Apple Inc. Organisational Structure 2h5i1a
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ANALYSIS OF ORGANIZATIONAL BEHAVIOR, STRUCTURE & EFFECTIVENESS: APPLE INC. (GROUP 10) [You can add an abstract or other key statement here. An abstract is
Contents About Organization __________________________________________________________ 2 Organizational Culture at Apple ________________________________________________ 4 Organizational Structure ______________________________________________________ 6 Organizational Process ______________________________________________________ 13 Analysis as Q&A ___________________________________________________________ 19 Exhibits Only ______________________________________________________________ 20 Other Sources______________________________________________________________ 23
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ABOUT ORGANIZATION Apple Inc. Formerly Apple computer Inc. is an American multinational corporation with headquarters based out of Cupertino California. The company was founded on April 1st 1976. And incorporated as apple computer Inc. on Jan 3rd 1977. The name was changed to Apple Inc. on Jan 09, 2007. The same day Steve jobs introduced iPhone, reflected its shifted focus towards consumer electronics. Apple is world’s second largest information technology company by revenue and the world’s third largest mobile phone maker. It has been awarded the most ired company by fortune magazine in United States in 2008 and in the world from 2008 to 2012. On Sep 30, 2013 Apple over took Coca-Cola to become the most valuable brand in the Omnicon groups best global brand’s report. However the company has received criticism for its contractors’ labour practices and for Apple’s own environmental and business practices. History: Initially it was established to sell Apple 1 personnel computer kit. A computer single-handedly designed by Wozniak. During the first five years revenues doubled every four months with an average growth rate of 700%. The Apple II also invented by Wozniak was introduced on April 1977. Apple II was chosen to be the desktop platform for Killer App. Of the business world, VisiCalc, A spread sheet program. By the end of 1970s Apple had a staff of computer designers and a production line. The company introduced Apple III in May 1980 in attempt to compete with IBM and Microsoft. On December 12 1980, Apple went public at $22 per share generating more capital than any IPO and instantly creating about three hundred millionaires than any company in history. In 19982, Jobs took over Jef Ruskin’s low cost computer project which was launched in 1984. It was a first personnel computer to be launched without any programming language at all. In 1985, a power struggle developed between Jobs and CEO John Sculley who had been hired two years earlier. The Apple board of directors instructed Sculley to limit Job’s ability to launch expensive forays into untested products. Rather than submit to Sculley’s direction, Jobs attempted to oust from him from his leadership role. Jobs after a conflict with Apple’s board of directors sided with Sculley founded NeXT Inc., the same year.
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The Macintosh portable was introduced in 1989 by Apple. After that Apple introduced power book in 1991. The same year Apple introduced system7, which remained the architectural basis for Mac OS until 2012. The magazine MacAddict named the period between 1989 and 1991 as the first golden age of the Macintosh. In attempt to avoid competing with various consumer outlets such as Walmart. Apple introduced many products leaving consumer confused during this time Apple experimented with a number of other failed consumer targeted products making consumers to not understand the difference between models. Apple relied on high profit margins and never developed a clear response. Instead, they sued Microsoft for using GUI similar to the Apple lisa The law suit was finally dismissed and at the same time a series of major product flops and missed deadlines sullied Apple’s reputation, which made Sculley to be replaced as CEO by Michael Spindler. In1996, Michael Spindler was replaced by Gil Amelio, who chose to purchase NeXT and its NeXT STEP operating system bringing Steve Jobs back to Apple as an adviser. Amelio was ousted by board of directors after three year record low stock price and crippling financial losses in 1997. Jobs become interim CEO and begun restructuring the company’s product line. In the period from 1998 to 2005, Apple purchased several companies to create a portfolio of professional and consumer oriented digital product software. In 2003, Apple’s iTunes store was introduced and the service quickly became the market leader in online music services. Between 2003 and 2006 the price of Apple’s stock increased more than ten folds in January 2006, Apple’s market cap sured that of Dell. Apple achieved widespread success with its iPhone, iPod touch and iPad products, which introduced innovations in mobile phones portable music players and personnel computers respectively. Delivering his key note speech at the Mac world expo on January 09, 2007 Jobs announced that Apple computer Inc. would from that point on be known as Apple Inc. because computers were no longer the main focus of the company, which shifted its emphasis to mobile electronic devices. The following day Apple share prices hit $97.8 and all time high at that point. After introducing iPad on January 27, 2010 and fourth generation iPhone Apple share hit an all-time high in October 2010. On January 7, 2011 Jobs announced medical leave of absence to allow him to focus on his health COO Tim Cook to assume Jobs’ day to day operations at Apple. Apple become the most valuable consumer facing brand in the world. In June 2011, Steve Jobs surprisingly took the stage and unveiled I Cloud, which was the last product launched Jobs attended before his death. On Aug 24, 2011 Jobs resigned his position as CEO of Apple and was replaced by Tim Cook. Jobs became Apple’s chairman prior to which Apple did not have chairman and instead had two co-lead directors. Apple launched many products in 2012 and 2013 and also acquired many companies like Embark Inc. etc. A mid October 2013 3
announcement revealed that Angela Ahrendts will commence as senior vice president at Apple in mid-2014.
Organizational Culture at Apple: Apple’s culture has invaded the business world and had a powerful impact. As a supremely successful company that has risen above strife to become a market leader, competitors look to Apple for inspiration, adopting its practices to improve their own companies. Apple’s culture is loosely structured around Steve Jobs personality, one of the Co-founders of Apple. Based on this background let us look at how work culture at Apple evolved over the years. Initial Years (1976-80): Apple was established on April 1, 1976, by Steve Jobs, Steve Wozniak and Ronald Wayne in Steve Jobs parents’ garage. Apple was incorporated January 3, 1977, without Wayne, who sold his share of the company back to Jobs and Wozniak for $800. Multi-millionaire Mike Markkula provided essential business expertise and funding of $250,000 during the incorporation of Apple. Since its inception Apple and its culture was heavily influenced by Steve Jobs personality. He was extremely ionate and fearless when it came to growing Apple. Many actions in his career were controversial and at certain points risked the future of the company. He ed this ion and commitment to its products and customers to others employees of Apple. This ion and commitment can still be seen in all the Apple’s employees to this day. Because of this ion and commitment and Steve Wozniak’s technological expertise, Apple grew at a very fast rate. During first five years, revenues doubled every four months, an average growth rate of 700%. Lisa and Macintosh (1981-85): As Apple grew, the Steve Jobs, then CEO felt need for someone with business expertise and someone who can guide Apple to become one of the technological giants of the current century. To bring about this change Jobs hired John Sculley, then CEO of Pepsi co. Initially everything went well. Apple started working on Lisa computers having best features. Steve Jobs wanted to introduce Lisa as low cost product. But Sculley refused because of its high cost of production. This 4
difference of opinion led expulsion of Steve Jobs from the Lisa project. Jobs’ obsession to produce low cost computer turned his attention to Macintosh, another product on which Apple’s team was working on. This led to a division within the company. Different divisions within the company started focusing on different objectives. One was Lisa group and the other was Macintosh group. Since competitiveness was inculcated in employees’ personalities, this competitiveness led to huge infighting between two groups for resources. This infighting resulted in removal of Steve Jobs as the CEO of Apple. Decline (1986-97): After Steve Jobs, John Sculley took control of Apple. But his lack of expertise on the developing industry, his short sightedness and risk averseness led to fall in sales and revenue of the company. During this period Apple and its employees lost their vision and mission. John Sculley failed to inspire the employees. The competitiveness and ion which defined Apple was lost. Apple was not producing the kind of products for which it was ired and loved. The profits declined. Even the series of changes in the top management failed to inspire employees and there was decline in Apple’s reputation and profits. Transition and Return to Profitability (1998-current): After series of transitions, Steve Jobs returned to Apple. The time when Steve Jobs was away from the company, he started working on different projects. Enriched from these experiences, Jobs started bringing the culture back to Apple. The team where given complete freedom for creativity and enough time to successfully execute the set targets. The employees where given sense of purpose and the bigger picture and overall mission of the company were explained to them. Employees where challenged to come up with new ideas. To motivate them, they were awarded higher wages, the star performers and their families were given a chance to go on yacht with Steve Jobs where new ideas about products where discussed and the best ideas were brought to production. The sense of purpose and award for excellence motivated employees which led to renaissance in the company and it became one of the most renowned companies of this century. Ethical behaviour of Apple Inc. Apple bases its success on “Creating innovative products and services and on demonstrating integrity in every business interaction.” The four main principles of Apple that contribute to integrity are honesty, respect, confidentiality and compliance. As many of the Apple’s product 5
components are manufactured in countries with low labor costs, the potential for misconduct if high due to differing labor standards and less direct oversight. Apple makes each of its suppliers to sign its “Supplier Code of Conduct” and performs factory audits to ensure compliance. Though Apple has consistently won first place as the world’s Most ired Company, it has aced several ethical issues in recent years. The issue requiring product quality oversight continuously. As Apple’s brand hinges upon product quality, so mistakes can create serious ethical dilemmas. Another important issue was regarding privacy which is the major concern for Apple. The most important issue for Apple is sustainability. As we see all the Apple products are using green technology it is constantly trying to ensure environmental friendly usage for the customers. Apple has many lawsuits regarding the intellectual property rights of the company against other companies. As it is totally based on innovation, these issues would be more common. It also frequently involved in the patents cases against other companies. Hence we can see that Apple is more concerned about its ethical standards and is constantly upgrading itself to comply with the standards it has set for its own operation.
Organizational Structure Apple has change in organizational structure and that is by time frame. In this report we try to present what are the major changes has been done to the organizational structure of the apple year wise. Here the main objective is try to find out the benefits and the disadvantages of the structural changes happened with Apple Inc.
New Organizational Structure of Apple (2010-current) Apple Inc. hired a new Vice President who will report directly to Tim Cook. Paul Deneve is cited as having responsibility for “special projects” and will report directly to Tim Cook. The organizational structure (in Exhibit 1) is CEO centric one and circular type. Where the each and every functions of the company caters around the Chief Executive Officer role. The left side of the structure suggests normal business function oriented departments where right side of the structure is suggesting product oriented functions. 6
Advantages: 1. Responsiveness is very high. 2. Inter department decision making is possible. 3. CEO has influence to the decision making of department’s functions. 4. Centrally controlled structure. 5. Reduction of the traditional hierarchy. Disadvantages: 1. Too many department to handle for CEO. 2. Functions are not inter related mainly product oriented ones, so communication gap between departments. 3. Transaction cost between departments.
Exhibit 1:
The main areas of Apples Management: Marketing The goal of this part of the firm is to identify the customer´s needs and preferences and to market the products that satisfy their needs. 7
Design Industrial Design is responsible for deg the all Apple products, including the Apple Macintosh computer line. Device Engineering The main task of this department is to design Apple’s hardware as well as the Software. To do customization, configuring according to latest trends and technology are the prime focus of the organization. Retail The retail business of Apple I tunes and music stores are being marketed by this department. Software Engineering This department is responsible for deg the OS platform of the Apple Inc.
Changes in Organizational Structure: In year 1977 Apple Inc. had traditional organizational structure that was created by Steven Jobs and Stephen Wozniak. They hired first professional manager A.C. Markkula. As the enterprise was growing and in 1983 the structure was look like as shown in Exhibit 2. Exhibit 2:
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Due to the Apple products were not competitive enough that became the reason to retire of Markkula as the CEO (but still remained as a consultant) and hire on his post John Sculley from PepsiCo. In 1984 new President John Sculley simplified the organizational structure. The main change was 1. To reduce the number of Apple product division to three. The three categories were Macintosh, Apple II. 2. The job maintained the position of the chairman of the board of directors. Exhibit 3:
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In 1985 Sculley made change in organizational structure. The changes were: 1. The main cause was to change the three product category to one Product Operations. 2. The change should lower the operating cost of the products. Changes consequences: 1. Steve Jobs was no longer a member, he resigned from Apple and Jean-Louis Gassee, head of Apple , was promoted to replace him. 2. Steve Jobs found company NeXT what will be bought by Apple later. Exhibit 4:
The centralization concept:
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1. To centralize operations and involve Apple’s senior management in day-to-day decisions, Sculley created a new position of Chief Operation Officer 2. Yocam was appointed as Chief Operating Officer. Exhibit 5:
Failure of the change in Organizational Structure: 1. Scully was forced out of his leadership position by Apple's board of directors in 1993 due to bad results. 2. Michael Spindler, broke tradition by licensing Apple technology to outside firms. The Big Mistake: Spindler made a horrible mistake in 1995, when Apple had unfilled order in worth of $1 billion (underestimated demand). This was his last mistake, after that was replaced by Gil Amelio. But Amelio was not the chairman for much time. In 1997 was replaced again by Steve Jobs. This was because lately in 1996 Apple bought NeXT, Steve Jobs’ enterprise. Apple – Organic or Mechanistic structure
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While mechanistic structures induce people in predictable, able ways with centralized decision making organic structure encourage people to take initiatives and is found to be very flexible. Apple cannot be clearly defined as purely organic or purely mechanistic. Industry that apple operates is very dynamic and it had tried to keep its structure as organic as possible and it was quite successful. Steve jobs created a flattened organizational structure which focused on decentralization. Mechanistic structure in Apple Apple manufactures its Ipad and Ipod through foxconn industries,China. Apple outsource this as they can focus on their core competency. Foxconn is found using performance appraisal and organizational structure is pyramid style bureaucracy. Foxconn even landed up in controversy for threatening employees using performance appraisal. So it can be noticed that whatever functions that may require mechanistic structure have been outsourced. Organizational structure Apple follows a flat organizational structure and this encourages employees to contribute effectively to company by taking part in the decision making process. With Hardware,software and retail functions apple clearly follows a divisional structure.This segregation was done based on the product the division is specialized in. So it can be said that apple revolves around departments rather than people. Advantaged this structure than offer could be Stronger pursuit of internal organizational efficiency,motivated by the extra control provided by the corporate office Corporate can easily identify the division/department which is performing poorly or which is earnng maximum returns on investment Division would tend to adopt international best practices as the division is linked with international counterparts. Disadvantages this structure can offer Huge Bureaucratic costs due to extensive duplication of activities within the organization Divisions competing eachother for human resources in external and internal labor market 12
Transfer pricing issues – determination of the same and coordination problems that can emerge because of that
Employee Motivation: Apple’s culture is greatly influenced by its founder Steve Jobs. He inculcated ion for the products into his employees. The employees are given complete freedom to use their imagination. They are given complete freedom in of product development to product delivery. The employees are encouraged to work in cross functional teams. Micro-management is discouraged. Opinions respected, ideas listened to, bug bears acted onto. To keep daily stock of activities, regular meetings are arranged but none of the employees are forced to attend these meetings. Because of the work environment and sense of purpose and chance to work on big things, employees are ready to work for long hours even though they are forced to. Secrecy: Because Apple is a hardware company they knew that letting details out about new products would kill sales of existing products, so they built culture of secrecy early on. Employees at Apple aren't allowed to tell even their co-workers about what they are working on.Everything is on a need to know basis reducing redundancy of data and as such limited confusions. This extends even into meetings. If you are in a meeting and you aren't on the disclosure list for something you'll be asked to leave. Generally people don't bring up stuff in meetings they aren't allowed to discuss with the group. In labs, every project is kept under black cloths, just in case someone gets into a section they weren't supposed to be in. Plus the labs are all sectioned off and you have to sign into your part of the lab (and, of course, key cards only work if you are supposed to have access to that lab).
Organizational Process 1. Product Design The success of the Apple’s products predominantly depends on the design of the product and application. In order to narrow down a specific design for a product of specific category or an application, the company follows several methods to finalize it. They are as follows i) 10 to 3 to 1 13
In this method, the designers are allowed to come up with up to 10 ideas, where the seven are selected to make the other three look better compared to them. After this, the selected three designs are taken to next level. The designers are allowed to work on them and the final strong decision on design is arrived by boiling down the options from 3 to 1. ii) Paired Design Meetings This method like the above mentioned is a bottom to top approach process, where the flow of ideas happen from the bottom level of the management such as employees to the top level of management such as C-suite persons. There are two meetings held by the company every week. One being the ‘Idea Meeting’ and the other being the ‘Production Meeting’. The aim of the former one is to help people come up with innovative ideas through brain storming whereas the later one involves the designers and engineers to nail down the work to make the idea finalized in the former meeting work. iii) Pony Meetings This process in contrast to the earlier mentioned methods involves top down management involvement. In this session, the senior manager clearly states the problem definition in of a required application or a product. During these meetings, the production engineers are expected to chalk out a road map that shows the building up of the requirement and present it to top management. Once these plans are approved by the people from C-suite, the plan is put into action. This method has several advantages. Through this method, the workers at the bottom will get hold of an idea of the vision that top management team trying to achieve. On the other hand, the top management can have a check on designers work before approving them. 2. Staffing i) Recruitment Throughout all these years right from beginning, Apple has maintained positive recruitment policy. And, the company achieved these by offering internship, on-the-job training and career opportunities. The company emphasized importance of computer knowledge in people in every one of its recruitment drive. The company had several business groups within itself, which have been given the privilege of recruiting people for specific domain. For instance, the software developers group hired interns to work on OS X server, Technical publications, Graphics and Imaging. Moreover, the company also recruited people based on 14
collected from consumers. Apple always recruits its product marketing manager based on the collected from consumers. Very often Apple insists on task primacy and individual responsibility. As a result, during its communication to employees, the company stresses on the employees to take a better offer if it came along their way. Through this the company gives the employees freedom to choose their career. On the other hand, Apple is unapologetic about the layoffs it makes. From this, we can see that Apple believed in Employability security rather than Employment security. ii) Responsibilities: Apple employees are required to perform different responsibilities from time to time like: Overseeing multiple projects with strict timelines, allocating resources, driving business, functional, financial, and reporting requirements. Cross-functional project schedules include development on the iTunes Store, back-end financial systems, and other Apple groups. Collaborate with IS&T, Treasury, legal, Tax, finance, operations and other organizations both within and outside of Apple to develop solutions for partnerships and promotions and other new business. iii) ability: An employee is able for any undertaking taken up by him. He is strictly under observation of the governing bodies within the organization at all times. All the regulations and guidelines of the organization and must be followed religiously and thereby operate within the boundaries of professional ethics. Sharing complete knowledge of the overall activity as a part of his job, a project manager must act as a guide to the concerned departments. iv) Probationary Period: Any candidate ing Apple has to sign a 12 month probationary period agreement which includes training and performance management to determine the satisfactory work capabilities. Apple monitors its new project manager`s performance closely since a large portion of responsibility is rested on his shoulders. Unsatisfactory performance of the candidate may lead to the termination of the job during the probationary period.
v) Compensation and material benefits
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Post recruitment, various benefits are enjoyed by the employees of Apple. The benefits depend on the location and employment status. The common benefits enjoyed include insurance coverage, flexible spending , and an employee stock purchase program and a 401K investment and savings plan. Product discounts, on-site fitness centres, and opportunity to work on big projects with some of the experienced players were added bonuses. In 1995, Apple initiated the Apple Fellows program to reward an employee, who had made extraordinary contributions to personal computing while at the program. Each Apple Fellow acted as a leader and a visionary, guiding the company in the area of their expertise. Apple also offered FlexBenefits program, where the employees can chose among the pool of benefits offered according to their need. In October 2008, Apple tried to setup a program called Apple University, with Mr. Joepodolny as head in 2010. Through this program the company tried to replicate the successful concept of Pixar University initiated by Steve Jobs. vi) Recognition: In the company, a group of 100 people are selected and labelled as ‘Apple Elite’. This group comprised of talented from various domain. The idea behind the group formation is that the company’s then CEO Steve Jobs organizes a meeting with these people and shares the vision of Apple and communicates where the company was heading at that point of time. Moreover, it was stated that only in these meetings, the draft of company’s idea on every new product is communicated.
Customer Satisfaction, Product/Services Concept
1. Customer Management and Satisfaction: Walking past an Apple store on the eve of every new product launch, one undoubtedly notices the line-up of devoted Apple fanatics impatiently waiting to get their hands on Apple’s newest delivery. Apple has always been triumphant in cultivating a cult of Apple fanatics who have repeatedly proved to be the most brand loyal consumers present in the market. Recent Bernstein research study shows that an incredible 90% of iPhone s indicated an intention to purchase another iPhone as their next phone, many as soon as the new iPhone comes out. 16
Although revolutionary product conceptualization, out-of-the-world design, and chic, clever marketing are largely accredited for Apple’s incredible sales and marketplace dominance over the last half a decade, its unique customer management system has also provided the foundation of its aforementioned features to nurture. Apple has been consistently ranked at the top for customer service in the personal computers category of the American Consumer Satisfaction Index (ASCI), has consistently scored highest in Vocalabs phone satisfaction surveys. It also achieved the highest customer satisfaction scores in numerous Consumer Reports. Apple’s customer management has depths beyond being just its obvious function as customer . It is more devoted to consistently deliver a customer experience that not only meets, but even exceeds expectations. Apple’s Customer Management can be explained from 5 different perspectives as follows: i) Apple Stores, the Perfect Customer Experience: Apple products are sold through Apple’s own chain of retail stores. Apple does not leave primary customer interaction to random employees of big multiband stores who treat each product indifferently or based on prejudice. Apple Stores are a microenvironment within them, devoted and dedicated to provide primary customers an experience of a lifetime, presenting every detail of Apple products in entirety, each time they visit an Apple Store. ii) Provide customers with an environment to “hang-out”: Along with being the most valuable brand in the world, Apple Stores are also the most profitable marketplaces in the world. However a key fact that has been noticed here is that, the majority of customers that enter an Apple store don’t actually make any purchases. Instead, teenagers, students, young professionals, and parents often visit Apple Stores to hang out and play around with Apple’s cool new products. Apple too, rather than pressurizing their staff to persuade the customers into sales, insists them to greet the customers by smiling and encouraging the customers to experience the products. Over the years Apple has been successful in turning shopping for computers and phones into an extremely enjoyable customer experience and it has resulted in creating a brand image that competitors can only be envy of.
iii) Tight Quality Control, best strategy to minimize customer service problems:
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For any company that aspires to be a market leader in customer satisfaction, customer service has to form the heart of its business model. It’s because no matter how good the technicians are, how amicable the sales staff are and how efficient the outsourcing partners are, poor quality products can never produce brand loyalty and customer retention. It is here that Apple has taken quality control to a whole new level. Apple exercises tight control over every aspect of their business model. Whether be it the impeccable veil of secrecy over its products or their strict proprietary control over the iOS, Apple has never left any slack on their security measures. This manifested in an unprecedented level of control over the experience and allowed them to stand a class apart from all competitors when it comes to the level of customer satisfaction. In their App store, Apple checks and sends every piece of software through stringent quality control tests before it can be installed onto an iOS device. Apples decision not to allow flash on their devices shows its level of quality control. Flash, required by most video websites has the notoriety of random crashes, which was unacceptable for Apple. iv) Customer Management, a Long Term Investment: Although most companies take customer management as an expense and try their best to minimize it, Apple welcomes it as a long term investment in fostering customer loyalty and building brand image. Apple refused to move its North American phone offshore, despite the huge cost benefits associated with the move. Also Apple maintains a hassle-free approach of replacing broken devices instead of repairing, as done by the competition. Studies show that these decisions have consistently resulted in placing Apple at number one position in customer service satisfaction. Apple believes that these decisions though seem costly in the short term, produce much greater dividends in the long run and we all have seen that it has been starkly correct. iv) Pin-point Targeted Business Focus: Although Apple is world’s richest technology company, it makes only a handful of products. Such has been its reputation that almost every tech enthusiast, be it an Apple fanatic or not, can recite every Apple product produced till now. Steve Jobs believed that the goal of customer management is to be able to answer the question, “What is our business?” Jobs understood that this question had to be asked from the customer’s perspective. Apple believes in delivering more than just the physical form of its products, Apple delivers cool, elegant, reliable products that stands out from the crowd, and thus makes the s stand out from the crowd. By taking
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utmost care and diligence in catering this experience to customers, Apple has been able to build an incomparable customer loyalty and satisfaction.
2. Products/Services Concept: Apple bases its marketplace advantage on two key Product/ Services Concepts which are: "category-killer innovation" and its expertise in “making complexity simple". i) Apple Concept: Category-Killer Innovation "Category-killer innovation" is when a company produces a product that fundamentally changes both the rules of the game and the customer's value proposition in a product category. It requires that “Think different" attitude. Apple examples of "category-killer innovation" include the iPod, iPhone, iPad and iCloud. Each one of these products have brought futuristic technologies at the times when they were released. The iPod with its compactness and huge memory and sound quality, the iPhone 1 with its fluid interface and the latest iPhone 5s with its fingerprint sensor are some examples of this very fact. Unlike other companies who believe in taking baby steps by just tweaking one product with minor changes to release a newer one, Apple takes its time, and delivers complete innovative products.
ii) Apple Concept: Make Complexity Simple A company “make complexity simple" when it moves technology out of the way and technology includes not just hardware and software but also obtuse jargon and confusing terminology. In Steve Jobs words, "the best technology is invisible - things work like magic". Apple achieves simplicity by focusing on the few most important concepts or features that add the most value - rather than include every feature you can imagine. Apple never included Bluetooth in its iPhones, nor did it allow music transfer without iTunes, still these have hardly had any impact of customer acceptance. Simplicity is about clean, uncluttered design and the iOS, both in its mobile and Mac versions represent the epitome of simplicity.
3) Apple Success
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Reliance on these key fundamental uniqueness have differentiated Apple in the marketplace and enabled it to establish a leadership position in mobile technology. All these culminated in placing Apple at the helm of the most valuable companies in the world. Analysis as Q&A
Why Apple to be considered as a learning organization in of Organizational behavior? 1. The most important reason is Steve Jobs’s contribution towards Apple’s organizational design change. 2. The employees are satisfied in working at Apple Inc. as mentioned by famous employee opinion website Glassdoor.com. 3. Main motto of the organization is learning as collective activity not an individual one. ive environment is always available. 4. The direction in which the organization is growing is to REFLECT, PLAN & GENERATE. 5. If the above one achieve then INTEGRATE, INTERPRET & ACT. Why Apple was forced to change its organizational structure? 1. To produce innovative product for long term reputation and making product that customer wish for. 2. To survive with financial failure and make organizational structure strong. 3. Competitive market share increase with competing IBM and MICROSOFT. 4. To revise corporate strategy. How Organizational change makes Apple Inc. successful? 1. Apple implements Peter. M. Senge’s fifth discipline to increase their sales 2. They involved in research and development with senior resources with several years. 3. Systems Thinking, Personal Mastery, Mental Models, Building Shared Vision, and Team Learning have been implemented as core values of Apple Inc. Exhibits Only: (Source cited) Chronologically Apple:
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“The founding of Apple1976-1980
Apple I: The Byte Shop ordered fifty units for $500 per unit
Apple II: The first West Coast Computer Faire (April 1977)
Apple III: Compete against IBM and Microsoft (May 1980) o The years of innovation 1981-1989
Lisa: First Personal Computer with a Graphical Interface (GUI) (1983)
Machintosh: The first “-friendly”PC, using GUI with the metaphor of “desktop” and Mouse. (1984)
Machintosh Portable: Compete against IBM and Microsoft (May 1980) o Decline and resurrection 1990-1997
Microsoft rolled out Windows 3.0, Apple was in trouble.
April 10, 2012 [APPLE’S ORGANIZATIONAL LEARNING ]
Apple Guys | 5 o Steve Jobs turnaround 1997-2011
Jobs understood the rapidity of change in the computer industry and therefore change the Apple’s leadership, alliance, licensing, market, and product range. Increase innovation withG3 Power Mac, this systems could also be used as network servers Buzs G3 PowerBooks (1998) & iMac boom! This fact sent Apple’s stock to 52 weeks high!
(1998) o Website renovation & Power Mac G4, 2000
The whole idea of being the best started to emerge in the website as well as the products. o New iBook & iMovie, 2000
The new iBooks started to show that there is a major shift in deg products. o Music revolution; iPod first generation, 2001
The revolution in the music industry happened by introducing this particular product. o Director MX for Mac OS X, 2002
Continues improvement in the software industry and Apple’s simple, easy to use software owned the market.
The new iPod (second generation) & iTunes, 2003
Another revolution in the music industry with introduction of iTunes, it was so important that the music became the #3 navigation element in Apple’s website.
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o Cellphone revolution; iPhone, 2007
Another evolution by Apple, this time in the cellphone industry, Apple has changed the functionality of smartphones to something other couldn’t compete at the time and still struggling to keep up with it. o Tablet revolution; iPad, 2010
Another revolution in the tablet industry, this time Apple had owned and ruled the tablet business and sold enormous number of iPads worldwide.
April 10, 2012 [APPLE’S ORGANIZATIONAL LEARNING ]
Apple Guys | 6
Apple’s core business has been in a constant evolution and change since the day it
started as a personal computer company, Apple focused on the PC industry from 1976 till the late 90’s which Jobs returned to Apple, in that time the internet was the biggest hit in the computer industries and Apple just like the others was trying to get involved in it as much as it could but in that time Apple was in a serious trouble.
Steve Jobs was fired mainly because he argue that Apple should be more of a software company instead of PC and hardware but the board of directors were denying his argument and finally they have fired him. However it became obvious in the 90’s that they were wrong and company was going to the drain, so they hired him back and this time Jobs turn the company to the most valuable computer business of all times by changing the company’s core business from old PC making to current more exciting products such as iPod and iTunes. Apple has been considered to be software, hardware and consumer electronic company ever since. So today’s Apple core businesses can be categorized as below:
Personal Computer (iMac) and notebook (MacBook)
Consumer electronics (iPod, iPhone, iPad, Apple TV)
Online music market (iTunes store)
Mobile advertising market (iAd)
Digital video editing market (Final Cut Pro)
Software Production (Mac OS X, iOS, iLife, iWork)
Real Estate (323 apple stores by November 2010)” Source of the history: http://mile.mmu.edu.my/orion/nimafotovati/files/2012/05/
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Other Sources:
Apple’s Financial Performance:
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“Overview of the Open Source Movement,” The University of Texas at Austin Graduate School of Library and Information Science, 2000,http://www.ischool.utexas.edu/~l38613dw/readings/OpenSourceOverview.html(accesse d June 6, 2011). Marguerite Reardon and Tom Krazit, “Cisco sues Apple over use of iPhone trademark,” CNET News, January 10, 2007, http://news.cnet.com/Cisco-sues-Apple-over-use-of-iPhonetrademark/2100-1047_3-6149285.html (accessed June 8, 2011). Steven Russolillo, “Kodak Obtains Favorable Ruling In Apple Patent Lawsuit,” The Wall Street Journal, May 13, 2011, http://online.wsj.com/article/BT-CO-20110513711367.html (accessed June 8, 2011). Martyn Williams, “Timeline: iTunes Store at 10 Billion,” ComputerWorld, February 24, 2010, http://www.computerworld.com/s/article/9162018/Timeline_iTunes_Store_at_10_billio n (accessed June 6, 2011). “World’s Most ired Companies: Apple,” CNNMoney, http://money.cnn.com/magazines/fortune/mostired/2011/snapshots/670.html (accessed June 6, 2011). Suzanne Vranica, “Public Relations Learned the Hard Way,” The Wall Street Journal, December 29, 2010, http://online.wsj.com/article/SB10001424052970204685004576046302759708050.htm l (accessed June 6, 2011 http://www.forbes.com/sites/stevedenning/2012/06/25/apples-employees-have-a-hell-of-aride/ http://blogs.fasthosts.co.uk/business-strategy-2/5-customer-management-strategies-that-setapple-apart/ http://www.bumpsforboomers.com/think-different-product-concepts-drive-apples-success
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Contents About Organization __________________________________________________________ 2 Organizational Culture at Apple ________________________________________________ 4 Organizational Structure ______________________________________________________ 6 Organizational Process ______________________________________________________ 13 Analysis as Q&A ___________________________________________________________ 19 Exhibits Only ______________________________________________________________ 20 Other Sources______________________________________________________________ 23
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ABOUT ORGANIZATION Apple Inc. Formerly Apple computer Inc. is an American multinational corporation with headquarters based out of Cupertino California. The company was founded on April 1st 1976. And incorporated as apple computer Inc. on Jan 3rd 1977. The name was changed to Apple Inc. on Jan 09, 2007. The same day Steve jobs introduced iPhone, reflected its shifted focus towards consumer electronics. Apple is world’s second largest information technology company by revenue and the world’s third largest mobile phone maker. It has been awarded the most ired company by fortune magazine in United States in 2008 and in the world from 2008 to 2012. On Sep 30, 2013 Apple over took Coca-Cola to become the most valuable brand in the Omnicon groups best global brand’s report. However the company has received criticism for its contractors’ labour practices and for Apple’s own environmental and business practices. History: Initially it was established to sell Apple 1 personnel computer kit. A computer single-handedly designed by Wozniak. During the first five years revenues doubled every four months with an average growth rate of 700%. The Apple II also invented by Wozniak was introduced on April 1977. Apple II was chosen to be the desktop platform for Killer App. Of the business world, VisiCalc, A spread sheet program. By the end of 1970s Apple had a staff of computer designers and a production line. The company introduced Apple III in May 1980 in attempt to compete with IBM and Microsoft. On December 12 1980, Apple went public at $22 per share generating more capital than any IPO and instantly creating about three hundred millionaires than any company in history. In 19982, Jobs took over Jef Ruskin’s low cost computer project which was launched in 1984. It was a first personnel computer to be launched without any programming language at all. In 1985, a power struggle developed between Jobs and CEO John Sculley who had been hired two years earlier. The Apple board of directors instructed Sculley to limit Job’s ability to launch expensive forays into untested products. Rather than submit to Sculley’s direction, Jobs attempted to oust from him from his leadership role. Jobs after a conflict with Apple’s board of directors sided with Sculley founded NeXT Inc., the same year.
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The Macintosh portable was introduced in 1989 by Apple. After that Apple introduced power book in 1991. The same year Apple introduced system7, which remained the architectural basis for Mac OS until 2012. The magazine MacAddict named the period between 1989 and 1991 as the first golden age of the Macintosh. In attempt to avoid competing with various consumer outlets such as Walmart. Apple introduced many products leaving consumer confused during this time Apple experimented with a number of other failed consumer targeted products making consumers to not understand the difference between models. Apple relied on high profit margins and never developed a clear response. Instead, they sued Microsoft for using GUI similar to the Apple lisa The law suit was finally dismissed and at the same time a series of major product flops and missed deadlines sullied Apple’s reputation, which made Sculley to be replaced as CEO by Michael Spindler. In1996, Michael Spindler was replaced by Gil Amelio, who chose to purchase NeXT and its NeXT STEP operating system bringing Steve Jobs back to Apple as an adviser. Amelio was ousted by board of directors after three year record low stock price and crippling financial losses in 1997. Jobs become interim CEO and begun restructuring the company’s product line. In the period from 1998 to 2005, Apple purchased several companies to create a portfolio of professional and consumer oriented digital product software. In 2003, Apple’s iTunes store was introduced and the service quickly became the market leader in online music services. Between 2003 and 2006 the price of Apple’s stock increased more than ten folds in January 2006, Apple’s market cap sured that of Dell. Apple achieved widespread success with its iPhone, iPod touch and iPad products, which introduced innovations in mobile phones portable music players and personnel computers respectively. Delivering his key note speech at the Mac world expo on January 09, 2007 Jobs announced that Apple computer Inc. would from that point on be known as Apple Inc. because computers were no longer the main focus of the company, which shifted its emphasis to mobile electronic devices. The following day Apple share prices hit $97.8 and all time high at that point. After introducing iPad on January 27, 2010 and fourth generation iPhone Apple share hit an all-time high in October 2010. On January 7, 2011 Jobs announced medical leave of absence to allow him to focus on his health COO Tim Cook to assume Jobs’ day to day operations at Apple. Apple become the most valuable consumer facing brand in the world. In June 2011, Steve Jobs surprisingly took the stage and unveiled I Cloud, which was the last product launched Jobs attended before his death. On Aug 24, 2011 Jobs resigned his position as CEO of Apple and was replaced by Tim Cook. Jobs became Apple’s chairman prior to which Apple did not have chairman and instead had two co-lead directors. Apple launched many products in 2012 and 2013 and also acquired many companies like Embark Inc. etc. A mid October 2013 3
announcement revealed that Angela Ahrendts will commence as senior vice president at Apple in mid-2014.
Organizational Culture at Apple: Apple’s culture has invaded the business world and had a powerful impact. As a supremely successful company that has risen above strife to become a market leader, competitors look to Apple for inspiration, adopting its practices to improve their own companies. Apple’s culture is loosely structured around Steve Jobs personality, one of the Co-founders of Apple. Based on this background let us look at how work culture at Apple evolved over the years. Initial Years (1976-80): Apple was established on April 1, 1976, by Steve Jobs, Steve Wozniak and Ronald Wayne in Steve Jobs parents’ garage. Apple was incorporated January 3, 1977, without Wayne, who sold his share of the company back to Jobs and Wozniak for $800. Multi-millionaire Mike Markkula provided essential business expertise and funding of $250,000 during the incorporation of Apple. Since its inception Apple and its culture was heavily influenced by Steve Jobs personality. He was extremely ionate and fearless when it came to growing Apple. Many actions in his career were controversial and at certain points risked the future of the company. He ed this ion and commitment to its products and customers to others employees of Apple. This ion and commitment can still be seen in all the Apple’s employees to this day. Because of this ion and commitment and Steve Wozniak’s technological expertise, Apple grew at a very fast rate. During first five years, revenues doubled every four months, an average growth rate of 700%. Lisa and Macintosh (1981-85): As Apple grew, the Steve Jobs, then CEO felt need for someone with business expertise and someone who can guide Apple to become one of the technological giants of the current century. To bring about this change Jobs hired John Sculley, then CEO of Pepsi co. Initially everything went well. Apple started working on Lisa computers having best features. Steve Jobs wanted to introduce Lisa as low cost product. But Sculley refused because of its high cost of production. This 4
difference of opinion led expulsion of Steve Jobs from the Lisa project. Jobs’ obsession to produce low cost computer turned his attention to Macintosh, another product on which Apple’s team was working on. This led to a division within the company. Different divisions within the company started focusing on different objectives. One was Lisa group and the other was Macintosh group. Since competitiveness was inculcated in employees’ personalities, this competitiveness led to huge infighting between two groups for resources. This infighting resulted in removal of Steve Jobs as the CEO of Apple. Decline (1986-97): After Steve Jobs, John Sculley took control of Apple. But his lack of expertise on the developing industry, his short sightedness and risk averseness led to fall in sales and revenue of the company. During this period Apple and its employees lost their vision and mission. John Sculley failed to inspire the employees. The competitiveness and ion which defined Apple was lost. Apple was not producing the kind of products for which it was ired and loved. The profits declined. Even the series of changes in the top management failed to inspire employees and there was decline in Apple’s reputation and profits. Transition and Return to Profitability (1998-current): After series of transitions, Steve Jobs returned to Apple. The time when Steve Jobs was away from the company, he started working on different projects. Enriched from these experiences, Jobs started bringing the culture back to Apple. The team where given complete freedom for creativity and enough time to successfully execute the set targets. The employees where given sense of purpose and the bigger picture and overall mission of the company were explained to them. Employees where challenged to come up with new ideas. To motivate them, they were awarded higher wages, the star performers and their families were given a chance to go on yacht with Steve Jobs where new ideas about products where discussed and the best ideas were brought to production. The sense of purpose and award for excellence motivated employees which led to renaissance in the company and it became one of the most renowned companies of this century. Ethical behaviour of Apple Inc. Apple bases its success on “Creating innovative products and services and on demonstrating integrity in every business interaction.” The four main principles of Apple that contribute to integrity are honesty, respect, confidentiality and compliance. As many of the Apple’s product 5
components are manufactured in countries with low labor costs, the potential for misconduct if high due to differing labor standards and less direct oversight. Apple makes each of its suppliers to sign its “Supplier Code of Conduct” and performs factory audits to ensure compliance. Though Apple has consistently won first place as the world’s Most ired Company, it has aced several ethical issues in recent years. The issue requiring product quality oversight continuously. As Apple’s brand hinges upon product quality, so mistakes can create serious ethical dilemmas. Another important issue was regarding privacy which is the major concern for Apple. The most important issue for Apple is sustainability. As we see all the Apple products are using green technology it is constantly trying to ensure environmental friendly usage for the customers. Apple has many lawsuits regarding the intellectual property rights of the company against other companies. As it is totally based on innovation, these issues would be more common. It also frequently involved in the patents cases against other companies. Hence we can see that Apple is more concerned about its ethical standards and is constantly upgrading itself to comply with the standards it has set for its own operation.
Organizational Structure Apple has change in organizational structure and that is by time frame. In this report we try to present what are the major changes has been done to the organizational structure of the apple year wise. Here the main objective is try to find out the benefits and the disadvantages of the structural changes happened with Apple Inc.
New Organizational Structure of Apple (2010-current) Apple Inc. hired a new Vice President who will report directly to Tim Cook. Paul Deneve is cited as having responsibility for “special projects” and will report directly to Tim Cook. The organizational structure (in Exhibit 1) is CEO centric one and circular type. Where the each and every functions of the company caters around the Chief Executive Officer role. The left side of the structure suggests normal business function oriented departments where right side of the structure is suggesting product oriented functions. 6
Advantages: 1. Responsiveness is very high. 2. Inter department decision making is possible. 3. CEO has influence to the decision making of department’s functions. 4. Centrally controlled structure. 5. Reduction of the traditional hierarchy. Disadvantages: 1. Too many department to handle for CEO. 2. Functions are not inter related mainly product oriented ones, so communication gap between departments. 3. Transaction cost between departments.
Exhibit 1:
The main areas of Apples Management: Marketing The goal of this part of the firm is to identify the customer´s needs and preferences and to market the products that satisfy their needs. 7
Design Industrial Design is responsible for deg the all Apple products, including the Apple Macintosh computer line. Device Engineering The main task of this department is to design Apple’s hardware as well as the Software. To do customization, configuring according to latest trends and technology are the prime focus of the organization. Retail The retail business of Apple I tunes and music stores are being marketed by this department. Software Engineering This department is responsible for deg the OS platform of the Apple Inc.
Changes in Organizational Structure: In year 1977 Apple Inc. had traditional organizational structure that was created by Steven Jobs and Stephen Wozniak. They hired first professional manager A.C. Markkula. As the enterprise was growing and in 1983 the structure was look like as shown in Exhibit 2. Exhibit 2:
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Due to the Apple products were not competitive enough that became the reason to retire of Markkula as the CEO (but still remained as a consultant) and hire on his post John Sculley from PepsiCo. In 1984 new President John Sculley simplified the organizational structure. The main change was 1. To reduce the number of Apple product division to three. The three categories were Macintosh, Apple II. 2. The job maintained the position of the chairman of the board of directors. Exhibit 3:
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In 1985 Sculley made change in organizational structure. The changes were: 1. The main cause was to change the three product category to one Product Operations. 2. The change should lower the operating cost of the products. Changes consequences: 1. Steve Jobs was no longer a member, he resigned from Apple and Jean-Louis Gassee, head of Apple , was promoted to replace him. 2. Steve Jobs found company NeXT what will be bought by Apple later. Exhibit 4:
The centralization concept:
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1. To centralize operations and involve Apple’s senior management in day-to-day decisions, Sculley created a new position of Chief Operation Officer 2. Yocam was appointed as Chief Operating Officer. Exhibit 5:
Failure of the change in Organizational Structure: 1. Scully was forced out of his leadership position by Apple's board of directors in 1993 due to bad results. 2. Michael Spindler, broke tradition by licensing Apple technology to outside firms. The Big Mistake: Spindler made a horrible mistake in 1995, when Apple had unfilled order in worth of $1 billion (underestimated demand). This was his last mistake, after that was replaced by Gil Amelio. But Amelio was not the chairman for much time. In 1997 was replaced again by Steve Jobs. This was because lately in 1996 Apple bought NeXT, Steve Jobs’ enterprise. Apple – Organic or Mechanistic structure
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While mechanistic structures induce people in predictable, able ways with centralized decision making organic structure encourage people to take initiatives and is found to be very flexible. Apple cannot be clearly defined as purely organic or purely mechanistic. Industry that apple operates is very dynamic and it had tried to keep its structure as organic as possible and it was quite successful. Steve jobs created a flattened organizational structure which focused on decentralization. Mechanistic structure in Apple Apple manufactures its Ipad and Ipod through foxconn industries,China. Apple outsource this as they can focus on their core competency. Foxconn is found using performance appraisal and organizational structure is pyramid style bureaucracy. Foxconn even landed up in controversy for threatening employees using performance appraisal. So it can be noticed that whatever functions that may require mechanistic structure have been outsourced. Organizational structure Apple follows a flat organizational structure and this encourages employees to contribute effectively to company by taking part in the decision making process. With Hardware,software and retail functions apple clearly follows a divisional structure.This segregation was done based on the product the division is specialized in. So it can be said that apple revolves around departments rather than people. Advantaged this structure than offer could be Stronger pursuit of internal organizational efficiency,motivated by the extra control provided by the corporate office Corporate can easily identify the division/department which is performing poorly or which is earnng maximum returns on investment Division would tend to adopt international best practices as the division is linked with international counterparts. Disadvantages this structure can offer Huge Bureaucratic costs due to extensive duplication of activities within the organization Divisions competing eachother for human resources in external and internal labor market 12
Transfer pricing issues – determination of the same and coordination problems that can emerge because of that
Employee Motivation: Apple’s culture is greatly influenced by its founder Steve Jobs. He inculcated ion for the products into his employees. The employees are given complete freedom to use their imagination. They are given complete freedom in of product development to product delivery. The employees are encouraged to work in cross functional teams. Micro-management is discouraged. Opinions respected, ideas listened to, bug bears acted onto. To keep daily stock of activities, regular meetings are arranged but none of the employees are forced to attend these meetings. Because of the work environment and sense of purpose and chance to work on big things, employees are ready to work for long hours even though they are forced to. Secrecy: Because Apple is a hardware company they knew that letting details out about new products would kill sales of existing products, so they built culture of secrecy early on. Employees at Apple aren't allowed to tell even their co-workers about what they are working on.Everything is on a need to know basis reducing redundancy of data and as such limited confusions. This extends even into meetings. If you are in a meeting and you aren't on the disclosure list for something you'll be asked to leave. Generally people don't bring up stuff in meetings they aren't allowed to discuss with the group. In labs, every project is kept under black cloths, just in case someone gets into a section they weren't supposed to be in. Plus the labs are all sectioned off and you have to sign into your part of the lab (and, of course, key cards only work if you are supposed to have access to that lab).
Organizational Process 1. Product Design The success of the Apple’s products predominantly depends on the design of the product and application. In order to narrow down a specific design for a product of specific category or an application, the company follows several methods to finalize it. They are as follows i) 10 to 3 to 1 13
In this method, the designers are allowed to come up with up to 10 ideas, where the seven are selected to make the other three look better compared to them. After this, the selected three designs are taken to next level. The designers are allowed to work on them and the final strong decision on design is arrived by boiling down the options from 3 to 1. ii) Paired Design Meetings This method like the above mentioned is a bottom to top approach process, where the flow of ideas happen from the bottom level of the management such as employees to the top level of management such as C-suite persons. There are two meetings held by the company every week. One being the ‘Idea Meeting’ and the other being the ‘Production Meeting’. The aim of the former one is to help people come up with innovative ideas through brain storming whereas the later one involves the designers and engineers to nail down the work to make the idea finalized in the former meeting work. iii) Pony Meetings This process in contrast to the earlier mentioned methods involves top down management involvement. In this session, the senior manager clearly states the problem definition in of a required application or a product. During these meetings, the production engineers are expected to chalk out a road map that shows the building up of the requirement and present it to top management. Once these plans are approved by the people from C-suite, the plan is put into action. This method has several advantages. Through this method, the workers at the bottom will get hold of an idea of the vision that top management team trying to achieve. On the other hand, the top management can have a check on designers work before approving them. 2. Staffing i) Recruitment Throughout all these years right from beginning, Apple has maintained positive recruitment policy. And, the company achieved these by offering internship, on-the-job training and career opportunities. The company emphasized importance of computer knowledge in people in every one of its recruitment drive. The company had several business groups within itself, which have been given the privilege of recruiting people for specific domain. For instance, the software developers group hired interns to work on OS X server, Technical publications, Graphics and Imaging. Moreover, the company also recruited people based on 14
collected from consumers. Apple always recruits its product marketing manager based on the collected from consumers. Very often Apple insists on task primacy and individual responsibility. As a result, during its communication to employees, the company stresses on the employees to take a better offer if it came along their way. Through this the company gives the employees freedom to choose their career. On the other hand, Apple is unapologetic about the layoffs it makes. From this, we can see that Apple believed in Employability security rather than Employment security. ii) Responsibilities: Apple employees are required to perform different responsibilities from time to time like: Overseeing multiple projects with strict timelines, allocating resources, driving business, functional, financial, and reporting requirements. Cross-functional project schedules include development on the iTunes Store, back-end financial systems, and other Apple groups. Collaborate with IS&T, Treasury, legal, Tax, finance, operations and other organizations both within and outside of Apple to develop solutions for partnerships and promotions and other new business. iii) ability: An employee is able for any undertaking taken up by him. He is strictly under observation of the governing bodies within the organization at all times. All the regulations and guidelines of the organization and must be followed religiously and thereby operate within the boundaries of professional ethics. Sharing complete knowledge of the overall activity as a part of his job, a project manager must act as a guide to the concerned departments. iv) Probationary Period: Any candidate ing Apple has to sign a 12 month probationary period agreement which includes training and performance management to determine the satisfactory work capabilities. Apple monitors its new project manager`s performance closely since a large portion of responsibility is rested on his shoulders. Unsatisfactory performance of the candidate may lead to the termination of the job during the probationary period.
v) Compensation and material benefits
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Post recruitment, various benefits are enjoyed by the employees of Apple. The benefits depend on the location and employment status. The common benefits enjoyed include insurance coverage, flexible spending , and an employee stock purchase program and a 401K investment and savings plan. Product discounts, on-site fitness centres, and opportunity to work on big projects with some of the experienced players were added bonuses. In 1995, Apple initiated the Apple Fellows program to reward an employee, who had made extraordinary contributions to personal computing while at the program. Each Apple Fellow acted as a leader and a visionary, guiding the company in the area of their expertise. Apple also offered FlexBenefits program, where the employees can chose among the pool of benefits offered according to their need. In October 2008, Apple tried to setup a program called Apple University, with Mr. Joepodolny as head in 2010. Through this program the company tried to replicate the successful concept of Pixar University initiated by Steve Jobs. vi) Recognition: In the company, a group of 100 people are selected and labelled as ‘Apple Elite’. This group comprised of talented from various domain. The idea behind the group formation is that the company’s then CEO Steve Jobs organizes a meeting with these people and shares the vision of Apple and communicates where the company was heading at that point of time. Moreover, it was stated that only in these meetings, the draft of company’s idea on every new product is communicated.
Customer Satisfaction, Product/Services Concept
1. Customer Management and Satisfaction: Walking past an Apple store on the eve of every new product launch, one undoubtedly notices the line-up of devoted Apple fanatics impatiently waiting to get their hands on Apple’s newest delivery. Apple has always been triumphant in cultivating a cult of Apple fanatics who have repeatedly proved to be the most brand loyal consumers present in the market. Recent Bernstein research study shows that an incredible 90% of iPhone s indicated an intention to purchase another iPhone as their next phone, many as soon as the new iPhone comes out. 16
Although revolutionary product conceptualization, out-of-the-world design, and chic, clever marketing are largely accredited for Apple’s incredible sales and marketplace dominance over the last half a decade, its unique customer management system has also provided the foundation of its aforementioned features to nurture. Apple has been consistently ranked at the top for customer service in the personal computers category of the American Consumer Satisfaction Index (ASCI), has consistently scored highest in Vocalabs phone satisfaction surveys. It also achieved the highest customer satisfaction scores in numerous Consumer Reports. Apple’s customer management has depths beyond being just its obvious function as customer . It is more devoted to consistently deliver a customer experience that not only meets, but even exceeds expectations. Apple’s Customer Management can be explained from 5 different perspectives as follows: i) Apple Stores, the Perfect Customer Experience: Apple products are sold through Apple’s own chain of retail stores. Apple does not leave primary customer interaction to random employees of big multiband stores who treat each product indifferently or based on prejudice. Apple Stores are a microenvironment within them, devoted and dedicated to provide primary customers an experience of a lifetime, presenting every detail of Apple products in entirety, each time they visit an Apple Store. ii) Provide customers with an environment to “hang-out”: Along with being the most valuable brand in the world, Apple Stores are also the most profitable marketplaces in the world. However a key fact that has been noticed here is that, the majority of customers that enter an Apple store don’t actually make any purchases. Instead, teenagers, students, young professionals, and parents often visit Apple Stores to hang out and play around with Apple’s cool new products. Apple too, rather than pressurizing their staff to persuade the customers into sales, insists them to greet the customers by smiling and encouraging the customers to experience the products. Over the years Apple has been successful in turning shopping for computers and phones into an extremely enjoyable customer experience and it has resulted in creating a brand image that competitors can only be envy of.
iii) Tight Quality Control, best strategy to minimize customer service problems:
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For any company that aspires to be a market leader in customer satisfaction, customer service has to form the heart of its business model. It’s because no matter how good the technicians are, how amicable the sales staff are and how efficient the outsourcing partners are, poor quality products can never produce brand loyalty and customer retention. It is here that Apple has taken quality control to a whole new level. Apple exercises tight control over every aspect of their business model. Whether be it the impeccable veil of secrecy over its products or their strict proprietary control over the iOS, Apple has never left any slack on their security measures. This manifested in an unprecedented level of control over the experience and allowed them to stand a class apart from all competitors when it comes to the level of customer satisfaction. In their App store, Apple checks and sends every piece of software through stringent quality control tests before it can be installed onto an iOS device. Apples decision not to allow flash on their devices shows its level of quality control. Flash, required by most video websites has the notoriety of random crashes, which was unacceptable for Apple. iv) Customer Management, a Long Term Investment: Although most companies take customer management as an expense and try their best to minimize it, Apple welcomes it as a long term investment in fostering customer loyalty and building brand image. Apple refused to move its North American phone offshore, despite the huge cost benefits associated with the move. Also Apple maintains a hassle-free approach of replacing broken devices instead of repairing, as done by the competition. Studies show that these decisions have consistently resulted in placing Apple at number one position in customer service satisfaction. Apple believes that these decisions though seem costly in the short term, produce much greater dividends in the long run and we all have seen that it has been starkly correct. iv) Pin-point Targeted Business Focus: Although Apple is world’s richest technology company, it makes only a handful of products. Such has been its reputation that almost every tech enthusiast, be it an Apple fanatic or not, can recite every Apple product produced till now. Steve Jobs believed that the goal of customer management is to be able to answer the question, “What is our business?” Jobs understood that this question had to be asked from the customer’s perspective. Apple believes in delivering more than just the physical form of its products, Apple delivers cool, elegant, reliable products that stands out from the crowd, and thus makes the s stand out from the crowd. By taking
18
utmost care and diligence in catering this experience to customers, Apple has been able to build an incomparable customer loyalty and satisfaction.
2. Products/Services Concept: Apple bases its marketplace advantage on two key Product/ Services Concepts which are: "category-killer innovation" and its expertise in “making complexity simple". i) Apple Concept: Category-Killer Innovation "Category-killer innovation" is when a company produces a product that fundamentally changes both the rules of the game and the customer's value proposition in a product category. It requires that “Think different" attitude. Apple examples of "category-killer innovation" include the iPod, iPhone, iPad and iCloud. Each one of these products have brought futuristic technologies at the times when they were released. The iPod with its compactness and huge memory and sound quality, the iPhone 1 with its fluid interface and the latest iPhone 5s with its fingerprint sensor are some examples of this very fact. Unlike other companies who believe in taking baby steps by just tweaking one product with minor changes to release a newer one, Apple takes its time, and delivers complete innovative products.
ii) Apple Concept: Make Complexity Simple A company “make complexity simple" when it moves technology out of the way and technology includes not just hardware and software but also obtuse jargon and confusing terminology. In Steve Jobs words, "the best technology is invisible - things work like magic". Apple achieves simplicity by focusing on the few most important concepts or features that add the most value - rather than include every feature you can imagine. Apple never included Bluetooth in its iPhones, nor did it allow music transfer without iTunes, still these have hardly had any impact of customer acceptance. Simplicity is about clean, uncluttered design and the iOS, both in its mobile and Mac versions represent the epitome of simplicity.
3) Apple Success
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Reliance on these key fundamental uniqueness have differentiated Apple in the marketplace and enabled it to establish a leadership position in mobile technology. All these culminated in placing Apple at the helm of the most valuable companies in the world. Analysis as Q&A
Why Apple to be considered as a learning organization in of Organizational behavior? 1. The most important reason is Steve Jobs’s contribution towards Apple’s organizational design change. 2. The employees are satisfied in working at Apple Inc. as mentioned by famous employee opinion website Glassdoor.com. 3. Main motto of the organization is learning as collective activity not an individual one. ive environment is always available. 4. The direction in which the organization is growing is to REFLECT, PLAN & GENERATE. 5. If the above one achieve then INTEGRATE, INTERPRET & ACT. Why Apple was forced to change its organizational structure? 1. To produce innovative product for long term reputation and making product that customer wish for. 2. To survive with financial failure and make organizational structure strong. 3. Competitive market share increase with competing IBM and MICROSOFT. 4. To revise corporate strategy. How Organizational change makes Apple Inc. successful? 1. Apple implements Peter. M. Senge’s fifth discipline to increase their sales 2. They involved in research and development with senior resources with several years. 3. Systems Thinking, Personal Mastery, Mental Models, Building Shared Vision, and Team Learning have been implemented as core values of Apple Inc. Exhibits Only: (Source cited) Chronologically Apple:
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“The founding of Apple1976-1980
Apple I: The Byte Shop ordered fifty units for $500 per unit
Apple II: The first West Coast Computer Faire (April 1977)
Apple III: Compete against IBM and Microsoft (May 1980) o The years of innovation 1981-1989
Lisa: First Personal Computer with a Graphical Interface (GUI) (1983)
Machintosh: The first “-friendly”PC, using GUI with the metaphor of “desktop” and Mouse. (1984)
Machintosh Portable: Compete against IBM and Microsoft (May 1980) o Decline and resurrection 1990-1997
Microsoft rolled out Windows 3.0, Apple was in trouble.
April 10, 2012 [APPLE’S ORGANIZATIONAL LEARNING ]
Apple Guys | 5 o Steve Jobs turnaround 1997-2011
Jobs understood the rapidity of change in the computer industry and therefore change the Apple’s leadership, alliance, licensing, market, and product range. Increase innovation withG3 Power Mac, this systems could also be used as network servers Buzs G3 PowerBooks (1998) & iMac boom! This fact sent Apple’s stock to 52 weeks high!
(1998) o Website renovation & Power Mac G4, 2000
The whole idea of being the best started to emerge in the website as well as the products. o New iBook & iMovie, 2000
The new iBooks started to show that there is a major shift in deg products. o Music revolution; iPod first generation, 2001
The revolution in the music industry happened by introducing this particular product. o Director MX for Mac OS X, 2002
Continues improvement in the software industry and Apple’s simple, easy to use software owned the market.
The new iPod (second generation) & iTunes, 2003
Another revolution in the music industry with introduction of iTunes, it was so important that the music became the #3 navigation element in Apple’s website.
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o Cellphone revolution; iPhone, 2007
Another evolution by Apple, this time in the cellphone industry, Apple has changed the functionality of smartphones to something other couldn’t compete at the time and still struggling to keep up with it. o Tablet revolution; iPad, 2010
Another revolution in the tablet industry, this time Apple had owned and ruled the tablet business and sold enormous number of iPads worldwide.
April 10, 2012 [APPLE’S ORGANIZATIONAL LEARNING ]
Apple Guys | 6
Apple’s core business has been in a constant evolution and change since the day it
started as a personal computer company, Apple focused on the PC industry from 1976 till the late 90’s which Jobs returned to Apple, in that time the internet was the biggest hit in the computer industries and Apple just like the others was trying to get involved in it as much as it could but in that time Apple was in a serious trouble.
Steve Jobs was fired mainly because he argue that Apple should be more of a software company instead of PC and hardware but the board of directors were denying his argument and finally they have fired him. However it became obvious in the 90’s that they were wrong and company was going to the drain, so they hired him back and this time Jobs turn the company to the most valuable computer business of all times by changing the company’s core business from old PC making to current more exciting products such as iPod and iTunes. Apple has been considered to be software, hardware and consumer electronic company ever since. So today’s Apple core businesses can be categorized as below:
Personal Computer (iMac) and notebook (MacBook)
Consumer electronics (iPod, iPhone, iPad, Apple TV)
Online music market (iTunes store)
Mobile advertising market (iAd)
Digital video editing market (Final Cut Pro)
Software Production (Mac OS X, iOS, iLife, iWork)
Real Estate (323 apple stores by November 2010)” Source of the history: http://mile.mmu.edu.my/orion/nimafotovati/files/2012/05/
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Other Sources:
Apple’s Financial Performance:
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