Introduction
Apple Inc. is a leading computer company founded in 1976. Success and global leadership are achieved by Apple because of its unique products and entrepreneurship in the software and computer industries. An innovative approach to business can best be accomplished by allowing divisions that specialize in certain areas the freedom to experiment, promoting a culture that emphasizes a big hit, creating compensation systems that reward individual and group creativity, and implementing an accounting system that emphasizes business development. Apple is a market leader specialized in consumer electronics and software products including personal computers and media players, software, hardware, and mobile phones. Apple is one of the best examples of unique strategies and goals, marketing approaches, and management innovations that help the company to compete and sustain a strong leadership position on the market.
The paths in terms of the technological trajectory applicable to Apple and how this trajectory has impacted upon the historical performance of the firm: the theory of blue/red ocean regarding Apple
The company was founded on Founded April 1, 1976, by Steve Jobs, Steve Wozniak, and Ronald Wayne. The first personal computers developed and manufactured by Apple were Apple I and Apple II. The remarkable feature of the first products (the 1970s) was color graphics, 51/4″ floppy drive & own software. the next stage, the 1980s, was marked by the development of the software, Macintosh, mouse, and application software & Portable Mac. In contrast to Microsoft and IBM, Apple Macintosh creates a conceptually new approach to operating systems and computer structure. During the 1970s, the main competitive products were C-PET (1976), C64 (1980), C500 (since 1985). The uniqueness of Apple’s products was in color graphics, open architecture, and a 5 ¼ inch floppy disk drive. Design rationale often means the historical record of the analysis that led to the choice of the particular artifact or the feature in question (Apple Home Page 2008).
To illustrate, let us take as an example a particular feature of the Macintosh operating system, namely, the placement of all the window commands in the global menu bar at the top of the screen. By a window command, we mean a command specific to a window; for example, SAVE is a window command that saves the contents of the window (Amberg, 2000). The design rationale in this sense would be some description of the logically possible alternatives for placing window commands, how they are related, and what the trade-offs are. It is often difficult to provide such a description systematically, but an example provides a vocabulary of the primitives and a set of composition operators for describing the design space of possible input devices (Kotler and Armstrong 2005). This meaning of design rationale seems different from the first meaning in its emphasis on design rationale not being a record but construction and from the second in its emphasis, not on a particular artifact but the relation among possible alternatives. Criteria have a role similar to that of requirements in the analysis of interface style.
For example, if provide feedback is made more important than response speed, it can have a big effect on the kind of user interface that results (Hollensen, 2007). Similarly, one can see how giving a lot of weight to Criteria concerned with usability and ease of learning can lead to a general-purpose, easy-to-use interface such as that of the Apple Macintosh, whereas giving greater prominence to Criteria having to do with the close match of the design to the requirements of a particular task, and an emphasis on the efficiency of usage by trained users (Amberg, 2000). The main technological changes took place during 1994-1997 and 1998-2005. These changes in modifications and software were influenced by increased competition and the global leadership of Apple’s direct competitor, IBM. The 2000 year was marked by the emergence of a conceptually new device, the iPod. The next innovations came in 2005: Nanotechnologies and iPhone. So, the main trajectories which helped Apple to become a global leader are science-based approach, specialization, scale intensity. Trajectories have a great impact on the revenue of the company and its profitability (Burns, 2001) (see Appendix 1).
Thus, the company always tries to follow the blue ocean strategy which helps Apple to compete and remain profitable. This strategy can be explained as constant innovations in all spheres and all directions. iPod is one of the most recent examples of this approach. Thus, Apple has to shift from the blue ocean to the red ocean strategy based on the idea that the market is saturated with innovations and adapts to market conditions and products created by competitors (Apple Home Page 2008). Since 2004, the red ocean strategy has dominated Apple’s performance.
The positions in terms of the assets and resources utilized by Apple to support its innovative performance and by comparison to competitive firms
The main resources used by Apple are human resources and unique talents among employees, leadership and strategic partnership, financial and R&D factors The demands of system management extend beyond the plant level to encompass the activities within Apple Corporation. In consumer products manufacturing, promotional campaigns and issuance create higher short-term demand, reaping havoc for plants that strain to push the abnormal load through the doors. Quality and costs may suffer, while profits do not appreciably improve by the temporarily inflated sales volume (Microsoft Home Page 2008). Corporate accounting procedures also impact the outcomes. The required reports and evaluative measures impact managerial decisions and actions on maintenance policies, capital upgrades, raw material expenditures, and other operating expenses (Apple Home Page 2008).
“Leadership assets” can be described as the unique qualities and skills of its leader, Steve Jobs. The historical success of the company was based on the unique personality and strategic vision of its founder. A company’s executive leadership is instrumental in making the needed changes. The first step that Jobs takes is to perform an organizational audit of the strengths and limitations of the company in terms of its entrepreneurial capabilities. Once the audit has been completed, the next step is to develop some action programs for improving the company’s entrepreneurial capabilities (Hollensen, 2007). Steve Jobs encourages creativity and innovation, he possesses the ability to construct, negotiate and build a consensus, he is a transformation leader who gives freedom at work and supports talented employees.
Human resources involve high caliber employees, 2,600 full-time employees, and 2,100 temporary equivalent employees and contractors. At Apple, management culture fosters innovations and technological changes. Fortunately for Apple Inc. seen as Dinosaur Company, effective use of resources means to behave more entrepreneurially and thus increase their chances of survival. To be successful, these companies must “mimic” or simulate the behavior of the new breed of entrepreneurship (Burns, 2001).
The strategic partnership helps Apple to innovate and expand its market activities. For instance, for iPod products strategic partnership allows Apple to decrease the cost of the product and improve its quality. It involves Linear’s power mgnt, Sharp’s flash memory chips, Wolfson’s converter, PortalPlayer decoder, Toshiba’s hard drive, and Sony’s lithium battery. This example shows that the parent organization begins to feel threatened by the success of its offspring and, accordingly, takes steps to curtail its growth or even destroy it.
Financial resources determine the amount Apple can spend on R$D and innovations. Since 2004, its revenue grows rapidly and reached $350 million in 2007. During 2003 and 2004, Apple invested heavily in R&D to remain a competitive and innovative company. Apple understands that it had to create new businesses within its existing structures. This was not an easy process since those who promoted entrepreneurship in established companies were often met with resistance. Further, even if the new venture was established and achieved success, there appeared to be a tendency for the parent to try to destroy or “devour” the thriving offspring. The main weaknesses of Apple are competition from such giants as Microsoft, IBM, and Sony (see Appendix 2, 3).
The processes Apple has used to scan for innovative opportunities, select the most appropriate opportunities, provide resources to develop and implement those opportunities, and learn how to improve their innovative performance.
For Apple, competitive benchmarking can serve both as a way of identifying what creative and innovative things competitors are doing as well as finding out for each of the areas requiring creativity and innovation who is the best. Once such a “benchmark” is identified, whether in the firm’s industry or any other industry, it is useful to study the case thoroughly to see what can be learned from the experience (McDonald and Christopher 2003). A market analysis of the current and expected needs, behavior, perceptions, and preferences of consumers and intermediate marketing organizations (retailers, wholesalers, and others) is critical to the firm’s ability to identify areas requiring creative solutions and innovative products and services (Hollensen, 2007). There is no substitute for thorough market analysis as a guide to understanding the firm’s customers and prospects and their distributors, and identifying areas that can benefit from creative solutions and innovative products and services (Apple Home Page 2008). Apple follows “a niche strategy” which helps it compete with such giants as IBM and Dell. For instance, iPhone is a niche product appealing to a small number of buyers. Excellence and unique quality, brand name, and unique solutions are the core of Apple’s niche strategy (see Appendix 4.5.6).
Researchers admit that Apple does not have the capabilities to cater to the mass market because of limited financial resources in comparison with IBM, Sony, and Microsoft. In this case, the mass-market strategy should be based on consumer-based approaches to the generation of new product ideas and become a part of any innovation aimed at identifying areas requiring creative solutions and innovative products and services. In addition, these approaches can be used on the “internal consumers,” all the organizational members who use organizational products and services. As with the consumer-based approaches, it is suggested that the firm use at least one of the unstructured approaches of brainstorming, synectics, and independent inventors and at least one of the structured approaches and, in addition, the “suggestion box” to get broader involvement of all employees (McDonald and Christopher 2003). Among the most useful approaches to the generation of new ideas are morphological analyses.
In searching for new ideas for creative and innovative business solutions, it is important to focus on both short- and long-term opportunities. The latter is more difficult to assess and often requires as a starting point the identification of the expected scenario five, ten, or twenty years ahead and focusing the new idea generation process on those approaches capable of identifying ideas under the conditions of the specific scenarios. Marketing as the boundary function of the organization can help create innovative products and services to meet the needs of the key target segments (Keegan and Green 2004). The main problems faced by Apple are that Apple lost out to Microsoft and IBM especially after Windows 95 launched; Apple differentiating its products through superior software and hardware; apple proposes 20-25% higher pricing than competitors. In the mobile phone market, Apple faces strong competition and expects that its profitability will be under threat due to low-cost manufacturers and constant innovation. The main problem with Apple is that iPod is the only product for the mass market. Thus, it is the most profitable product. PCs and iPhones represent a niche market. The main weaknesses are that big competitors like Nokia, Samsung, and LG already catching up with ‘Me 2’ products; there is a growing effect of players like Google and independent software developers on the mobile market.
How does Apple’s organizational culture affect the innovation in Apple?
One of the most critical determinants of organizational vitality and success in today’s business environment is organizational culture. The essential impetus for innovation derives from creativity, which is the ability of individuals or groups to generate on a sustained basis significantly original ideas or solutions to problems. Creative work, especially formal and ongoing work in organizational settings, serves as a prototypical case of multi-disciplinary teamwork involving professionals. This is so because first, creativity requires a very high level of professional expertise based on specialized knowledge (Keegan and Green 2004; McDonald and Christopher 2003). Apple encourages creative ideas and approaches, also its inherent complexity is frequently a team endeavor. Finally, such work often proceeds across the boundaries of more than one field of knowledge. Therefore, an understanding of the unique leadership challenges in facilitating creativity and maximizing its payoffs for the organization can provide a useful model for the effective leadership of multidisciplinary professional teamwork.
Even when creativity is greatly valued in an organization, it cannot be supported just for its own sake, and it cannot be supported endlessly (Crawford 2003). Therefore, selectivity enters in where the key decision-makers place their bets, and how far they go with these bets. And when a good breakthrough is achieved–which may happen suddenly and unexpectedly–the organization needs to move opportunistically to exploit the new possibilities and identify future projects that can build on this breakthrough. It is for such reasons as these critics regard “technical taste” as an important factor in research management and the value of strategic orientation in the management of creativity. At Apple, creativity is accompanied by formidable substitutes for leadership; on the other hand, creativity involves stakes and demands that cry for “high power” leadership (Kotabe and Helsen 2006). The resolution of this apparent contradiction calls for a great deal of creativity in leadership! In this context two themes are particularly worthy of serious attention; one focusing on the distinctive abilities and orientations of those who can provide effective leadership for creativity, and the other focusing on how and by whom such leadership might be provided in organizational settings (Apple Home Page 2008).
Implementation of the managerial leadership model and roles for middle managers creates a demand-pull for operator inclusion. The term inclusion implies (better than the familiar term involvement) that there exists something with which to be included. That “something” is the managerial leadership and middle management behaviors, that is, ownership of systems, processes, and activities for customer value (Kotabe and Helsen 2006). Managers who lead by behavioral example and are accountable for managing systems for customer value will necessarily “demand” specific activities by operators. Operator inclusion should be pulled into the managerial strategic effort, rather than pushed and supported as an end in itself.
With the right orientation toward operator inclusion, managers can achieve all the humanistic objectives of enriching jobs, providing an outlet for human creativity, and meeting the needs of operators to engage in meaningful work. The managerial strategic focus, managerial task activities, and managerial culture must be in place before operator inclusion can be effectively implemented. If managers are appropriately equipped for and engaged in managing systems, then they may empower operators to contribute to customer value, for example, solicit suggestions, encourage operator problem solving, and grant specific autonomy to self-directing, self-supervising teams (Burns, 2001). However, empowerment without enablement through systems management yields suboptimal results. Before executing work, operators should assess the demands for their output or contribution (Levy, 2007), Downing They must determine what is needed from them and when it is needed. Assessment of demand is important to avoid starving downstream processes. Managerial leaders should build systems so that an operator can produce to demand, for the strategic purpose of customer value, and not produce to inventory just to look busy or to meet quotas (Crawford 2003).
For Apple, entrepreneurship introduced by Steve Jobs can be explained as the process of creating a new business within an existing business. In contrast, entrepreneurship is the process of creating a new business per se. The entrepreneur creates a new business as a separate, stand-alone entity, while the intrapreneur creates a new business within or as an adjunct to an existing business. Apple Computer was entrepreneurship, while IBM’s celebrated PC division was an intrapreneurial venture. Both required entrepreneurially oriented behavior. In firms that encourage entrepreneurial behavior, managers tend to adopt a very non-directive style. The most effective style under these conditions is a positive laissez-faire style in which the manager gives subordinates a great deal of freedom in both setting goals and how they are achieved (Degraff & Lawrence 2002). There is a great deal of trust between these managers and their subordinates. The philosophy is that employees know what they are supposed to do so they will do it with little direction. This affords subordinates a great deal of creativity in accomplishing their goals and may result in innovative products, production processes, or procedures that increase the unit’s efficiency (Apple Home Page 2008).
The challenges and possible future strategy of Apple
Unfortunately, it appears that once an organization reaches a certain size (perhaps as early as $100 to $500 million in annual revenues), it begins to stagnate and lose sight of those factors that made it successful in the first place. Apple is founded on innovation and creativity–creating a product or service that people want. The main challenges for Apple are overdependence on a small portfolio of products (iPod & iMac = 2/3 of turnover); very small innovative team; risk from outsourcing; selective partnership; touchscreen advantage can be eroded; music companies forming their online retail store; closed ecosystem (dissatisfied customer)and free online music. As Apple grows, however, it tends to become self-congratulatory and somewhat complacent.
Its personnel comes to believe that the company can live indefinitely off its initial success (Paley, 2006). Apple focuses on “forward-looking” stuff from the leader and tries to keep the ear to the ground. Apple is the corporate dinosaur. As evidenced by the number of once-successful companies that have deteriorated or failed in recent years, this is not a very adaptive strategy for today’s environment (Holbrook, 1999). The main lessons Apple should learn from the past are that the company should do not do everything itself. It should rely on support common standards & backward compatibility, introduce price sensitivity and go low end as soon as possible. The main weakness of Apple is that it tries to sell hardware, but the case of IBM proves that successful software sells hardware.
To remain competitive, Apple should create an environment for sharing ideas and introduces ad hoc meetings for the exchange of ideas. Also, it encourages employees to “think different” and put capabilities together- eg. Integrating iPod and iTunes in a mobile phone. Apple should scan the environment for opportunities based on evaluation and analysis, matching existing capabilities with ideas and new product launches (Apple Home Page 2008). The key to survival for Apple appears to be recreating the entrepreneurial spirit that may have been lost as the organization grew. In other words, the corporate dinosaur must transform itself into a faster-moving, sleeker animal. Management must learn how to promote new business development within the confines of the existing organization. This process has been termed “intrapreneurship” to distinguish it from the classic process of entrepreneurship (Degraff & Lawrence 2002).
The main success factors for Apple will be geographical expansion, alliances with open software developers, innovative new products (E.g. Fully integrated communication & entertainment systems), and Incremental innovation on existing products. With the growing importance of other stakeholders, such as suppliers, distributors, employees, various consumer groups, and government, marketing perspectives should be increasingly employed in the design of strategies and programs aimed at all stakeholders (Harris, 1998). It is quite surprising, therefore, that the internal management of an organization, especially those activities aimed at increasing its creativity and innovativeness, has not taken advantage of marketing concepts and methods. Assessing the creativity and innovation needs of an organization can greatly benefit from specific marketing concepts and approaches, including the concept of market segmentation and the methods for internal marketing audit, and external competitive benchmarking and market analysis (Apple Home Page 2008; Paley, 2006).
For Apple, market segmentation recognizes the fact that all markets are heterogeneous and that effective marketing strategy requires the identification of target market segments, assessing their needs and characteristics, and using these as guidelines for the design of products and services and associated marketing programs. n the context of making organizations more creative and innovative, it is important to assess the areas in which the organization can benefit the most from greater emphasis on creativity and innovation (Harris, 1998).
Conclusion
The case of Apple shows that the global and innovative company cannot rely on one strategy and has to adapt itself to the competitive environment. The blue ocean strategy is replaced by the red ocean strategy influenced by increased competition and customized products. The application of rigorous analytical techniques, and new ways of thinking through the complex problems of organizational creativity and innovation, demand multidisciplinary awareness. Longitudinal as well as horizontal studies must be made to assess the impact of time as a critical variable. Too often it is easy to have what appears to be “successful” creativity and innovation in the short term yield unsuccessful ultimate results in the long term. Creativity and innovation must always be means not ends. The process is equal to content. Creative and innovative management is advanced by the development of new techniques and technologies.
References
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Appendix
- Impact of Trajectories on Performance
- Financial Resources
- Investment in R&D vs. Competitors
- PCs World Market Share
- PM3 World Market Share
- Mobile Phone Market