“Tim Cook’s response to Apple’s poor Q2 results has been conventional. Instead of declaring the urgent need to innovate and create new channels of growth, Cook responded by increasing Apple’s share buyback program by $35 billion and upping the quarterly dividend by 10%,” Short/Long Trader writes for Seeking Alpha. “This conventional response to Apple’s lack of growth is a tactic that could have been used by any average manager and demonstrates a lack of visionary leadership.”
“To be fair, supporters of Tim Cook will readily point out numerous redemptive actions he is taking to deal with Apple’s current set of problems. For example, Cook is actively responding to investor criticism and went on Jim Cramer’s Mad Money to defend his actions. He highlighted how Apple had an ‘incredible quarter by absolute standards’ noting sales of $50.6 billion for the quarter and profits of $10.5 billion,” S/LT writes. “On a basic empirical level, all of this sounds good and well. But none of this charts out a fundamentally new path for Apple’s long-term innovation or growth. Instead it charts a path to continue growing iPhone profits and does not seriously or fully address the urgent need for new channels of growth. Although Cook did hint at the possibility of a large acquisition, it is unlikely that any large acquisition will be the fundamental driver for new channels of growth.”
MacDailyNews Take: Uh, Hello? Apple doesn’t “chart out fundamentally new paths” for public consumption.
“Ultimately, these actions fall neatly in line with my argument that Tim Cook is not a visionary leader. He is not offering investors a visionary plan to push Apple out of its current rut. Instead he continues to respond in conventional ways like focusing on increasing iPhone sales in emerging markets,” S/LT writes. “A visionary leader is an individual who thinks outside of the box and constantly utilizes second-level thinking.”
“Howard Marks explains the difference between first- and second-level thinking in his book The Most Important Thing,” S/LT writes. “First-level thinking is superficial and is conducted by your average manager like Tim Cook. Here a manager utilizes typical methods to improve a company’s fate. For example, if a company has lots of cash and wants to increase shareholder value, a first-level thinker would follow the common strategy of instituting a share buyback program and perhaps increase dividends. But this average way of thinking is what any manager could do and will not lead to innovation or outsized returns.”
“In contrast, second-level thinking is deep, difficult, and oftentimes controversial. This is the defining characteristic of visionary leaders because they will do whatever it takes to ensure their vision comes to fruition,” S/LT writes. “For example, in 1997 when Steve Jobs came back to Apple, he didn’t follow any conventional framework to turn the company around. Instead he cut jobs, reduced product lines, and created a partnership with archenemy Microsoft. But these radical steps were taken in order to follow through on his vision to fundamentally turn around Apple. His success came from being unconventional, taking risks, and utilizing complex thinking to follow through on his vision.”
S/LT writes, “What Apple needs right now more than anything else is a visionary leader who utilizes second-level thinking to move things forward.”
Read more in the full article here.
MacDailyNews Take: Unfair, but certainly illustrative of a certain school of thought that tends to arise in times of declining share prices.
Every little bobble brings them out of the woodwork.
We won’t know if Apple can pull off visionary, Jobsian products until they are unveiled. There will be no roadmap published beforehand. There is much going on behind the scenes. In some cases, even Apple employees don’t know what or the full extent of what they’re working on until launch day. Apple Watch is still in “original iPhone” state. The potential is certainly there, as any Apple Watch user can tell you. Therefore, with Apple Watch, Apple has already delivered a “visionary” product under Tim Cook.
Running the world’s most valuable company is tough enough, imagine having to do it while following Steve Jobs.