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Feb. 18 (Bloomberg) -- Apple Inc. is known for producing great products, like the iPod. Now Google Inc. with its acquisition of Nest Labs Inc. and its Apple alumni founder Tony Fadell, is hoping it produces great leaders who can replicate that success as well.
It’s a gamble that has proved disappointing for companies from Palm Inc. to J.C. Penney Co.
Fadell, who oversaw development of Apple’s iPod, was a star attraction in Google’s $3.2 billion purchase of home-management startup Nest. Just as Apple’s music player sparked the company’s shift from a niche computer maker into dominance in mobile devices, Nest may help Google push its software and services into a new generation of connected household items.
Fadell will have to break the run of ex-Apple executives who have yet to replicate the iPhone maker’s success at their new employers. Managers at Apple -- distinguished by its secretive culture and narrow focus on a few products -- don’t necessarily flourish at companies with more traditional and cooperative structures.
“Apple is not known for producing leaders -- it produces products,” said Ram Charan, a management consultant who has acted as an adviser to Jack Welch, former General Electric Co. chairman and chief executive officer, and Ivan Seidenberg, former chairman and CEO of Verizon Communications Inc.
Some high-profile defectors have already struck out. Two years after leaving Apple, Jon Rubinstein took over product development at handheld computer maker Palm and became CEO there in 2009. The failure of Palm’s Pre smartphone led to its sale in 2011 to Hewlett-Packard Co. Within a year, its new owner ended production of Palm software-based phones and Rubinstein left the company.
Former Apple retail chief Ron Johnson was ousted as CEO of J.C. Penney in April after presiding over a 25 percent decline in annual revenue at the department store. His firing came less than two years after he left Apple, which he had helped make the world’s leading retailer in sales per square foot.
Other executives have yet to make a mark at their new employers. Intel Corp., which has been struggling to get mobile- phone makers to use its chips, hired Mike Bell, also a former Palm and Apple executive, to lead that effort. Four years later, the chipmaker has less than 1 percent of the market for smartphone processors and hasn’t made a dent in Qualcomm Inc.’s dominance. Bell is now running an Intel unit called New Devices, tasked with finding a spot for the company’s chips in the market for connected devices -- called the Internet of things -- that Google is targeting with Fadell’s Nest.
Intel’s only rival in personal-computer chips, Advanced Micro Devices Inc., is also trying to rebuild its business after years of market-share losses by hiring at least three former Apple hardware-engineering executives: Mark Papermaster, Jim Keller and Raja Koduri. Their technical skills, which helped shape key components of the iPhone and iPad at Apple, haven’t yet helped AMD gain back ground in PCs, and the company is still trying to return to profit amid a new focus on custom products for devices such as game consoles.
Papermaster has led AMD’s engineers in delivering chips on schedule since he joined the company in 2013, and the other two executives are working on future designs, said Drew Prairie, a spokesman for AMD. Intel and Apple representatives declined to comment, as did Rubinstein. Johnson and Fadell couldn’t be reached for comment.
The former Apple executives’ records are especially unremarkable when compared with their former employer, which under the leadership of co-founder Steve Jobs transformed itself from the edge of bankruptcy into the world’s most-valuable company. Jobs’s pursuit of his vision for the future of phones and computers left a string of companies struggling to catch up with the sweeping changes in consumer tastes he ushered in.
Those still playing catch-up include Google’s Motorola unit -- which the company last month agreed to sell -- Nokia Oyj, BlackBerry Ltd. and Hewlett-Packard. So far, signing up executives who played important roles under Jobs hasn’t provided a big boost.
Fadell’s prospects may be rosier. Many former Apple leaders succeeded there by focusing on one area, then struggled once they left to take larger roles at new companies. Fadell, by contrast, had broader responsibilities encompassing design to customer support, said former Apple marketing executive Bob Borchers, who worked with him on the iPod.
“Fadell was more well-rounded than most,” he said. “Apple doesn’t really develop well-rounded leaders, because Steve always wanted people who were narrow and deep.”
Under Jobs, Apple bred executives with a “we versus they” mentality that prized secrecy in the development and marketing of products -- even within the company, said Jeff Sonnenfeld, a professor at Yale University School of Management. That makes it harder for former executives to collaborate and to lead efforts that depend on close work with other companies, he said.
“With Apple, some of the important qualities might actually be detrimental at other companies,” Sonnenfeld said.
Apple was also driven by its escape from near bankruptcy in 1997, when it lost more than $1 billion, to ditch its digital cameras, CD players, speakers and personal digital assistants to focus on a narrow line of new products, such as the iMac. Few established companies have management teams with a similar sense of urgency, making it difficult for former Apple executives to recreate the speed of action they are accustomed to.
“Apple was starting with a clean slate in a lot of the things that it was doing in the last 10 years,” said David Yoffie, a professor at Harvard Business School. “Some of the people who left Apple were going into operations that could never operate at the speed or creativity that Apple was able to accomplish.”
Focusing on fewer products has helped Apple market its wares as exclusive, high-end devices. Similarly, Fadell’s Nest makes only two -- a digital thermostat and a smoke detector -- and their designs reflect the minimalist style that Apple helped make popular among consumers. Now, as a part of Google, Fadell said that connecting everyday devices such as refrigerators to the Internet will shake up the home-appliance market.
Some other Apple alumni are still burnishing their post- Cupertino legacies. Bertrand Serlet, who was Apple’s senior vice president of Mac software, co-founded a cloud-computing company called UpThere. Mike Matas, who worked as part of the original iPhone software design team, left to found Push Pop Press, which was acquired by Facebook Inc. Evan Doll, another member of that group, co-founded news-reading application company Flipboard in 2010.
Change in organizations ultimately has to come from the top, said Rick Devine, CEO of TalentSky Inc., who helped Steve Jobs recruit current Apple CEO Tim Cook. Without a leader committed to constant evolution, importing outsiders -- even those as celebrated as Apple designer Jonathan Ive -- would have little impact -- no matter where they come from, he said.
“You can bring in Jony Ive to Dell, but is he going to get things done there if Michael Dell doesn’t agree with him?” said Devine. “You need a leader who believes constant change and that looking for the next act is important.”
--With assistance from Adam Satariano in San Francisco. Editors: Jillian Ward, Reed Stevenson