Apple Inc.:
Where’s the Next Innovation?
CASE NOTES
Is Apple well positioned for continued
innovation in the future?
• Innovation is often a function of effective managerial focus on
implementation.
• Strategic Leadership Abilities: Vision-Strategies / Structures and Processes/
Culture
• Effective Organization Design / Structures / Systems
• Effective Strategic Controls
Strategic Leadership
• Leadership
• Process of transforming organizations from what they are to what the leader
would have them become.
• Involves setting a direction. [VISION]
• Designing the organization. [STRUCTURE and PROCESSES]
• Nurturing a common core of attitudes and beliefs about the
organization. [CULTURE]
• ASSESS: Apple’s visionary leadership under Jobs.
•
Apple’s visionary leadership under Cook.
Leadership Styles
• What type of
leader is Jobs /
Cook?
Leadership Styles
• Transformational Leader = Jobs
•
•
•
•
Visionary
Strong Personality/Character
Innovator: Focused on development
“Revolutionary”
• Transactional Leader = Cook
•
•
•
•
Power from his position, not personality
Team Supervisor
Managerial focus: Steady, consistent growth
“Evolutionary”
Strategic Implementation:
-- Apple’s Structure (Organizational Design)
Good organizational structure provides a means of effectively managing
strategy implementation. It must balance 2 conflicting forces:
• Need for the division of tasks into meaningful groupings.
• Need to integrate the groupings for efficiency and
effectiveness.
5. Organization Design: Structure options
Divisional Design
Functional Design
•
•
•
•
Smaller, more stable environments
Supports functional expertise
Promotes skill development
Communication silos created
•
Fast-paced, complex environments
•
Dedicated resources for responsiveness
•
Expertise in markets/regions/products
•
Less efficiency/Duplication of resources
Structure options
Matrix Design
• ASSESS Apple’s Organization
Design
• What type of organization
structure appears to be in use ?
• Complex environments
• Effective resource management
required
• Stressful for employees in matrix
Apple’s Functional
Organization….WHY?
The adoption of a functional structure may have been
unsurprising for a company of Apple’s size in 1998.
What is surprising—in fact, remarkable—is that Apple retains it
today, even though the company is nearly 40 times as large in
terms of revenue and far more complex than it was then.
As was the case with Jobs before him, CEO Tim Cook occupies
the only position on the organizational chart where the design,
engineering, operations, marketing, and retail of any of Apple’s
main products meet.
In effect, besides the CEO, the company operates with no
conventional general managers: people who control an entire
process from product development through sales and are
judged according to a P&L statement.
IS APPLE ORGANIZED TO INNOVATE?
BENEFITS OF ORGANIZATIONAL DESIGN
Shared
Strategic
Vision
Ease of
Decision
Making
Communication
Market
Responsiveness
Resource
Utiliz.
Technical
Problem
Solving
Best in
External
Environ.
Functional
NEG
NEG
NEG
NEG
POS
POS
STABLE
Decentralized
POS
POS
POS
POS
NEG
NEG
DYNAMIC
Matrix
POS
NEG
POS
POS
POS
POS
DYNAMIC
Team
NEG
POS
POS
POS
POS
NEG
ALL
Innovation at Apple
To innovate, Apple leaders need deep expertise, immersion in
details, and collaborative debate, without financial pressure
To create such innovations, Apple relies on a structure that centers on functional
expertise.
First, Apple competes in markets where the rates of technological change and disruption
are high, so it must rely on the judgment and intuition of people with deep knowledge of
the technologies responsible for disruption.
Second, Apple’s commitment to offer the best possible products would be undercut if
short-term profit and cost targets were the overriding criteria for judging investments and
leaders.
Strategic Controls
• To retain an environment of innovation, Apple must rely on effective
strategic controls:
• Informational control: Concerned with processing internal and external
information effectively. Concerned with whether or not the organization is
“doing the right things” given their environments
• Behavioral control: Concerned with whether or not the organization is
“doing things right” in the implementation of its strategy.
• Three control levers: Culture, rewards, boundaries.
ASSESS: Does Apple possess effective strategic controls?
Informational Control
• Informational control
• As the world becomes more data driven, Apple will increasingly move
into data management services
• Are they well configured internally to address such changes?
• ASSESS Apple’s move into “services” Does a functional organization still work?
Apple’s Strategic Controls
• Apple’s Informational controls are tightly managed:
• Seeks routine feedback from the marketplace about their products.
• Traditionally kept its Research and Development work a secret
• Fiercely protected its patents
• However, its move into the Services arena may require better intercompany coordination
and communication, not supported by a functional organization
Behavioral Control: Boundaries that
institutionalize behavior and norms
• Boundaries and constraints can be useful:
Describe
Apple’s
culture
Jobs’ Entrepreneurial Culture
Apple’s Culture of Entrepreneurship
Culture of entrepreneurship.
• Search for venture opportunities permeates every part of the organization.
• Strategic leaders and the culture generate a strong impetus to innovate,
take risks, and seek out new venture opportunities.
Is maintaining Steve Jobs’ cultural legacy essential to Apple’s
success?
Is Cook the leader of an innovative Apple or is Apple now just a
well-performing company?