Apple's Executive Shake-Up: 10 Ways It Could Hurt the Company

By Don Reisinger  |  Posted 2012-10-30

Apple's Executive Shake-Up: 10 Ways It Could Hurt the Company

Apple has made the shocking announcement that not one, but two of its top executives have left the company. Scott Forstall, Apple's senior vice president of iOS Software, is leaving. In addition, John Browett, who only took over Apple's retail efforts six months ago, has left. According to Apple, it doesn't have any plans to replace the men, but will assign other top executives to take over for them.

Apple made the not-so-surprising decision to announce the executives' departures Oct. 29, the day before the stock market closed for Hurricane Sandy. The move allowed the news to circulate among investors for a while and give Apple some time to control its messaging to the news media. Regardless, the news is a blow to Apple's entire executive team and could have profoundly negative consequences on the company, the sales success of its entire product line and perhaps bring to an end Apple's current unprecedented period of growth.

Don't believe it? Read on to find out why Apple's executive shake-up is bad news for customers, shareholders and Apple, itself.

1. Software is key

If Scott Forstall did anything at Apple, it's prove that iOS really is the best way to implement a mobile operating system. With Forstall now gone, will Jonathan Ive, Apple's design guru, really be able to continue on that track? It's certainly possible. But Forstall was a key ingredient in Apple's mobile success.

2. The retail chain is rudderless

With John Browett now gone, Apple's retail division has been left rudderless. That's a real issue. Apple has been expanding rapidly around the world, and in the last month alone, has opened a few new stores across China and Asia. Without a leader, can its aggressive retail expansion continue?

3. Shared roles are never good ideas

According to Apple, it has decided to divvy up among the other executives the responsibilities that Forstall and Browett took on. That means Forstall's duties will now be handled by Ive and iTunes lead Eddy Cue. But sharing duties is never a good idea, especially in a company as large and dynamic as Apple. In far too many cases, executives get overworked and they start losing focus. Hopefully, that won't happen here.

4. Investors will grow worried

Although it's often overlooked in Apple's world, investors have a major impact on the company's business. With two executives departing, might Apple's vaunted share price come crashing down far more than Cook and his fellow executives would like? Don't ever forget the power and importance of shareholder sentiment.

Apple's Executive Shakeup: 10 Ways It Could Hurt the Company

5. Forstall was well-liked

Forstall's departure is a major issue for Apple's software division. According to internal reports, Forstall was well-liked by his team, despite being one of the more demanding executives at the company. If the engineers who worked under him are upset to see him go, they might look to follow him to new jobs elsewhere.

6. Morale will take a hit

Whenever executives leave, there is always some concern that morale will take a hit. Chances are Browett's departure won't be a major deal for morale, since he was at Apple for such a short time. But how will Apple's employees feel about losing the man who helped make iOS what it is today? Watch out for Apple morale data in the coming weeks and months. It might just prove sobering.

7. It will call Cook's leadership into question

It's never good when a company loses two top executives. But it's perhaps even worse for the CEO. Whenever such a scenario plays out, outsiders quickly question why they're leaving and what might have caused it. The CEO comes into the crosshairs as some wonder if he or she is incapable of leading people with big salaries and big egos. It's now Cook's turn in that spotlight.

8. There's more autonomy and that's a problem

In the past, Apple has been a place where autonomy is really not encouraged or celebrated. Steve Jobs ruled with an iron fist, and he didn't care who knew it. But Cook has tried to be nicer and give his executives more autonomy. That hands-off approach might come back to haunt Apple and Cook as the executives work their way into roles to which they are not accustomed. In times like this, a more Jobsian view on leadership is needed. But Cook won't have it.

9. Jonathan Ive is a double-edged sword

There's no debating that Jonathan Ive is a design genius. But until now, he has really only proven himself as a software guy. It takes a special person to be able to deliver high-quality design on both software and hardware. That's why so many companies separate those two elements. Now, they're all under Ive. And we'll have to see if he's one of the special few who can deliver outstanding quality on both the hardware and software sides.

10. Will they poach the best workers?

Whenever companies see their executives go, they have to worry about one thing: losing workers to whichever firms their senior leaders join. When Marissa Mayer left Google to take over Yahoo, she poached several old friends at the search giant. That's just as likely to happen at Apple. As great as the company is, if Forstall offers his best employees more cash and promotions, they'll leave Apple in a hurry.

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