leader of Apple, not merely tolerating the spotlight but leaning into it to focus attention on issues of importance to him and his company. His decision last October to announce publicly that he is gay instantly made the onetime low-profile and exceedingly private executive a global role model. It also made him the only openly gay CEO in the Fortune 500. And Cook has used the pulpit provided him by Apple’s worldwide platform to opine on subjects as diverse as human rights, access to education, female representation on Wall Street, immigration reform, and privacy rights. He even ventured into the heart of the Deep South, to the capital of his home state of Alabama, to lament the sorry state of racial equality there.
Cook has differentiated himself from Jobs in myriad ways, and not merely with his willingness to speak out on societal issues. Cook, who joined Apple from Compaq Computer in 1998, came from an operations background and had spent the formative years of his career at IBM. At Apple that means he’s not what company executives like to call a “subject-matter expert” on such critical areas as product development, design, and marketing. Consequently he behaves much more like a coach who trusts his players than the manipulative mastermind Jobs was.
The result has been a level of stability in the senior management ranks few expected. “He never tried to be Steve,” says Eddy Cue, senior vice president for Internet software and services, who joined Apple in 1989. “He tried to always be himself. He has been very good at letting us do our thing. He’s aware and involved at the high end, and he gets involved as needed. Steve got involved at the pixel level.”
There is no model, of course, for following someone like Jobs, a founder-entrepreneur widely regarded for a ruthless impulsiveness that repeatedly resulted in greatness. What’s more, three-plus years of steady success is no guarantee for the future. Says Michael Useem, the prominent Wharton management professor and director of the school’s Center for Leadership and Change Management: “In my own small world the question of whether Cook can sustain Apple’s momentum comes up more often than just about any other question on top management these days.”
For his part, Cook says he has grasped that more important than answering his critics is learning to ignore them. “I’m not running for office,” he says. “I don’t need your vote. I have to feel myself doing what’s right. If I’m the arbiter of that instead of letting the guy on TV be that or someone who doesn’t know me at all, then I think that’s a much better way to live.”
Cook’s defiant, confident tone reflects the CEO he has become. No one guards Apple’s distinct corporate culture—a culture designed by Jobs—more fiercely than Cook. Yet he also is gradually tweaking Apple at its edges, leading the company where he wants to take it, adding his unique perspective, and subtly but clearly redefining Apple in his image. It isn’t clear if Jobs would have approved or disapproved. But the enigmatic founder himself, in his dying days, told Cook that he shouldn’t obsess over trying to channel Jobs when making decisions. Given that, the question of what Jobs would have thought of where Cook is leading the company is, in the end, beside the point.
Moments of Truth
Richard Tedlow taught the history of business at Harvard for 31 years. He developed an expertise on the technology industry, penning books about the Watson family’s turbulent stewardship of IBM and a biography of the mercurial CEO of Intel, Andy Grove. Today Tedlow teaches at Apple University, the in-house education unit Jobs established before his death. Apple University isn’t a typical managementtraining arm, and Tedlow calls it the “Think Different corporate university,” a nod to the famous advertising campaign Jobs orchestrated in the late 1990s. Its goal is to document for its employees Apple’s peculiar ways as well as to ensure that the company’s people consider non-Apple perspectives that will help them think critically and remain open to new ideas.
Tedlow calls the school a “therapeutic alliance between technology and the liberal arts.” Its courses on topics seemingly far removed from the business of computers and gadgets unsubtly reinforce Apple’s view of itself. For example, the Stanford political philosopher Joshua Cohen has lectured about pianist Glenn Gould’s meticulous effort to record and then re-record the famous Bach Goldberg Variations. Jobs’ famous obsession with the perfect screws on the inside of the original Mac can’t be far from an Apple student’s mind.
The course Tedlow has been teaching lately is called Moments of Truth. It features a discussion of Abraham Lincoln’s famous “with malice toward none” second inaugural address, which he made into “a moment not of retribution but of reconciliation,” says Tedlow. The 67-year-old former academic, who has remained almost completely out of the public’s eye since joining Apple, also includes Margaret Thatcher’s decision to commit to battle in the Falkland Islands and Johnson & Johnson CEO James Burke’s handling of the Tylenol bottle-tampering crisis.
Tedlow draws a straight line from the moments of truth of Lincoln and others to the situation Cook faced when Jobs died. Sure, leading a beloved gadget maker isn’t quite on par with reuniting a great nation ripped asunder by a bloody civil war. But the emotional parallels resonate. “I certainly think he had to come onboard and take the weight of everybody’s expectations,” says Tedlow. At a memorial service for employees in the courtyard of Apple’s Cupertino, Calif., campus, Cook told the company, “Our best days are ahead of us”—a difficult message to deliver at that moment and one Tedlow compares to Lincoln’s trying to reassure a war-weary and deeply divided nation.
Convincing anyone that the post-Jobs era held great promise was a tough sell for Cook. The company had few headline-level innovations on the near-term horizon. At a product launch the day before Jobs’ death, for example, the voice-recognition application Siri was one of the company’s few hints at something new. Yet Siri represented Apple playing catch-up to a feature Google’s Android already offered. Worse, it wasn’t particularly good. Siri quickly became the butt of jokes at Apple’s expense for its frequent inability to understand its user.
A year later Apple was in hot water for another weak product, its version of mobile mapping. Apple had booted Google Maps from the prime position on the iPhone in favor of its own version. But Apple Maps was riddled with errors, comically leading users to wrong destinations. The product was so lame that Cook publicly told customers he was “extremely sorry” for the debacle. He recommended that they use Google Maps, among other products, instead. A short time later Cook fired Scott Forstall, the head of mobile software and a longtime Jobs acolyte.
In early 2013, Cook confronted another senior management challenge. His highest-profile hire from outside Apple had been John Browett, the former head of the U.K.-based discount electronics chain Dixon’s. The chief of a low-end retailer was a curious choice for the head of Apple’s high-touch retail operation. (Ron Johnson, the former Target executive who had run the Apple Stores division since its inception, had by this time left Apple and later signed on as CEO of J.C. Penney.) Browett didn’t fit in at Apple—he angered store employees by changing scheduling practices, for example—and Cook dumped him in March 2013. (Browett later acknowledged in a speech that it was a shock to be let go not because he was incompetent but because he didn’t gel with the Apple culture. Reached for comment, he declined to elaborate.)
Looking back, Cook sees the episode as part of his education as CEO. “That was a reminder to me of the critical importance of cultural fit, and that it takes some time to learn that,” he says. As CEO, “you’re engaged in so many things that each particular thing gets a little less attention. You need to be able to operate on shorter cycles, less data points, less knowledge, less facts. When you’re an engineer, you want to analyze things a lot. But if you believe that the most important data points are people, then you have to make conclusions in relatively short order. Because you want to push the people who are doing great. And you want to either develop the people who are not or, in a worst case, they need to be somewhere else.”
Another challenge for Cook was figuring out how to deliver Apple’s message when its new products simply weren’t ready to be discussed. At a technology industry conference in mid-2013, for instance, Cook was so elusive that investors openly questioned whether he had a vision for the company. Apple’s stock by that time had fallen back to the level at which it had traded when Cook took over.
All the while, behind closed doors, Cook was shoring up his management team as the company was working on the new products the world so badly wanted. In late 2013 he lured the CEO of Burberry, Angela Ahrendts, to head Apple’s retail stores. A year later Apple launched the large-screen iPhone 6 and its even bigger iPhone 6 Plus. It also unveiled a new payment system, Apple Pay, and its soon-to-be-shipped Apple Watch. The new iPhones, more than anything else, put Apple back on its upward trajectory. It sold a stunning 74.5 million of them in the last quarter of 2014, as the company generated $18 billion in profits, sending the stock price on an upward tear.
The success has allowed Cook to take mistakes in stride. In late 2014 a glassmaker called GT Advanced Technologies, which Apple had contracted with to make a next-generation screen for its devices, declared bankruptcy when Apple declined to use its product. GTAT, as it is known, filed suit against Apple, claiming that its finances were ruined because of investments it made to fulfill the Apple contract. Apple, for its part, said it was blindsided by GTAT’s bankruptcy. The two sides eventually settled, and Apple committed to building a data center and solar farm on the company’s former manufacturing site in Arizona. Apple also was forced to take a major write-off for the debacle—it won’t say how large—a painful screwup for a company that regularly commits billions of dollars to its manufacturing processes. Jeff Williams, senior vice president of operations and Cook’s successor in that role, says Cook told him three things after the lawsuit. “When I informed Tim of the problem, his response was, ‘Let’s see what we can learn from it. We’re not going to bat a thousand. And we’re going to keep betting on great technologies for our customers.’ ”
Cook’s measured emotional approach in leading Apple is markedly different from his predecessor’s, but the focus on core products and a long-term orientation are exactly the same. In that context, it isn’t critical that Apple Pay or the new wristwatch amount to giant profit drivers. “I have a simplified view of Apple,” says Jean-Louis Gassée, an Apple executive in the 1980s who now writes a widely read weekly column on Apple in the email newsletter The Monday Note. “They have and always have had one business, personal computers. Now they make them in three sizes, small, medium, and large—the iPhone, the iPad, and notebook and desktop computers. Everything else, including Apple Watch in the case of the iPhone, exists to push up the margins of those products.” To Gassée’s way of thinking, Apple’s strategy under Cook resembles the digital-hub strategy Jobs put into place 15 years ago, where products like iTunes drove sales of the iPod and ultimately the Mac. “Tim is playing the long game in his own way,” he says.
Cook frames the debate in terms of how investors ought to view Apple. “The kind of investors we seek are long term because that’s how we make our decisions,” he says. “If you’re a short-term investor, obviously you’ve got the right to buy the stock and trade it the way you want. It’s your decision. But I want everybody to know that’s not how we run the company.”
Putting His Life in View
In his early performances at the helm of Apple product launches and other public events, Tim Cook came off as wooden. But then, no matter how well he had done, he would have compared unfavorably with Jobs, a virtuoso of the keynote presentation. As time has passed, however, Cook has clearly settled into the role. At the watch event, he emceed with a natural smile on his face. When he hugged the fashion model and maternal-health advocate Christy Turlington Burns—who has been using an Apple Watch on long-distance runs—there was nothing awkward about their interaction.
Cook even seems to be enjoying himself. The day after the product launch, he presided over Apple’s annual meeting in Cupertino, a tedious chore most CEOs endure rather than relish. Cook, on the other hand, visibly cottoned to the give-and-take with shareholders, answering questions in a folksy manner—and amiably avoiding the ones he didn’t want to address. After twice sidestepping questions about whether Apple would buy the much-admired and rather Apple-like automaker Tesla Motors, he playfully praised himself for artfully not taking the bait. “There’s some advantage to being CEO,” he quipped.
While being CEO allows Cook the luxury of swatting away unwanted questions, it also gives him a powerful platform to address a host of other issues—even if they aren’t directly related to Apple. In late October his home state inducted him into its Alabama Academy of Honor. It chose Cook to represent his class—which included University of Alabama head football coach Nick Saban and Sen. Jeff Sessions—as the sole speaker at the ceremony, a decision some came to regret. Cook moved quickly beyond platitudes and used the occasion to lambaste Alabama for its slowness to act on racial equality, on educational opportunity, and on equality for gay, lesbian, bisexual, and transgender people. “This isn’t right,” he said. “It isn’t reflective of our values.”
A local television station captured an awkward moment afterward between Cook and the Republican governor of Alabama, Robert Bentley, who audibly took umbrage at Cook’s comments. Don Logan, an Alabamian who is a former CEO of Time Inc. (Fortune’s owner), was in the audience at the state capitol in Montgomery. “Tim is a very courageous guy,” says Logan, a fellow Auburn University alum, who notes that the state legislature had only recently passed a bill to not allow gay marriage. “He knew he was speaking into the wind and that most people in the room didn’t agree with him.”
A few days later Cook announced publicly, in an essay in Bloomberg Businessweek, that he is gay. With no further comment from him or Apple, the disclosure set off a media frenzy, most of it favorable. Looking back, he says that he primarily acted out of concern for kids who were bullied at school, some to the point of suicide, and because of the many states that still allow employers to fire workers over their sexual orientation. Also, whereas U.S. courts were moving surprisingly quickly on the issue, “I didn’t feel like business was exactly leading the way in the executive suite.”
Cook says that he’d come to the decision of coming out “quite some time ago” and that his announcement was viewed internally at Apple, where his sexual orientation was more or less well known, as a “yawner.” Speaking out so publicly was a big step for Cook, though, who has described himself as intensely private and who is rare among big-company CEOs for being genuinely ill at ease talking about himself. “To be honest, if I would not have come to the conclusion that it would likely help other people, I would have never done it,” he says. “There’s no joy in me putting my life in view.” Referencing the often-cited line that “to whom much is given, much is required,” Cook says, “I’ve certainly been given a lot.”
The move made Cook famous for more than being the person running Steve Jobs’ company. Mike Sullivan is a San Francisco lawyer with the global law firm Pillsbury Winthrop Shaw Pittman who advises startup technology companies. Like Cook, he views his sexual orientation as a point of pride and affiliation but something that doesn’t define him professionally. “We have 500 CEOs in the Fortune 500 out there, and I can guarantee you some of them are gay,” he says. “The message Tim sent is, ‘It’s okay to be yourself. You don’t have to lead with it. But you don’t have to hide it either.’ ”
Cook has become so ubiquitous that it’s tough to remember when he wasn’t so visible. On an early March trip to Europe he huddled in Berlin with German Chancellor Angela Merkel and in Brussels with Andrus Ansip, the former Prime Minister of Estonia and now the European Commission’s top regulator on digital issues. He is featured in a new book by the former Fortune journalists Brent Schlender and Rick Tetzeli, who report that Cook offered Jobs a piece of his healthy liver for a transplant. (Jobs turned him down.) In March, Cook even phoned in to a surprised—and delighted—Jim Cramer during a live airing of the 10th anniversary of the broadcaster’s financial shoutfest on CNBC.
Representing their companies publicly is obligatory for CEOs, but Cook takes public stands on issues including stopping the transmission of AIDS, human rights, and immigration reform. He sees them as opportunities for leadership. “You want to be the pebble in the pond that creates the ripple for change,” he says, adding that Apple’s people have long cared about such issues even if they haven’t previously spoken so openly about them. To Cook, changing the world always has been higher on Apple’s agenda than making money. He plans to give away all his wealth, after providing for the college education of his 10-year-old nephew. There should be plenty left over to fund philanthropic projects. Cook’s net worth, based on his holdings of Apple stock, is currently about $120 million. He also holds restricted stock worth $665 million if it were to be fully vested. Cook says that he has already begun donating money quietly, but that he plans to take time to develop a systematic approach to philanthropy rather than simply writing checks.
An irony of Cook’s Apple is that the company is becoming visibly more open under its guarded CEO than it was under the publicity-savvy demigod who ran Apple before him. Whereas Jobs severely restricted interactions between all his employees and the press, Cook has ushered in a period of glasnost with the news media. It is highly unlikely that Jobs would have tolerated, for example, The New Yorker’s recent 16,000-word profile of Jony Ive, Apple’s chief designer. Cook says such exposure is part of his plan. “My objective is to raise the public profile of several of the folks on the executive team, and others as well. Because I think that’s good for Apple at the end of the day.”
The new openness serves two purposes. First, it ensures that the world continues to talk about Apple. Granting a longer leash to executives with healthy egos also is a valuable retention tool. “A true coach is happy with his star players getting media time,” says Gassée, the ex-Apple executive. “Tim Cook is a true impresario who takes care of his prime donne. As long as the box office is good, the impresario will do that.”
Building for the Future
Tim cook is standing atop a giant mountain of dirt. He has come to tour the construction site in Cupertino that by the end of 2016, if all goes as planned, will be Apple’s new corporate campus. The dirt has been excavated from the massive pit below, and the pile is just about eye level with where the rooftop will be over the four-story, ringed building that will soon rise here. The building’s doughnut-shaped design has sparked many comparisons to a spaceship. Looking down as trucks and workers scurry to and fro, Cook begins to talk about one of the subjects that really gets him going: where people work. It always amazes him, he says, how drab workspaces are in metropolitan office skyscrapers. Apple’s new home will not be like that. “It shouldn’t be a place that doesn’t turn on your creative juices,” he says, musing about how future college recruits will feel when they first visit. Visible in the distance are Apple’s existing Cupertino campus, downtown San Jose, and Levi’s Stadium, where the San Francisco 49ers play and which, incidentally, would fit into the 30-acre park that will be at the center of the main spaceship building.
Steve Jobs spent a considerable amount of the last two years of his life planning the campus, including hiring the British architect Norman Foster to design it. Everything about the site is large scale, and Cook, a numbers man, can recite most of the figures by heart. The main building itself will be 2.8 million square feet and will house 13,000 employees. About 2,000 more workers will fill up adjacent buildings on the site, which will include a 100,000-square-foot fitness and wellness center, a café that will serve 15,000 lunches a day, and more than 8,000 trees, all native to the Santa Clara Valley.
Cook visits the work site periodically
—including twice already with Apple’s board—and he exhibits an engineer’s glee at watching the 22 construction cranes that dot the landscape. He says Apple hasn’t decided yet exactly what it will call “Apple Campus 2,” the current internal designation. Some naming element of the buildings or the entire locale will almost certainly include an homage to Jobs, depending on his family’s wishes, says Cook.
On a 90-minute tour of the site, Cook dishes out details of the campus, which he calls “the mother of all products.” For instance, Apple is investing in cutting-edge technology to manage tasks as mundane as parking. A system of sensors and apps will play traffic cop for employees as they enter the facility, eliminating the fuel-wasting hunt for a parking place. Just as it has done for its retail stores, Apple has built entire mockups of wings of the building to see how they look—and then torn them down. As to why Apple isn’t building higher than four stories, the same height as its existing campus, Cook says, “When we mocked up five we didn’t like the looks of it.” He is particularly excited about the mostly below-ground, 1,000-seat auditorium in the southeast corner of the campus, which will be the company’s new site for all its public presentations other than its annual developers conference. “No more scheduling months ahead of time around other people’s schedules,” says Cook enthusiastically.
In talking about the new campus, Cook is particularly ornery about one label for it. “I hate the word ‘headquarters,’ ” he says. “There’s real work going on here. It isn’t overhead, and we’re not bureaucrats.” Indeed, among Apple’s employees there is considerable speculation as to which groups will be assigned to the new building—and which will be relegated to the existing real estate. “We’ve decided three times,” says Cook. “And we’ll probably decide it three times more.”
On the drive back to Cook’s current office at 1 Infinite Loop, his Apple Watch emits a chiming sound that sounds like the ding! from a symphonic triangle. Cook is wearing the entry-level Sport version of the watch, with a white plastic wristband. It’s the first time in nearly two hours that he’s received a notification, and he says it’s a text message from his assistant that Al Gore, an Apple board member, would like to speak with him.
The electronic interruption doesn’t require Cook to extract his iPhone from his pocket, one of the key attributes Apple believes will drive adoption of the watch. It does give him an opportunity to show off some of the watch’s features, including the iconic Mickey Mouse watch face, cleverly updated so that the Disney mascot cheerfully taps his feet at the rate of one per second. A self-described fitness nut, Cook proudly shows off his daily physical activity as measured by the watch. So far he has clocked 50 minutes of exercise and has traveled 8,139 steps, or about four miles. An early riser, he has been on his feet for 12 hours, and it’s not quite 3:30 p.m. His workday, and his job leading Apple, are far from over.
This story is from the April 1, 2015 issue of Fortune. It originally stated that the Siri product launch occurred days after Steve Jobs died. The event was the day before his death.