Apple Inc.: Innovation and Organizational Structure

Introduction

• Apple is renowned for its innovation in hardware, software, and services (e.g., computers, iPhones, iPads).
• Less known aspect: organizational design and leadership model that drive innovation success.

Steve Jobs' Return (1997)

• Steve Jobs returned as CEO and took significant steps:
  • Laid off general managers of all business units in one day.
  • Reason: Conventional management structure stifled innovation.

Organizational Structure Changes

• Apple transitioned to a unified organization under one profit and loss (P&L) statement.
• Functional structure implemented:
  • Departments based on function, each led by functional managers with expertise.
  • Senior vice presidents responsible for functions, not products.

Key Features of Apple's Structure

• Current CEO, Tim Cook, has a unique position where all main product functions converge.
• No conventional general managers in the operational structure.

Reasons for Functional Structure

1. Technological Change and Disruption

   • Need for judgment and intuition from technical experts to predict successful technologies and designs.
   • General managers may lack this expertise.

2. Commitment to Quality

   • Decision-making not limited by cost and price targets to ensure the best products.
   • R&D leaders evaluate user benefits against cost considerations.

Case Study: iPhone 7 Plus and Portrait Mode

• Introduction of dual lens camera as a defining feature.
• Paul Hubel and team took risks with potential user pricing.
• Successful feature strengthened credibility for future proposals.

Conclusion

• Traditional structures often limit innovation due to rigid cost analysis.
• Apple’s combination of organizational structure and leadership model saved the company from bankruptcy and propelled it to become a leading tech company.