Apple Executive’s Autonomy

ifoAppleStore had a huge scoop yesterday about the recent Apple Store personnel changes:

A series of recent administrative moves to reduce the number of Apple retail store employees is being attributed to Sr. VP Retail John Browett, who is hoping to increase the chain’s contribution to company profit. The staff reductions seem to be in direct contradiction to an increasing number of visitors to the stores, and the need to maintain Apple’s global reputation for excellent customer service. But according to those with close ties to the retail stores, Browett feels the stores are “too bloated” with employees, and he is willing to gamble the stores’ legendary customer experience to gain back a few points of profit margin.

This makes it clear that Apple’s executives enjoy a lot autonomy and not much accountability. Browett reports directly to Tim Cook. In most large corporations, you would usually meet with your boss, set goals, and then be held accountable.

More specifically, Browett is aiming to increase the chain’s 22 percent profit margin reported for the latest quarter. That figure is in the mid-range of profit margin reported over the past five years. Retail store profit constitutes about 10 percent of the entire company’s profit each quarter.

How did the goal of increasing the store’s profit levels even come across Tim Cook, much less approving it as and telling Browett he’d be accountable for higher margins?

With $100 billion sitting in the bank, the last thing Apple executives are worrying about is making more money. The guys who have been around are smart enough to know that they make money through a great experience (which Browett was willing to compromise), not through spending cuts.

You don’t spend less money to make more.

It’s clear that Browett must have been operating on his own here – yes, “trying to make his own name,” as Jim Dalrymple put it – but even more so, it’s a glimpse into Tim Cook’s relationship with his executives. He either 1) doesn’t pay much attention to Apple retail or 2) has people around him that he completely trusts to do their jobs well.

I’d bet on #2 when you have a team of people like Phil Schiller, Johnny Ive, and Scott Forstall.

Cook is the opposite of Steve Jobs who always had his hand in every project. 99% of the time, I’d say that’s a smart move and one that will lead to a company that can last without a “supreme leader” like Steve. But you have to be vigilant about maintaining the culture of what makes you successful.

It won’t surprise me one bit if in a few days we see the new that Browett “has chosen to leave Apple to pursue other projects.” I have no doubt he’s lost the trust of his team at this point, and that it became public only piles on.

People who focus on slashing costs to increase profitability are like a cancer at companies. They bring in other people to lead teams who are focused on the same thing. Culture is what will keep Apple sustaining, and if I was Tim Cook, Browett would be out of Apple before I blinked an eye.

August 17, 2012