I’ve written several times about Jim Schrager who opened my eyes to the difference between strategy and hope at the University of Chicago.
Jim is one of the world’s leading thinkers on why businesses succeed. His resume as a practitioner, teacher and thought leader speaks for itself. I’m proud to call him a mentor and a friend.
Jim reads this blog regularly and wrote a follow up to my Steve Jobs post from last week. As with all great teachers, he answers some questions while raising new ones.
Does Apple Need Jobs?
The stock market had a case of the nerves with the announcement that Steve Jobs was stepping aside again for awhile. As we all know, the market can be at times a rational arbiter of things to come, or an utterly random marker. Which is it this time?
A change of leadership poses a risk for all organizations. Some make the transition well, others less so. Strategy is a powerful tool the best CEOs use to think about the future. Within some boundaries, strategy allows us to process the news streams of the day and select what matters as we think about tomorrow. One of those boundaries describes what decision researchers call the “task environment. ”That’s a fancy way of categorizing different situations based on the affect people have on it. Strategy can explain many things in the business world, such as the rise of Toyota, the fall of K-Mart, and the reason why Fortune Brands is changing its portfolio of products.
But when we have a “fashion” business, strategy is much less useful.
Steve Jobs is one of the very few people with the skills required to prosper in the “technology fashion" business. Like apparel, his business is very creative, and as we note over many decades, success in fashion is very hard to predict. The folks who can run a business like this are rare, their talents cannot be easily transferred, and when they leave, in almost every instance, the company struggles.
Other fashion business examples beyond apparel include movies, books, TV, and radio. CEO succession in these businesses poses a special risk.
The reason we watch the leaders of these businesses in a special way is because we know that strategy, used so well in other environments to find the best path forward, won't work in a fashion business. Jobs has had a series of great tech hits, that’s the mark of CEOs who master this tough challenge. That he has no one else ready to take over is common, because those who can do this are exceptionally uncommon.
Try and find a fashion business that made a smooth transition between leaders, and you won’t find many. Most don't make a transition at all, and simply glide along without the power of new hits until they crash.
Strategy doesn't work here, and we simply must be humble about that. The stock market is right to know there isn't another Steve Jobs ready to take the controls.
There isn't another Ralph Lifshitz either.
When either of these fashion leaders leaves the stage, it’s fair to expect big changes ahead for their companies.
Written by James E. Schrager, who teaches strategy at the University of Chicago, Booth School of Business.