Apple Needs a Succession Plan -- Fast

When Apple (AAPL Quote) announced on Dec. 16 that Philip Schiller, the company's senior vice president of worldwide product marketing, would deliver the keynote speech at this week's Macworld conference instead of CEO Steve Jobs, speculation swirled again about the future of the company -- and Jobs's health.

(Updates: "Macworld Exit Opens New Doors for Apple" and "Crabby Apple Fans Unimpressed by Macworld")

Jobs disclosed in August 2004 that he had a cancerous tumor removed from his pancreas. Observers at recent Apple events reported that the visionary technologist appeared gaunt. Adding fuel to the fire, Apple also announced that it would not be participating in future Macworlds, saying, "Trade shows have become a very minor part of how Apple reaches its customers."

Responding to questions about his health, Jobs said in a Jan. 5 open letter that he was suffering from a hormone imbalance that was "robbing" his body of nutrients. He also noted that he is receiving treatment and will remain CEO of Apple. "I have given more than my all to Apple for the past 11 years now. I will be the first one to step up and tell our board of directors if I can no longer continue to fulfill my duties as Apple's CEO," stated the letter.

Meanwhile, the looming question of who would replace Jobs if he had to leave Apple remains unresolved for shareholders, analysts and customers. While the company maintains it has a succession plan, it has offered no details. Observers are left to question what Apple might look like without Jobs and whether the company can continue pumping out hits like the iPhone, MacBook and iPod.

(Photo gallery: Steve Jobs: The Man, the Myth, the Turtleneck)

A succession plan is critical for most companies, but especially so for Apple, according to Wharton faculty. They acknowledge that every company is different, but also point to established best practices for succession planning, including hiring from within, conducting an audition period, easing the successor into a leadership role and providing some level of succession disclosure to shareholders.

Companies with strong corporate cultures can usually count on continued success if they can seamlessly transfer power to an executive from a strong bench of managers. But selecting Jobs's successor will be challenging, given the degree to which he is tied to Apple's identity. As Wharton management professor Michael Useem puts it: "There are few companies where the top person has as much of an impact [as Jobs has had] at Apple."

Apple and Jobs seem almost inseparable in the public mind. Jobs cofounded Apple in 1976, left during a power struggle with corporate investors in 1985 and returned to Apple in 1997 after the struggling company acquired NeXT, another computer firm started by Jobs. Apple ousted CEO Gil Amelio, who had been at the helm a little more than a year. Jobs became interim and then permanent CEO, quickly establishing himself as the voice of Apple and launching a string of consumer electronics hits.

"He really is the face of the company," says Kendall Whitehouse, senior director of IT at Wharton. "When you speak to Apple employees, there is always a lot of talk about Steve and what Steve wants. It's palpable. That has generally been a positive thing for [Apple]. Jobs was the centerpiece for refocusing the company and brand" following his return.