The Genius Dilemma

Gallery: Steve Jobs: Insanely Great Ryan Anson / AFP-Getty Images

A chair crashed on the tile floor as a skinny young man rushed over to our table at Michela's, a hot restaurant in Cambridge, Mass. It was Steve Jobs, then just 29 years old, and his haste was not to meet me but to salute my guest, Polaroid founder Edwin Land.

I was surprised to see how enthusiastically the enfant terrible greeted the 76-year-old Land. I was even more surprised that Land didn't recognize Jobs. He awkwardly returned Jobs's greeting by introducing me: "This is Dr. Sonnenfeld … an expert in CEO succession …you know, drawing organization charts with lots of boxes. And how do I know you?" Still smarting from his recent ouster as CEO of Apple, Jobs sat down and replied, "Dr. Land, I am Steve Jobs and I started a company called Apple but I now run a business called NeXT. I think it's too late for me to learn about succession." After Jobs left, Land commented, "That Jobs is a bright young man … but he'll never make it back. He's a marketer but doesn't really know his own technology." Of course, Jobs did make it back, and then some, taking Apple's stock from $3 to $350. Now his latest medical leave stemming from a liver transplant has many worried about how Apple can thrive without him. Land, meanwhile, left his company directionless in changing winds.

It is surprisingly difficult being a genius in corporate America. Unbridled (mostly) capitalism makes it possible for a unique few to take an idea, turn it into a company—and, every once in a while, change the world. Along the way, they enrich all of us: consumers who get great products, investors who benefit from big returns, and citizens who need their nation's economy to compete on the global stage. But once these visionaries have moved on, their creations often struggle to retain the founders' magic.

Steve Jobs embodies Apple to many people, a view reinforced by his staggering success as well as the company's flailing when it banished him for a time back in the '80s. Over at Google, meanwhile, a related drama is playing out. When Larry Page and Sergey Brin started the company, they submitted to investors' demand for "adult supervision" and hired tech veteran Eric Schmidt as CEO. But after years of Schmidt running the show and growing the company to once unthinkable heights, there are mutterings inside and outside Google that the company has lost its edge, facing threats from Apple and Facebook. So Page—so integral to what makes Google Google that its central PageRank algorithm is named for him—is pushing his way into the CEO job, leaving Schmidt as chairman.

For Google, Apple, and many other companies built on their founders' vision, this is the genius dilemma. How do you maintain the DNA that the founders have imprinted into the business? And what can the visionaries themselves do to prepare the company for that day? The same gifts and drive that make these people heroic leaders often leave them ill equipped to contemplate what's needed to keep things growing without them. Time and again, they share a disdain for any distraction about their own mortality. Like monarchs, they often believe they can and should reign as long as they live.

And sometimes they have a point. What Jobs has accomplished at Apple is, of course, monumental. With a succession of brilliant, futuristic products—the iPod, the iPhone, the iPad—Jobs improbably turned Apple into the world's most valuable technology company. He has also dragged one industry after another into the future. When iTunes and the iPod arrived, people switched to buying their music online and the dire fears of the Napster days faded. Now Jobs's iPad is forcing publishers of books, magazines, and newspapers to rethink their businesses.

Jobs has pulled this off with an unbending vision and a constant obsession for guarding the quality of everything Apple does. He is a master at bringing simplicity to the macho complexity that tech culture embraces, and he will not compromise. Charging into a smart-phone market dominated by the button-festooned BlackBerry, Jobs demanded the iPhone's front sport a single physical button. Now stores are filled with sleek phones that look like iPhone clones.

You can also thank Jobs's exacting standards for transforming the telecommunications industry in the past few years. When developing the iPhone, Jobs decided he didn't like traditional voice mail, which forces owners to listen to their messages in sequential order. He said he wanted "visual voice mail," letting users choose and hear messages in any order. The feature meant overhauling huge phone systems—but AT&T agreed, got the iPhone, and signed up millions of customers.

It's never easy sizing up how a company might eventually fare without its founder, but in Apple's case it's particularly challenging. Jobs has imbued a culture of deep secrecy at Apple. The company has benefited from this, with new-product announcements that generate huge buzz, instead of leaks that suck the air from unveilings. The secrecy—intense enough that an engineer's lost iPhone prototype became a national sensation—is part of the Apple mystique. But it also makes it hard to gauge the depth of Apple's bench. The company has some terrific talents below Jobs—iPhone and iPad designer Jonathan Ive is one example; global marketing chief Philip Schiller is another. But you have to be an Apple detective/anthropologist to even know the names, let alone know how these people work with each other. If and when he returns to an active role, Apple would benefit from Jobs giving more of the limelight to the best talents.

So we need to nurture these creative geniuses—but we also want their creations to outlast them. We don't want to sap their passion with bureaucratic oversight. At the same time, we must watch to see if the company is continuing to evolve, forging new relationships with outside investors, hopeful customers, trusting employees, committed suppliers, and dependent communities. As Dell's maverick founder Michael Dell told me: "Perhaps the best measure of a founder's success is not how bright the star shines while they are there—no doubt this is certainly an important trajectory!—but what happens after they are long gone from this earth."

The post-genius failures are sobering in number and severity. When I began teaching, the world's second-largest computer company was one most of my current students never heard of—Digital Equipment Corp. Its founder, Ken Olsen, ran things for more than three decades, but the company became a casualty of the personal-computer revolution. He wasn't an isolated example: An Wang of Wang Labs and William Norris of Control Data were both brilliant engineers, too.

Overdependence on the founder is one red flag. Juan Trippe, who launched Pan American Airways, was essentially the Steve Jobs of aviation. Trippe built his vision of a worldwide air-travel network by meticulously crafting relationships with key diplomats and politicians in countries around the world to ensure Pan Am would get favorable treatment on routes and gates. That gave Pan Am hugely profitable dominance in international air travel. Trippe was also a Jobsian showman when it came to selling his product to consumers, using nautical terminology to evoke the luxury of cruise ships. But Trippe got so obsessed with company infighting that he didn't notice the world was changing around him. Pan Am's board found him to be arrogant and secretive but felt powerless to make changes. Many key company records seemed to exist only in Trippe's head. When deregulation arrived, Pan Am was ill prepared to transfer power to a new generation.

Things work well when the founders establish a line of successors. Intel, the computer-chip giant, was founded by Gordon Moore and Robert Noyce—legendary engineers who left Fairchild Semiconductor to pursue their vision for microprocessors. They handpicked their senior executives, sculpting a clear succession process and cultivating a successor who was, if anything, even more creative: Andy Grove. Moore and Noyce were confident in their legacy, never threatened by Grove's ascension. They took the title of chairmen, with Grove as CEO. Yet it was Noyce who originally shaped Intel's carefree "follow your bliss" management style—shunning executive perks like private jets and dedicated parking spaces—that thrives there today and around Silicon Valley. He was the model for later Intel CEOs, and Intel's HQ is named for him. Intel's leaders keep the revolution young by redefining themselves technologically, but not culturally. They've evolved from their early focus on chips to other key components such as graphics chips and flash memory. Now Intel is working on such new technologies as electrical transmission and generation.

Preserving key DNA is also about implanting crucial values throughout the company. Howard Schultz, whose vision turned Starbucks into a global brand, stepped away from management for years. He returned when growth began to slow under his successors—and amid a sense that Starbucks had become too generic, losing some of the identity that originally attracted customers. To get employees to truly buy into the core values, Schultz advocates face-to-face conversations with as many people as possible. "Especially in our digital age, the power of talking to people in person is exponential," he told me. "When I came back, I could not communicate enough."

In those conversations, Schultz advocates balancing the need to innovate with values that must be preserved. It's "encouraging creativity and intuition while also insisting on operational rigor and discipline," he says. "Being responsible to our shareholders without abandoning our social responsibilities. I think it's fair to say that I, too, have become a more balanced leader in all the ways I just mentioned."

But admiration of the founder must not become a stifling cult. Michael Dell has cautioned about the importance of the founder not creating a religion around himself or herself—and he takes practical steps to avoid that. Dell says he works to make other stars visible with an institutionalized review process that exposes up-and-comers to the board of directors. "We also ask board members to meet these key leaders on their own during the year in one-on-one meetings so they get to know them and can make their own judgments about their capabilities and potential."

With so much evidence showing the benefits of good planning and the traps that lie in wait for companies too tied to their founders' vision, you'd think modern CEOs would know better. Yet many seem loath to acknowledge a future without them in it. At a 2007 panel of CEOs, Warren Buffett asked founder Jeff Bezos and News Corp. CEO Rupert Murdoch to address their succession plans—and was met with virtual silence. Murdoch, now 79, was questioned about this at an annual shareholders' meeting in Adelaide, Australia, eight years ago and replied that his retirement plans had been "put on hold forever" and that he would have to be "carried out," citing the recent birth of his second daughter to his third wife and boasting of his low cholesterol. Why would a Jobs or a Murdoch or an Olsen think he has anything more to prove? They all transformed their industries and have had sweeping commercial impact in general across countries and continents. But in our modern age, they are heroes of a sort—which is embedded in their self-concepts—and they're susceptible to the foibles of heroes.

Top leaders, like artists, are fueled by the desire to leave a lasting legacy. I have termed this the "heroic mission." In his book The Denial of Death, Ernest Becker wrote that the leader is on a quest for immortality—he or she must "stand out, be a hero, make the biggest possible contribution to work life, show that he counts more than anyone or anything else." Is it any surprise, then, how often such CEOs will proudly show me their exercise schedules, share their diets, and boast of their good health? Boston Consulting Group founder Bruce Henderson liked to give me a tour of his workout equipment. In his late 70s, Bill Rosenberg, the founder of Dunkin' Donuts, challenged me to a freestyle race in his backyard pool on Cape Cod.

Founders must also come to terms with a threat to their identity, or what I've termed their "heroic stature." Many are utterly obsessed with their work. That's obviously a huge asset when developing a business. But as a consequence, they often tend to let other life and community roles slip away. They are not consummate joiners in civic organizations and social clubs. They channel their energies exclusively around their creative passions and thus often become overly identified by their positions. What else would they do but run their companies?

It's wrong to view this as merely the product of vanity needs and oversize egos—and there are benefits to having bosses willing to be the brand and, therefore, highly accountable. By contrast, former BP CEO Tony Hayward's apparent disdain at public scrutiny after last year's massive oil spill eroded public confidence in his company and hampered his credibility with government officials. Brands, and the bosses who embody them, can help bring us business clarity, product reassurance, legal responsibility, and consumer excitement.

We cannot, of course, indulge our geniuses without limit. We do not want to cultivate bureaucratic executive clones—but we also do not want unconstrained imperial titans running public businesses without oversight, as we saw in so many governance defaults of the last decade. Yet in balancing those, we must realize that founders are not like the rest of us. We are so much better off with these creative brains than without them. After all, Sigmund Freud observed that society is changed by its discontents—the iconoclasts who challenge the status quo. They are more narrowly focused than many of us on an entrepreneurial dream, they have talents most of us lack, and they make superhuman sacrifices that benefit us all.

Sonnenfeld is a senior associate dean and Lester Crown Professor in the practice of management at Yale University's School of Management.