Steve Jobs and the inanity of the cult CEO

January 21, 2011: 9:04 AM ET

If you believe a company can't sustain the loss of a single individual, you shouldn't invest in it. Steve Jobs is a wonder, but he is not a one-man $300 billion corporation.

Steve Jobs shows off iPhone 4 at the 2010 Worl...

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We had to know it was going to happen. As soon as word came out about Steve Jobs' latest health issue, a swath of commentators would jump on the "shareholders' right to know" issue and run with it. Steve Jobs, they would argue, is Apple personified. Without him, it's over.

Run with it they did. Not many got further than Brett Arends of MarketWatch, who, without any apparent nod to irony, decided to go big: "Jobs' employment at Apple is share-price sensitive information," he wrote. "He's probably the most important chief executive in the market, one of the most important people in the economy." Why, he demanded, were we not privy to more detailed information about Jobs' health? This, in other words, was a matter of national importance.

But is it? This latest Jobs health scare has brought into precise focus the inanity of the cult of the CEO, at least as far as the stock market is concerned. Steve Jobs is clearly a genius marketer. And he might just have a few more big ideas up his sleeve. But every journalist or shareholder who bemoans the lack of information about Jobs' leave is simultaneously insulting the other 47,000 employees who have made Apple (AAPL) such a success. And Jobs himself. He's the smartest man to ever walk the earth, but he hasn't taken care to build a deep bench? Especially given that he knows more than the rest of us about what's wrong with him? Would he do that to shareholders? Can we send him to jail for it?

Arends also floated the idea that with the paucity of information about Jobs coming from official sources, the opportunity is ripe for unscrupulous hedgies to float the "Steve Jobs is dead" rumor in order to make a quick buck. It's all about the integrity of the markets, you see. If other CEOs start to act like Jobs, demanding privacy about personal issues, what will become of us? We won't know anything about anything anymore, and the entire economy will come grinding to a halt. And hedge funds will win again, like they always do. Goldman Sachs (GS) will surely be involved, somehow.

( Apparently no one told Arends that the hedge fund world has people in high places at pretty much every technology firm in the Valley. They don't need to conjure up fake news to make money these days. They're getting the real stuff, via "expert networks." It's easier to make money from reality than myth.)

Charisma doesn't last forever

Apple stock slumped—momentarily—on the news of Jobs' leave, and then recovered on the total lack of follow-up news. This leaves one to conclude that this was…much less important news for shareholders than the likes of Arends would have us believe. "[There is] a fervent though erroneous belief that the quality of a CEO is the primary determinant of firm performance," wrote Harvard professor Rakesh Khurana in his 2002 book Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs. But what if we've already got a charismatic CEO? Is it irrational to hope that they live forever? Short answer: yes.

Before the rejoinders come back at me in full force, I'll admit that I have and will continue to contribute to CEO-as-hero canon. But we've got to draw the line somewhere. Will JPMorgan Chase (JPM) be a lesser place once Jamie Dimon leaves? Sure, if you're talking about being able to personalize a corporate narrative while tossing in a few choice words for good measure. Will the stock drop when he announces that he's decided to move on? It surely will. But if you can't take that kind of uncertainty, I'm not sure you should be buying stocks at all. Things change, people. And sometimes, that change is not for the better.

Jobs is a great marketer, and perhaps his greatest product is himself. (He will likely own the black turtleneck-and-jeans look for all of eternity.) But he is human, and one day he will leave the company he has helped reinvigorate so—for one reason or another. For now, the company is a finely tuned innovation machine. If you want my advice, I'd buy on the dip the next time Apple shares drop $20 on Jobs-related health news. But that's just me. Steve Jobs is a wonder, but he is not a one-man $300 billion corporation. No one is.

On the other hand, if you're talking about Warren Buffett and Berkshire Hathaway (BRKA), I would like to know if he's still drinking as many Cherry Cokes as he used to. It cannot be good for his health, especially at his age.

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About This Author
Duff McDonald
Duff McDonald
Contributing Editor, Fortune

Duff McDonald is a contributing editor at Fortune. He has also written for New York, Vanity Fair, Condé Nast Portfolio, GQ, WIRED, Time, Newsweek, and others. In 2004, he was the recipient of two Canadian National Magazine Awards -- best business story (gold) and best investigative reporting (silver) -- for "Conrad's Fall" in National Post Business. Last Man Standing, his biography of Jamie Dimon, chairman and CEO of JPMorgan Chase, was published by Simon & Schuster in October 2009. He is also the co-author, with Owen Burke, of The CEO, a satire.

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