INSIGHT - At Apple, Tim Cook leads a quiet cultural revolution | Reuters

12/29/14, 9:30 PM

INSIGHT - At Apple, Tim Cook leads a quiet cultural

revolution

Credit: Reuters/Rick Wilking

Tim Cook, Apple CEO walks past a news conference being held by Eric Schmidt, executive chairman of Google
at the annual Allen and Co. conference in Sun Valley, Idaho Resort July 11, 2013.
Credit: Reuters/Rick Wilking

(Reuters) - Shortly after signing on as chief operating officer at Facebook, Sheryl

Sandberg was looking to connect with people in a similar role - No. 2 to a brilliant and
passionate young founder. She called Tim Cook.
"He basically explained nicely that my job was to do the things that Mark (Zuckerberg)
did not want to focus on as much," Sandberg said of the 2007 meeting that lasted several
hours with the chief operating officer of Apple Inc.
"That was his job with Steve (Jobs). And he explained that the job would change over
time and I should be prepared for that."
While Sandberg has enjoyed a steady run at Facebook, it is Cook's job that has changed
radically since then. Now, the man who was handed one of the more daunting tasks in
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INSIGHT - At Apple, Tim Cook leads a quiet cultural revolution | Reuters

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business - filling the shoes of the late Steve Jobs and keeping Apple on top - may himself
need a spot of advice.
Two years into Cook's tenure, Apple is expected to unveil a redesigned iPhone next
month. It will be a key moment for Cook. The company he inherited has become a very
different creature: a mature corporate behemoth rather than a scrappy industry pioneer,
with its share price down 5 percent this year, despite a recent rally. The S&P 500 is up
about 15 percent this year.
A transition was, perhaps, inevitable after an astonishing five-year run in which Apple's
headcount tripled, its revenues rose over six-fold, its profits grew 12-fold, and its stock
price jumped from $150 to a peak of $705 last fall.
But it's been painful for some.
It is unclear whether the spread-sheeting-loving, consensus-oriented, even-keeled Cook
can successfully reshape the cult-like culture that Jobs built. Though Cook has deftly
managed the iPhone and iPad product lines, which continue to deliver enormous profits,
Apple has yet to launch a major new product under Cook; talk of watches and televisions
remains just that.
Some worry that Cook's changes to the culture have doused the fire - and perhaps the
fear - that drove employees to try to achieve the impossible.
CAN NICE GUYS FINISH FIRST?
Cook is known as a workaholic who guards his privacy closely. People who know him
well paint a portrait of a thoughtful, data-driven executive who knows how to listen and
who can be charming and funny in small group settings.
Lisa Cooper, who went to high school with Cook in Robertsville, Alabama, and remains a
friend, still laughs at memories of Cook staging prank photos for the school yearbook
and crooning "The Way We Were" to her in class.
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INSIGHT - At Apple, Tim Cook leads a quiet cultural revolution | Reuters

12/29/14, 9:30 PM

In the day to day at Apple, Cook has established a methodical, no-nonsense style, one
that's as different as could be from that of his predecessor.
Jobs' bi-monthly iPhone software meeting, in which he would go through every planned
features of the company's flagship product, is gone.
"That's not Tim's style at all," said one person familiar with those meetings. "He
delegates."
Still, he has a tough side. In meetings, Cook is so calm as to be nearly unreadable, sitting
silently with hands clasped in front of himself. Any change in the constant rocking of his
chair is one sign subordinates look for: when he simply listens, they're heartened if there
is no change in the pace of his rocking.
"He could skewer you with a sentence," the person said. "He would say something along
the lines of 'I don't think that's good enough' and that would be the end of it and you
would just want to crawl into a hole and die." Apple declined to comment on Cook or the
company for this article.
Cook's fans say that his methodical manner doesn't get in the way of decisive action.
They point to the Apple Maps fiasco, in which Apple replaced Google's mapping product
with its own on the iPhone and it quickly became clear that Apple's maps were not ready
for prime time.
Apple initially downplayed the glitches by saying Maps was a "major initiative" and they
were "just getting started." But behind the scenes, Cook bypassed Scott Forstall, the
mobile software chief (and Jobs favorite) who was responsible for maps, and tasked
internet services honcho Eddy Cue with figuring out what exactly happened and what
should be done.
Cook had a lot of questions, and the episode also prompted him to fast-track his thinking
on the future direction of the critical phone and tablet software known as iOS, a person
close to Apple recounted.
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INSIGHT - At Apple, Tim Cook leads a quiet cultural revolution | Reuters

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Cook soon issued a public apology to customers, fired Forstall, and handed
responsibility for software design to Jony Ive, a Jobs soul-mate who had previously been
in charge only of hardware design.
"The vision that Tim had to involve Jony and to essentially connect two very, very
important Apple initiatives or areas of focus - that was a big decision on Tim's part and
he made it independently and very, very resolutely," said Bob Iger, CEO of Walt Disney
Co. and an Apple director.
Still, employees report some grumbling, and Apple seems to have taken note, conducting
a survey of morale in the critical hardware engineering unit earlier this year.
"As our business continues to grow and face new challenges, it becomes increasingly
important to get feedback about your perceptions and experiences working in hardware
engineering," Dan Riccio, Apple's senior vice president of Hardware Engineering, wrote
to his team in February in an email seen by Reuters.
Some Silicon Valley recruiters and former Apple employees at rival companies say they
are seeing more Apple resumes than ever before, especially from hardware engineers,
though the depth and breadth of any brain-drain remains difficult to quantify, especially
given the recent expansion in staff numbers.
"I am being inundated by LinkedIn messages and emails both by people who I never
imagined would leave Apple and by people who have been at Apple for a year, and who
joined expecting something different than what they encountered," said one recruiter
with ties to Apple.
Still, the Cook regime is also seen as kinder and gentler, and that's been a welcome
change for many.
"It is not as crazy as it used to be. It is not as draconian," said Beth Fox, a recruiting
consultant and former Apple employee, adding that the people she knows are staying
put. "They like Tim. They tend to err on the optimistic side."
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INSIGHT - At Apple, Tim Cook leads a quiet cultural revolution | Reuters

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SOCIAL SIDE
There does seem to be, under Cook, a new willingness to admit mistakes and a more
open approach to problems such as poor working conditions at Chinese contract
manufacturers.
"On the social side, the only way for Apple to make a difference in the world in a broad
way is to be - I believe strongly - is to be totally transparent," Cook said earlier this year
at what was, paradoxically, a closed-door talk at his business school reunion.
"When you do that, you make a decision to report the bad and the good, and we hope
that by doing that, that it puts pressure on everyone else to join."
Under pressure from investors, Cook not only agreed to share more of Apple's $150
billion cash hoard with shareholders, he voluntarily tied his own pay more closely to
stock performance.
Yet critics wonder whether Cook's stated commitments to transparency and workers'
rights really amount to much. Cook set up the global manufacturing system being
criticized, and the company and its CEO remain highly secretive about matters large and
small. Conditions at some Chinese factories have improved -Apple now tracks and
reports hours of a million workers to avoid illegal overtime - but allegations of unfair
working conditions continue to be made.
Apple has also come under scrutiny over its tax structure, under which it has kept
billions of dollars in profits in Irish subsidiaries so as to pay little or no taxes. Cook
defended the policy, which is legal, at a Congressional hearing in May.
Shareholders, meanwhile, are focused on the bottom line, and the next big product
launch. A sharp drop in China revenue in April-June underscores the challenges Apple
faces in its second-largest market as the technology gap with cheaper local rivals
narrows and as Samsung Electronics (005930.KS) keeps up a steady stream of new
models across all price ranges.
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INSIGHT - At Apple, Tim Cook leads a quiet cultural revolution | Reuters

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Cook got a vote of confidence this month when activist investor Carl Icahn disclosed he
had amassed a large position in Apple stock.
Bob Iger, the Apple director, said Cook had taken on "a very, very difficult role given the
person that he's succeeded and the company he's running."
"I think he's done so with a deft hand, a strong sense of himself," said Iger, who himself
long toiled as the number two to a celebrated CEO, Michael Eisner. "With that comes a
real self-honesty that he is who he is, and not what the world expects him to be, or what
Steve was. And I like that." (Editing by Jonathan Weber, Edwin Chan and Claudia
Parsons)

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