Overview
This lecture examines how Apple's unique organizational structure and leadership model drive its innovation and success, focusing on changes initiated by Steve Jobs in 1997.
Apple's Innovation Focus
- Apple is renowned for innovation in hardware, software, and services across products like computers, iPhones, and iPads.
- Less known is Apple’s innovative organizational design, which supports its ability to innovate successfully.
Organizational Structure Shift
- Steve Jobs eliminated general managers of business units upon returning as CEO in 1997.
- Apple moved from a business-unit structure, each with its own profit and loss (P&L), to a single unified P&L.
- Jobs reorganized Apple into a functional structure, grouping employees by expertise (e.g., design, engineering, marketing).
- Functional managers, as domain experts, hold decision rights within their specialties.
Leadership Model and Decision Making
- Senior vice presidents lead functions, not product lines, and only the CEO oversees all functions for every product.
- No traditional general managers exist at Apple except for the CEO.
- The structure is designed for industries with rapid technological change, relying on technical experts’ judgment.
- R&D leaders prioritize user benefits over strict cost and price targets in decision-making.
Example: iPhone 7 Plus and Risk-Taking
- The decision to add the dual lens camera with Portrait Mode in iPhone 7 Plus exemplified the functional model’s risk-taking.
- Technical leaders were empowered to take significant risks for user benefits, even if it increased costs.
- Traditional structures might prevent such innovations due to a focus on cost over user experience.
Impact and Rationale
- Apple's structure allows better balancing of costs with user value, led by experts in each area.
- The changes implemented by Jobs enabled Apple’s transformation from near bankruptcy to tech industry leadership.
Key Terms & Definitions
- Functional Structure — Organizational design grouping employees by expertise or function, not by product line.
- Profit and Loss (P&L) — Financial metric showing revenues minus costs for a business unit or entire company.
- General Manager — Role overseeing all aspects of a business unit, typically responsible for its P&L.
Action Items / Next Steps
- Review the differences between functional and product-based organizational structures.
- Reflect on how Apple's structure enables innovation compared to traditional models.