Apples Vision and Strategy for Innovation - Research Paper Example

Apple’s Vision and Strategy for Innovation Table of Contents 1. Executive Summary : Page 4 2. Introduction : Page 5 3. Apple’s need for innovation : Page 5 a. General imperatives in computer industry sector : Page 5 b. How have the innovation and change affected Apple in the last five to ten years? : Page 6 c. Specific Innovation imperatives faced by Apple : Page 8 d. Apple’s current level of Innovation : Page 8 e. How does Apple compare with other more innovative organizations? : Page 10 4. Apple’s vision and strategy for innovation a. How well does the current vision and strategy address the need for innovation? : Page 10 b. What components does the vision contain? : Page 11 c. Does Apple’s innovation strategy differ from corporate strategy? : Page 11 5. Context, competencies and culture for innovation a. The extent of innovation as a core business process today : Page 12 b. Which aspects of Apple and its environment currently support innovation? : Page 13 6. Learning for innovation a. What avenues for learning currently exist in the organisation? : Page 14 b. Which additional avenues are most likely to be of value for the Apple? : Page 15 c. To what extent is Apple able to continuously innovate and change? : Page 15 7. Potential change management issues in Apple a. Overall change process : Page 16 b. Barriers and enablers to change : Page 17 c. Internal and external communications : Page 18 d. Leadership and change agent roles : Page 19 e. Project management and measurement Requirements : Page 20 8. References : Page 21 Executive Summary Apple Inc is the most valued technological company in the world at present. Apple attained this spot because of the continuous innovation and change management strategies implemented in the organization. Apple has faced lots of ups and downs their corporate history; however, they were able to overcome all the challenges with the help of carefully planned business strategies. During the latter part of 1990 and at the beginning of 2000, Apple has introduced many innovative products like iPhone, iMac, iPad, iPod, iTunes etc in the market. All these products helped Apple to regain its lost place in the market. Apple delivers more than what they promise which is the major reason for the popularity of Apple brand all over the world. Even though Apple succeeded in grabbing the spot from Microsoft as the most valued technology company in the world, they need to continue their innovation and change management process in order to sustain their top place in the market. Apple’s current business strategies are rotating around their charismatic leader Steve Jobs and once Steve decides to quit, Apple may face lot of leadership troubles. This report briefly analyses the innovation and change management process implemented in Apple which helped Apple to attain the top spot in the market. Introduction “Apple was founded in Cupertino, California on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne” (Apple Inc. History, 2008). The 35 years of Apple’s history is mixed with ups and downs. The company faced major challenges in the 1990’s when their major competitor Microsoft introduced their Window based operating system in the market. However, Apple was able to bounce back in the beginning of the twenty first century with the help of innovation and change management principles implemented in the organization. Apple Inc caught the attention of the public recently when they surpass Microsoft in market capitalization. Apple Company is currently operating internationally and has more than 200 retail stores in different countries. Apple’s need for innovation General imperatives in computer industry sector Computer industry is mainly dominated by some big players like Microsoft, Apple, IBM, Motorola, Linux etc. The operating system industry is monopolized by the Microsoft whereas the personal computer manufacturing is controlled by the IBM. The tie up between IBM and Microsoft helped both the companies immensely in controlling a substantial market share in the global computer and software industries. Most of the people all over the world were using personal window based computers in the 1990’s. Microsoft has developed lot of application software like MS word, MS excel, MS power point, MS access etc in order to use with the personal computers and most of these packages were compatible only with the windows based PC’s. Even though, Apple tried to counter the threats of Microsoft and IBM with the help of their operating system Macintosh and PowerMac computers, their efforts were not succeeded. Apple realized the necessities of change and innovation to stay in the market at the beginning of the 1990’s itself. During the latter periods of the 90’s and at the beginning of 2000 Apple introduced many innovative products such as iMAC, iPHONE, iTOUCH. iPOD. iPAD etc in the market which helped Apple immensely in regaining their lost control in the market. How have the innovation and change affected Apple in the last five to ten years? Krazit (2008) has mentioned that the Wall Street is expecting Apple to report earnings per share of $1.07 on revenue of $6.9 billion in 2008. He has also mentioned that Apple is a company which is under-promising and over-delivering (Krazit, 2008). Moreover, Timmer (2009) has mentioned that Apple’s revenue crossed $ 10 billion mark in the first quarter of 2009 which was a big change from the last quarter $ 7.9 billion mark. Moreover, the quarter-to-quarter rise in profits and earnings per share were significantly higher during this period (Timmer, 2009). These figures clearly suggest that Apple was able to sustain its business or margins even when the consumers stayed away from the market. Apple is currently the most valued technological company in the world. Kim (2010) has mentioned that Apple Inc pushed Microsoft behind them and attained second spot in the list of most valuable companies in United States after Exxon Mobil, as far as market capitalization is concerned. “Apple's market capitalization - the sum of its outstanding shares multiplied by its stock price - finished at $222.07 billion, ahead of Microsoft's at $219.18 billion Wednesday, May 26, 2010” (Kim, 2010). (Warren, 2010) Pushing Microsoft behind is not an easy task under any circumstances. However, Apple made the impossible possible with the help of some innovative products, well formulated business polices and change management implemented in the organization. Mac OS has grown from 6.38 in 2007 to 7.57 in 2008 and 9.63 in 2009 whereas globally it grew from 2.5 in 2006 to 3.4 in 2008. Apple on July 21, 2008 announced their financial results for its fiscal 2008 third quarter ended June 28, 2008. The Company posted revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share (Apple Reports Record Third Quarter Results,2010) From these statistics it is clear that the Mac OS grew gradually and significantly even in 2008 and 2009 when the global financial crisis badly struck America and other countries. Most of the American companies struggled to survive during the recession period; however Apple was able to maintain their growth rate even during the recession which is definitely a big achievement. Recession is almost over now and most of the companies started to show the signs of revival now. Apple may double their growth rate in the current favourable economic conditions. Specific Innovation imperatives faced by Apple The strong challenges faced by Apple from Microsoft were the major reason for the innovation and change management policies implemented by the Apple Company. Apple faced stiff challenges from Microsoft in the 90’s. Microsoft introduced its famous Windows operating system and cheaper personal computers during this period. It was a big success and many of the Apple customers started to use the Microsoft products. Even though the Apple’s market share dropped considerably in the 90’s, the company succeeded in regaining its market control at the beginning of the 2000 with the help of product diversification strategies. Apple’s charismatic leader Steve Jobs had been ousted from the company in 1985 which was a costly affair for Apple Company. On the opposite side, it was Bill Gates at the top of Microsoft and it was not easy for a normal Apple CEO to counter the strategies of Bill Gates. Because of the above awareness, Steve has been called back to the same post which he forced to give up once. Apple’s current level of Innovation Steve Jobs realized that computers and operating system alone may not be enough to counter the threat Apple was receiving from Microsoft. ipods, ipads, iphone etc were introduced in the market by Apple in 2000 as part of their product diversification and innovation strategies. The introduction of ipod music player in 2001 was a big step towards success. Followed by ipod, iphone and ipads entered the market which helped Apple immensely in bringing back the lost customers. Steve has realized that the name Apple Computer Inc is no longer suitable to Apple because of their increased market share in the consumer electronics industry and changed it to Apple Inc. Even the Apple logo was changed in order to give the company a new face and look (See the old and new logos of Apple Company given below) (The Evolution and History of the Apple Logo, 2009) “With the release of the iMac on August 15, 1998 Apple was able to put to rest some its past failures” (Dougherty, 2010). iMac was comparatively faster and lighter than the previous models of PowerBook. The earlier models failed in the market because of the bulky nature. Mac OS X, with increased capabilities was used in iMac and the customers from all over the world accepted it with both hands. The “i” series products brought unbelievable returns to Apple company. Followed by iMac, iphone, ipod, ipad etc were entered the market and all of them were huge success. How does Apple compare with other more innovative organizations? Apple thinks differently all the times. They believe in leadership rather than followership. They have proved it many times in the past. For example, when most of the mobile phone manufacturing companies concentrate in the manufacturing and selling of ordinary normal mobile phones in the market, Apple thought differently and introduced the advanced iphone with touch screen facility in the market. Nokia and Samsung like major mobile phone manufacturers forced to follow Apple’s path in order to compete effectively with Apple in the global mobile market. The story of ipods is also not different. The ability of Apple to think differently made them different and unique in the market. “Apple scored a runaway hit with its digital music players (iPod) and online music store (iTunes). Other products include mobile phones (iPhone), servers (Xserve), wireless networking equipment (AirPort), and publishing and multimedia software” (Apple Inc. Cupertino, CA United States, n.d.) Apple’s vision and strategy for innovation How well does the current vision and strategy address the need for innovation? Science and technology is advancing rapidly and hence the living standards and life styles of the people are also advancing rapidly. Transistor Radio was once a revolutionary product; however, a mere transistor radio is not a popular product at present. Even the tape recorders and CD players lost their popularity in the current world. Light weight, easy to handle and superior quality digital products like ipods, iphones have replaced the conventional electronic products. Apple realized the need for innovation and introduced many revolutionary products to address the consumer needs. Apple succeeded in combining the music industry with the computer industry which brought dividends to the company. ipods, and the itunes music stores were innovative products which succeeded in combining the music industry with the computer industry. What components does the vision contain? Apple has realized that the products like computers and operating system are more or less mechanical in nature and incorporating some aesthetic values like music to this mechanical system will enhance the looks of the computer world. They calculated that a partnership between the music industry and computer industry will bring the computer industry more close to the layman. Earlier, computer users were only the educated people because of the complexity in handling the computer equipments; however, now even uneducated people are using computer products for their personal use. The above change was happened only because of the Apple’s effort to reduce the gap between ordinary people and the computer world. Most of the existing consumer electronics products in the market are outdated and hence the people are always on the lookout for innovative products. Apple realized the attitude and changing needs of the consumers and succeeded in introducing some of the revolutionary electronic products in the market. In short, Apple succeeded in giving a new face to the computer industry. Does Apple’s innovation strategy differ from corporate strategy? Apple started their life as a business, not as a company. Their corporate strategy is derived from the above principle. Apple never attempted to innovate complicated products. All the new products like iphones, ipods, ipads, itunes etc introduced in the market were intended for the ordinary people. For many of the business pundits, the strategies of Apple Company are indigestible. Many people are of the view that the growth of Apple Company is indebted to the abilities of its charismatic leader Steve Jobs. It is true up to certain extent. Steve was instrumental in the developments of most of the innovative products introduced by Apple. Apple Inc started their business with the introduction of Apple branded computers and soon they diversified into many other areas. They have developed an operating system Macintosh for the use with Apple computers and currently apart from personal computers, Apple sells portable media players, mobile phones, computer software, computer hardware and hardware accessories. Apple’s growth was gradual and they never tried to introduce too many things in too little time. They studied the market well before introducing a new product. In short, Apple’s innovation strategies never differed from their corporate strategies. Context, competencies and culture for innovation The extent of innovation as a core business process today “Innovation is what gives life to a business in a market economy. The businesses that never get going or if they do, then fail or fail later under pressure of a changing economy or marketplace have all failed to innovate appropriately” (Newham, 2007). Organizations cannot exist in the market with the conventional products alone. For example, think of a situation in which Microsoft sticking with its old operating system DOS or Windows 3 at present. Everybody knows that Microsoft was able to keep its monopoly in the software industry purely because of their ability to innovate news products or incorporate new features to their existing products. Thus we got Windows 95, 98, 2000, XP, Vista, Windows 7 like updated versions of windows. It is not possible for Microsoft to accommodate the requirements of the current world using their older versions of operating systems. The current facilities like video conferencing, video chat, high resolution graphics processing, internet, e-mail etc may not run its older versions of Windows. Thus innovation makes an organization capable of meeting the present challenges and the requirements of the consumers. “The ability to define and develop new products and services and deliver them to market is the fundamental source of value creation in companies and an important enabler of competitive advantage” (Bordia, et al, n.d, p.1) The new product developed must enter the market at the appropriate time in order to succeed. For example, Apple has developed a new product, touch screen phones called iPhones. It actually conquered the cell phone market. Competitors like Nokia and Samsung also introduced similar phones in the market very shortly. But nothing succeeded like the Apple’s iPhone because of the late entry of these products. If Nokia or Samsung were able to introduce the touch screen phones before Apple, they could have easily conquered the market. Samsung has recently introduced the LED television which is creating immense interests across the world. Even if other companies come up with LED televisions, they may not enjoy the same demand as Samsung LED televisions enjoy now. Thus innovation is necessary in the corporate world in order to increase the market share and to counter the competition. Which aspects of Apple and its environment currently support innovation? Most of the new products introduced in the market by Apple were enjoyed huge success. None of the Apple’s innovative products failed in the market which is definitely a motivation for Apple to introduce more and more innovative products in the market. Apple was able to surpass Microsoft in terms of their market capitalization which is definitely a remarkable achievement and this achievement was made possible only because of product innovation. Currently Apple has more diverse products than Microsoft. Microsoft is mainly focusing on the OS market whereas Apple was able to develop more diverse portfolios like computers, OS, ipods, Mobile phones, consumer electronic goods etc. In short, Apple may not face much problems in future in sustaining their business because of their diverse product range. Even if one product fails in the market Apple would be able to counter it using another product. In short, Apple can think in terms of more innovative products now because of the better performances of their existing products in the market. Most of the companies promise much, but deliver less. Consumers quiet often brainwashed by the promises given by the big companies and get in troubles. But Apple’s business policy is exactly opposite to that. They know it is difficult to regain the lost customer confidence if they give false promises to the customers. On the other hand, if they promise less, then the customer expectation about the quality of Apple products will also be less. At the same time when a customer gets more than what he expected from a product, he will be greatly appreciate performances of such companies and his confidence in such companies will increase much. Thus the confidence of consumers in Apple’s abilities is sky high at present which will definitely encourage Apple to introduce more innovative products in the market. Learning for innovation What avenues for learning currently exist in the organisation? “Apple provides opportunities for their employees to work with experienced and talented people” (Qumer, 2009, p.3). Fresh employees who are joining the Apple Company will get the opportunity to work with the experienced employees which will polish the ideas of the new employees. Apple encourages its employees to work independently which will increase their problem solving and project management skills immensely. “There is no end to challenges and opportunities to work on big projects in Apple which is good for the fresh employees” (Qumer, 2009, p.8). Apple always provides challenges and opportunities to the employees and they believe in Human Capital Theory which deals with the investments made in people. The ability to think differently and to introduce new products in the market at the suitable time made Apple Company one of the hot favourites of the stock investors. The future growth prospects of Apple Company are higher than the competitors because of the fact that many of its products are in the growth stage. Which additional avenues are most likely to be of value for the Apple? Apple should improve their human resource management strategies. They should realize that giving more workloads to the employees may destroy their productivity ultimately. Apple should develop a smart middle management force in order to take charge once the top management team retires. Apple should take their employees in confidence and they should allow the employee participations and suggestions more in the development of new products. Apple should realize that salary alone may not satisfy the employees and they should give the employees more leisure time and opportunities. To what extent is Apple able to continuously innovate and change? Apple products are in the growth stage now and moving well in the market at present which will definitely encourage the company to continue with their innovation strategies. They are currently number two in the market as far as market capitalization is concerned and hence they will do everything possible to attain the number one spot. So, in all probabilities, apple will continue its innovation process till it attains the number one spot. However, most of the innovations are revolving around the Apple CEO now. The contributions from other top level managers are less in Apple Company now. Many people have strong concerns about Apple’s abilities to continue their innovation after the Steve era. Potential change management issues in Apple Overall change process Even though Apple has a big reputation in international market, many people believe that their organizational culture needs drastic changes in order to retain their top spots in the market. Human resource development is one of the major responsibilities of an organization and Apple is not so good in this area. Updating the knowledge and skill sets are necessary for the employees to sustain their good performances in an organization and Apple needs more comprehensive human resource policies to meet the challenges of the current globalized business environment. Apple revealed to its employees that it believes in employability security rather than employment security (Qumer, 2009, p.10). The above strategy is impractical in the current business world. The above policy will force the employees to work under threatening environment. Moreover, in order to secure their employment, Apple employees will be forced to work lengthy working hours. Such lengthy working hours will prevent the Apple employees from keeping a work-life balance. The freedom enjoyed by the Apple employees is limited inside the organization. Employees were not allowed to disclose anything about their profession as far as they are working with Apple Company (Qumer, 2009, p.11). All the above restrictions increases the job stresses of the Apple employees which may lessen their productivity. So the change process should be implemented in the human resource management. “In 2005 Apple won a legal case that forced Bloggers to name the sources of information that pre-empted the launch of new Apple products” (SWOT Analysis Apple, 2010).Similar incidents forced Apple to tighten their screws on employee freedom within the organization. They have reduced the transparency level in organizational matters especially the matters related to new product developments. At present Apple does not disclose information such as new product developments to its employees which is reducing the loyalty or intimacy of the employees towards the company. “Product development executives provide false facts to other employees with respect to the new product” (Qumer, 2009, p.11-12). Creative suggestions from the employees for the new product development is absent in Apple Company because of the tight secrecy it keeps with respect to the new product development. The relationships with the employer and the employee are important in sustaining organizational growth and such relationships are absent nowadays in Apple organization. Apple should increase its relationships with its employees Barriers and enablers to change Apple’s growth aspects revolve around its charismatic leader Steve Jobs alone. Because of the absence of well structured system, and the over work load of Steve, the VP’s became more powerful and they work in a totalitarian manner (Qumer, 2009, p.14). Only the top executives have enough freedom in Apple Company. Some of the VP’s assume themselves as the all in all in the company which is not a good sign for the company’s future growth prospects. These VP’s are the major barriers in implementing changes in Apple. They are afraid that any changes implemented in the company may reduce their power and authority. Each employee forced to safeguard their interests and career options and the managers often show no interests in such matters. “Unfairness in promotions and overall treatment is a common complaint in Apple Company” (Qumer, 2009, p.15). Instead of organizational growth, employees of Apple Company forced to concentrate more on their own individual growth as managers and supervisors keeping blind eye towards their outstanding performances. Partiality, prejudices and biases in promotions and treatment forced the employees to give more attention to safeguard their interests rather than the organizations’ interest. Apple needs to change this in order to sustain its top spot in the market. Internal and external communications Apple concentrated heavily on the brand building process with the help of internal and external communication strategies. Apple has changed its name from Apple Computer Inc to Apple Inc in order to convey the message to the consumers that Apple is no more a computer company alone, but it is a leader in the consumer electronics industry Moreover, Apple has changed their multicolor logo to a single color logo in order to give more visibility to it. Suman, (2010) has pointed out that a logo definitely has to speak for the organization. In his opinion, allowing the consumers to brainstorm and answer the unsaid part will help the company immensely as far as logo design is concerned (Suman, 2010). Apple logo says nothing about its products; however it is helping the consumers to recognize the name of the company. Once the name of the company identified through the logo, customers will search more things about the company and their products. Advertising is another major area through which Apple communicate externally to the consumers. Apple uses TV ads, print ads, and internet ads judiciously to market their products. “I think, therefore iMac”, the slogan introduced for the selling of iMac computers was an innovative advertising strategy” (Imac Computer: I THINK. THEREFORE, iMAC, n.d). The above advertisement helped the people to know more about the iMac computers. Another famous TV ads “I am a Mac, I am a PC.” “Apple's "I'm a Mac/I'm a PC" ads have been widely regarded as one of the company's most effective campaigns” (Reisinger, 2010). This ad was a thought provoking and it was intended to ridicule Microsoft. Apple's use of colors, sounds, shapes and other elements helped them to build a clear brand image. Those who are not using Apple products may also be attracted by its design. In other words, the Apple product designs attract both users and nonusers of Apple products. Leadership and change agent roles Apple is facing many challenges with respect to leadership. They failed to find a substitute for Steve Jobs yet. Apple’s performances were attributed to a one man show of its charismatic leader Steve Jobs. “If Steve leaves apple, probably the stocks of Apple may down by 25%” (Qumer, 2009, p.4). It is impossible for an organization to formulate long term business strategies depending on the abilities of a single leader. Many people are of the view that Apple’s future is unpredictable after Steve Jobs decides to quit. Apple should change their philosophies with respect to leadership. They should develop a second level management force just below Steve Jobs in order to lead the company in future. Project management and measurement requirements “The work culture in Apple is demanding and the employees forced to work for 60-70 hours per week” (Qumer, 2009, p.7). Apple is one company which has not much respect towards the work life balance of the employees. Employees were forced to work on projects one after other and they are getting very less leisure times. Apple asks their employees to work for 10-12 hours per day which is more than the accepted international standards of 8 hours per day. Team works are less valued in Apple and Apple encourages individual work. Apple employees are getting less support from others while working on projects. Team work is encouraged in most of the current organizations and Apple is an exception in this case. In fact team work increases the overall productivity of the individual and the organization. In a team each member will get assistance from other team members in executing their work successfully which is definitely an advantage for the individual and the organization. The individuals in a team thus face less job related stress and the productivity of each team members will be increased immensely. Mullins (2007) pointed out that group exists in all organizations and are essential for the efficient working and performances in the current organizations (Mullins, 2007, p.6). Apple must change their tactics with respect to teamwork in order to sustain their top spot in the market. References 1. Apple Reports Record Third Quarter Results. (2010). [Online] Available at: http://www.apple.com/pr/library/2008/07/21results.html [Accessed on 14 January 2011] 2. Apple Inc. History. (2008). [Online] Available at: http://www.ipodtopctransfer.com/news/apple-inc.html [Accessed on 14 January 2011] 3. Apple Inc. Cupertino, CA United States (n. d). [Online] Available at: http://www.hoovers.com/company/Apple_Inc/rtjcci-1.html [Accessed on 14 January 2011] 4. Bordia R, Kronenberg E & Neely D (n.d), Innovations’ [Online] Available at: http://www.boozallen.com/media/file/145808.pdf, [Accessed on 14 January 2011] 5. Dougherty, M. (2010). The History of Apple, Inc. 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[Online] Available at: http://arstechnica.com/apple/news/2009/01/apple-earnings-take-a-hit-but-not-a-dive.ars [Accessed on 14 January 2011] 16. The Evolution and History of the Apple Logo. (2009). [Online] Available at: http://www.edibleapple.com/the-evolution-and-history-of-the-apple-logo/ [Accessed on 14 January 2011] 17. Warren, C. (2010). [Online] Available at: http://blogs.forbes.com/velocity/2010/05/27/apple-passes-microsoft-as-most-valuable-tech-company/?partner=yahootix [Accessed on 14 January 2011] Read More