That was Tim, this is Ternus: Some first thoughts on Apple’s CEO transition

Tim Cook didn’t get to be a part of a “thoughtful, long-term succession plan” in 2011. After stepping in for Steve Jobs multiple times during the Apple co-founder’s fight with cancer, Cook became CEO, and Jobs became executive chairman just 43 days before Jobs died. Apple didn’t dictate the executive transition. Jobs’s cancer did.

I get the sense that Cook wanted to give his own successor the thoughtful, long-term plan that Jobs couldn’t give to him. Nearly two years ago, Bloomberg’s Mark Gurman suggested that Ternus could be Cook’s planned successor. By the time the Financial Times reported that Ternus was likely to succeed Cook last November, it was clear things were already headed in that direction. I doubt there was a single person at the March unveiling of the MacBook Neo who didn’t know that John Ternus, who spoke to the crowd, was likely to be Apple’s next CEO.

Tim Cook knows he can’t stay at Apple forever. The longer he lengthened his tenure as CEO, the shorter he risked making the transitional period. I’d actually be surprised if Cook isn’t in the executive chairmanship for a lot longer than people expect. I don’t think he’s ready to put Apple in the rearview—but I do think he’s trying to get the timing on this exactly right.

And here it is: Cook will give Ternus the CEO job in a little over four months. (Wall Street has ten days to digest that news before Apple reports its latest financial results.) Then Cook will become Apple’s executive chairman, able to provide advice and support to his successor while presumably allowing him to forge his own path. Ternus gets a runway, mentorship, and a trusted adviser at a particularly stressful moment. I’m sure Cook wishes he’d been able to talk to Steve Jobs during his first year as CEO.

Oh, and Cook will apparently be taking one very specific job with him to the boardroom, according to the press release:

Cook will continue in his role as CEO through the summer as he works closely with Ternus on a smooth transition. As executive chairman, Cook will assist with certain aspects of the company, including engaging with policymakers around the world.

It doesn’t take a magnifying glass to read between those lines. Cook is keeping one of the stickiest jobs he’s had to do the last decade for himself, for now: connecting with the representatives of various governments in ways that advantage Apple, whether that’s easing China’s worries about Apple’s focus on diversifying its supply chain, or convincing the Trump administration that Apple is investing in the U.S. while also needing tariff relief. Not only does Cook have the personal connections there, but it’s a messy business that perhaps Ternus is best insulated from—for now.

Tim Cook’s legacy

There’s going to be ample time to ponder the highs and lows of the Tim Cook era at Apple. The company is impossibly larger than the one Cook took over from Jobs. The explosive growth of the iPhone, especially from 2014 on, has changed the fundamentals of the company. When iPhone growth finally slowed, Cook swapped in a growing wearables business (led by what I assume is the product Cook is most proud of, the Apple Watch) and a dramatically growing set of subscription services. Those growth lines keep Wall Street happy.

When you’re the CEO, you’re the CEO of the whole company—but I do believe that CEOs come to the job with their own strengths, which reflect on their priorities as CEO. Cook’s focus on efficiency, owing to his background in operations, also served Apple well during this period. Realizing that product margins increase over time, he allowed Apple to sell iPhones at lower prices by keeping older models on sale for much longer.

Cook’s priorities helped make Apple a manufacturing powerhouse, capable of building products nobody else could—at least, until Apple showed the way. But as Patrick McGee so capably showed in his book Apple in China, Apple was also training up China on being a tech manufacturing powerhouse. Between that and Cook’s policy of engaging with the Chinese in order to gain access to the lucrative and growing Chinese market, Cook reaped benefits with the side effect of empowering a global competitor and not engaging with a government whose core principles do not fit with Apple’s.

The same goes for the United States, where Cook has managed to reduce the impact of tariffs by playing nice with the administration 1, making some made-in-the-USA servers and boasting about its investments in American manufacturing while downplaying its commitment to diversity, equity, and inclusion.

John Ternus’s opportunity

For John Ternus, who’s been working at Apple for half his life, to say that this is a huge opportunity is an understatement. Congratulations, dude, here’s the keys to one of the world’s most important and valuable corporations. Don’t break it.

But Ternus’s arrival in the CEO’s office isn’t just an opportunity for him. It’s an opportunity for Apple. Every time a new person takes over, whether it’s in the role of CEO or even just a middle manager, there’s an opportunity for change. Even if you worked for the old boss, once you’re the new boss, you have the opportunity to turn the page. It’s a lot harder for someone to reverse themselves on a decision they made than it is for someone new to come in and see the opportunity to move forward. (Cook re-instituted an employee donation-matching program when he took over from Jobs, just as one small example.)

In spite of its success, or perhaps because of it, Apple has been a company in stasis for 15 or 20 years. When everything’s going great, and all the executives just stick around no matter how rich they get on stock options, it’s really hard to make changes. The arrival of any new person in charge, not just John Ternus in particular, is an opportunity to shake things up. New leaders have the freedom to make their mark. That could be good for Apple.

I’m also struck by the fact that John Ternus comes from a product-focused background. All in all, it was probably for the best that Tim Cook was as different in skill set from Steve Jobs as possible, because that was an impossibly hard act to follow. Cook, as an operations guy, got to put his faith in the product teams that were executing and guided them at a very high level. I think it would’ve been a disaster if Apple’s first post-Jobs CEO had been trying to cosplay as Steve. Cook couldn’t pull off wearing that turtleneck.

But it’s been 15 years, and maybe it’s a good thing for Apple to get a CEO who’s closer to the metal? Ternus knows the ins and outs of product development at a different level than Cook ever could. Given that Apple is, at its heart, a company that makes physical products and sells them, having someone who has spent decades at Apple working on those products feels like an opportunity for a positive change.

The importance of keeping Johny Srouji

As a part of Monday’s moves, Johny Srouji has been named Chief Hardware Officer, reporting to Ternus. This is a new C-suite position for Srouji, previously the senior VP of hardware technologies.

It’s hard to see this move and not consider Bloomberg’s report back in December that Srouji “recently told Cook that he is seriously considering leaving in the near future,” a report defused by Srouji two days later.

Srouji is the father of Apple silicon, and Apple’s chip efforts are one of the company’s greatest assets. When word of Srouji’s potential exit broke, it only underscored to me just how vital Srouji and his team are to Apple. It also struck me that perhaps this was evidence that Apple was negotiating with Srouji in order to retain him, during a period when one of his peers—Ternus—was about to be made his boss.

The moment your boss of more than a decade decides to hang it up seems like a pretty good time to take stock and consider what your own next move might be. If you’re Srouji, you undoubtedly have all sorts of different opportunities out there. Having a fellow SVP like Ternus be promoted over you also has to sting a little bit, even if you didn’t especially want the top job.

You need to retain key employees, and there aren’t many people more key at Apple than Johny Srouji. No matter how it went down, here’s the result: Srouji gets a C-suite title, and he takes over Ternus’s hardware role. Ternus’s lieutenant Tom Marieb is reportedly taking his slot and reporting to Srouji. This is textbook retention, and Apple has to be relieved that Srouji is staying on.

Still, these won’t be the last changes. With Cook on his way upstairs to the boardroom, I would expect many other long-tenured Apple executives to redefine their positions or even depart entirely. Keep in mind, most of these people have been working intensely for decades and have made enough money to retire in style. I have no doubt they do it because they love it, but once the boss changes and some of your old colleagues step away, it’s not the same, is it? It’s a cascading wave of change that is probably going to continue at Apple for some time.

Managing that change, and making it for the better, will be one of John Ternus’s first jobs. At least he’ll have Tim Cook to lean on for advice.

Gold trophy included. ↩