Greg Abel Has Warren Buffett As His Benchmark, Tim Cook Had Steve Jobs | Invesloan.com

Greg Abel has taken on the Herculean task of succeeding Warren Buffett as Berkshire Hathaway’s CEO.

If he’s looking for guidance, there’s one person in particular who’s followed in the footsteps of a business icon and taken their company to even greater heights.

“I don’t think anyone can appreciate what Greg Abel is going through right now better than Tim Cook,” Kevin Carpenter, the author of “The Berkshire Beat” newsletter, told Business Insider.

Two legends, two companies

Grasping the full weight of expectation on Abel and Cook requires understanding the legacies they inherited.

Buffett spent six decades transforming Berkshire from a failing textile mill into a $1 trillion conglomerate that owns scores of businesses including Geico, Dairy Queen, and BNSF Railway, and holds huge stakes in public companies such as Apple, Coca-Cola, and American Express.

The late Steve Jobs, who cofounded Apple 50 years ago, pioneered a personal-computing revolution, built an iconic brand, and changed the fabric of society with inventions such as the iPhone.

Both men became synonymous with their companies, and transcended the business world to become pop-culture icons with hordes of passionate followers.

Perceived as singular geniuses in their fields — Buffett in investing and Jobs in consumer technology and marketing — they achieved such extraordinary success that they seemed irreplaceable.

Yet nothing lasts forever. Buffett, 95, handed Berkshire’s reins to Abel at the start of this year, while Cook took over from Jobs shortly before his death in October 2011.

With Cook at the helm, Apple has roughly quadrupled its net sales and net income to $416 billion and $112 billion respectively last financial year, catapulting its market capitalization from around $350 billion to $4 trillion.

Cook and Abel didn’t respond to requests for comment.

Guard the culture

Cook has fiercely protected the fundamental values that Jobs built Apple around.

He recently told “CBS Sunday Morning” that those principles include collaboration, focus, “insanely great” execution, obsession with the user experience, and creating “magic” for customers by owning the intersection of hardware, software, and services.

In similar fashion, Abel pledged to steward Berkshire’s “foundational values” in his first letter to shareholders in February: its decentralized model, integrity, financial strength, capital discipline, risk management, and operational excellence.

Cook may be in charge but he still sees Apple as Jobs’ baby. “His DNA is deep in this company,” the executive said. “We revere him.”

He added that Jobs’ “greatest invention wasn’t a product — it was Apple itself.”

Abel paid similar homage in his letter, writing that Buffett and his late business partner, Charlie Munger, “combined world-class capital allocation” with “vision and leadership” to create Berkshire, and he was “committed to strengthening the great legacy” the pair built.

Forge your own path

Cook hasn’t been afraid to diverge from Jobs.

He revealed to “CBS Sunday Morning” what Jobs told him after informing him that would be Apple’s next CEO: “His advice to me was: ‘Never ask what I would do. Just do the right thing.'”

Jobs explained to Cook that he didn’t want Apple to suffer the same “paralysis” as Disney did after its founder died with management “sitting around and talking about what Walt would do.”

“I’ll never forget that,” Cook said. “It was such a gift for me because he took off of my shoulder this question of ‘What would Steve do?'”

“I just put my head down and thought, ‘I’m going to be the best version of myself,'” he added.

Cook’s greatest challenge was reshaping Apple to operate without Jobs, Tripp Mickle, the author of “After Steve,” a book about the decade at Apple after Jobs’ death, told Business Insider.

“Steve Jobs had made every major decision, especially on product development and marketing,” Mickle said. Cook changed that so “decisions were made collectively” by Apple’s executive team, and products such as the Apple Watch were developed by “a group of leaders,” Mickle said.

Cook has also focused more on operations and financials than Jobs did. He’s expanded into China, harnessing the nation’s manufacturing nous to massively ramp up iPhone production, and supercharging sales and profits by selling to a mushrooming middle class.

John Longo, the author of “Buffett’s Tips,” told Business Insider that Abel is likely to emulate Cook in charting his own course.

“Abel will want Buffett’s spirit to always be with Berkshire, but he will not run the firm by asking, ‘What would Warren do?” Longo said.

“Rather, he will stay in his own circle of competence and make decisions he believes are best for the firm over the long term,” the finance professor and fund manager said.

Longo added that Abel’s background as an operator could see Berkshire buy fewer individual stocks and make more acquisitions instead.

He also predicted Abel will break from Buffett by introducing a modest dividend, funded by Berkshire’s vast cash reserves — a record $373 billion on December 31 — and robust cash generation. He noted that Cook reinstated Apple’s dividend within a year of becoming CEO.

Harness your strengths

Cook has brought a different set of skills to Apple.

He’s “leaned on his sales and production expertise to make the iPhone ubiquitous,” and wrangled its chipmaking team to build a better processor that “breathed new life into its Mac business,” Mickle said.

“Cook’s process has been method over magic,” he continued. “Where Jobs became regarded as a great innovator, who introduced products that upended industries, Cook became known for steering Apple’s business success, as it became the world’s largest company for a decade.”

The flip side is that Cook’s Apple has “shed some of its reputation for innovation,” Mickle said, pointing to its scrapped plans to build a self-driving car, its lackluster HomePod, and its Vision Pro headset flop.

“Successors to iconic leaders often succeed not by imitation but by bringing different strengths,” Larry Cunningham, the author of several books about Berkshire and the director of the University of Delaware’s Weinberg Center, told Business Insider.

“Cook knew he was not Jobs and didn’t care to be,” he added.

Carpenter said that Cook’s incredible success at Apple is “in large part because he embraced his own strengths rather than trying to be a poor imitation of Steve Jobs.”

Buffett, who made a fortune for Berkshire by investing in Apple, has repeatedly praised Cook for building Apple into a global behemoth by scaling manufacturing and distribution and establishing a global supply chain.

The Berkshire chairman recently told CNBC that Cook “couldn’t have done what Steve Jobs did,” but Jobs “would not have done as well” with the version of Apple that he handed to Cook.

“I imagine Buffett would say the same” about Abel, Carpenter said.

“Abel’s operations acumen is just what Berkshire needs in the future as wholly-owned subsidiaries continue to become a bigger and bigger part of the business,” he added.

Chris Ballard, the managing director of Check Capital Management, told Business Insider that Berkshire shareholders can expect Abel to add value in different ways to Buffett.

Abel “isn’t going to be the ‘Oracle of Omaha’ who gives long philosophical lectures at the annual meeting; he should be the guy who knows exactly why BNSF’s profit margins are lagging and how to fix them,” Ballard said.

Paul Lountzis, a longtime Berkshire shareholder and the president of Lountzis Asset Management, told Business Insider that Abel can prove himself a worthy successor to Buffett by doing what he does best — just like Cook has in the post-Jobs era.

“Greg needs to be Greg and not try to be Warren,” Lountzis said, as that will empower him to “utilize his own unique strengths to continue to build Berkshire.”