The genius behind Steve (pg. 2)

@FortuneMagazine August 24, 2011: 7:59 PM ET

That balance sheet is a potent strategic weapon: It allows Cook to lock in suppliers and club competitors. In 2005, Apple introduced a new iPod, the Nano, a music player that was revolutionary because it used far more flash memory than existing products on the market. Cook's team accurately predicted tremendous demand for the Nano, and prepaid $1.25 billion to suppliers like Samsung and Hynix to effectively corner the market through 2010 on a specific kind of memory.

"That's the sort of thing they wouldn't have thought of in the days before Tim Cook," says Kevin O'Marah, chief strategist at the Boston consulting firm AMR Research, which specializes in supply-chain analysis.

The memory purchase also shows that Apple's operations strategy isn't only about cost cutting. "Way too much of the supply-chain world has been about taking the last cent out," says Blake Johnson, a consulting assistant professor of management science and engineering at Stanford University, who has deep contacts in Apple's operations group. "Apple doesn't do that."

To make Apple's innards run more smoothly, Cook relies on a tight-knit team of operations executives who have been with him since he joined the company. They are Jeff Williams, who executed the flash-memory purchase; Deirdre O'Brien, a longtime Apple employee who handles demand forecasting; Bill Frederick, who heads customer support; and Sabih Khan, the notebook operations executive Cook once dispatched to China. This year Cook hired Rita Lane, who used to work for him at IBM, to run desktop operations.

Over the years, Cook has assumed duties beyond making the trains run on time. In 2000 he took over the sales force as well as customer support. Back then, "selling" at Apple meant dealing with retailers and other resellers of Macs. Under Cook, Apple began replacing store employees in outlets like Best Buy with Apple's own well-trained salespeople. It was a precursor of the popular "Geniuses" in Apple's retail stores today.

In 2004, the year Cook filled in for Jobs, he also took control of the Macintosh division. The next year, Jobs named Cook chief operating officer. Today his purview extends to iPhone sales and operations, including responsibility for negotiating with wireless carriers who sell the devices in 51 countries. The heads of important departments like legal, finance, design, and marketing report directly to Jobs. But no other executive touches as much of Apple as Cook.

A brush with death

Though he's capable of mirth, Cook's default facial expression is a frown, and his humor is of the dry variety. In meetings he's known for long, uncomfortable pauses, when all you hear is the sound of his tearing the wrapper of the energy bars he constantly eats.

Like everyone else at Apple, Cook dresses casually in jeans, his graying hair cropped close in the style of Lance Armstrong, whom he idolizes. (Through a friend, Armstrong says he doesn't know Cook, though he's "heard he's a good dude.") Perhaps Cook's only notable sartorial flourish is that he always wears shoes from Nike, where he's on the board of directors. (Jobs, another sneaker wearer, is a New Balance man.)

Cook's stamina is the stuff of legend at Apple. He often begins e-mailing the executives who work for him at 4:30 a.m.; worldwide conference calls can take place at any time of day. For years, Cook held a standing Sunday night staff meeting by telephone in order to prepare for yet more meetings on Monday morning.

Mike Janes, who worked with Cook for five years, ultimately as head of Apple's online store, recalls a Macworld conference in New York when Cook convened a meeting in the afternoon after one of Jobs' mesmerizing morning keynotes. "A number of us had tickets to see the Mets that night," says Janes, now CEO of an event ticket site called FanSnap. "After hours, he was still drilling us with question after question, while we were watching the clock like kids in school. I still have this vision of Tim saying, 'Okay, next page,' as he opened yet another energy bar. Needless to say, we missed the Mets game."

For those who can take it, working for Cook is an edifying experience. "He'll ask you ten questions. If you answer them right, he'll ask you ten more. If you do this for a year, he'll start asking you nine questions. Get one wrong, and he'll ask you 20 and then 30," says Steve Doil, who worked in Cook's operations group before moving to Texas for family reasons.

Cook can be brutal in meetings. "I've seen him shred people," says a former executive who now works for another consumer electronics company and refused to be quoted by name. "He asks you the questions he knows you can't answer, and he keeps going and going. It isn't funny, and it's not fun."

While a select group can claim to understand Cook at work, almost nobody claims to know much about his life outside Apple. A lifelong bachelor, he lives in a rented house in Palo Alto, vacations in places like Yosemite and Zion national parks, and shows few visible signs of wealth despite having sold more than $100 million of Apple stock over the years. He's known for being the first in and last out of the office and for his grinding international travel schedule, and when he isn't working he tends to be in the gym, on a hiking trail, or riding his bike.

Cook's aversion to ostentation may be rooted in his background. He grew up in Robertsdale, Ala., a small town "on the road to the beach," he told an Auburn University alumni magazine in 1999. His father is a retired shipyard worker, his mother a homemaker. Like Steve Jobs, Cook had his own brush with mortality: In 1996 he was told he had multiple sclerosis, which turned out to be a misdiagnosis. "You see the world in a different way" after such an experience, he told the Auburn magazine.

The health scare also fueled Cook's passion for cycling; he often completes in grueling fundraising rides for MS. Cook has told others that he gives away large amounts of money, though he leaves hardly a trace. An exception is a scholarship he funds in his name at Auburn's engineering school. Even at Auburn, though, where he rates high on lists of distinguished alumni, he keeps his head down. "Let's just say we have our fair share of alumni who like the recognition," says Debbie Shaw, head of Auburn's alumni association. "Tim's not one of them."

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