Individual Assessment: The Innovation Structures and Processes at Apple Inc.

Generation of novel ideas has manifold benefits for business organisations. Companies that do not innovate face the risk of being edged out of the market by innovative competitors. Moreover, lack of innovation results in inefficient business processes, and sometimes in a loss of core employees (Müller, 2011). There is agreement in the literature that innovation plays an integral role in differentiating market leaders from their competitors. Innovation helps to discover present and future opportunities (Fischer, 2010). Successful businesses do not only focus on responding to the needs of existing customers, but also anticipate future customer requirements by developing new ideas, services or products that will enable the company to handle future demand in an effective and swift manner. Simply stated, innovation helps organizations to stay ahead of shifting trends, technologies, and competition. From the perspective of consumers, innovation adds value to the firm as well as its products (Gallo, 2010). When utilized effectively, constant innovation can be a crucial instrument that a firm can use to develop sustainable competitive advantage, particularly in dynamic and saturated markets. Customers often pay premium price for an innovative, well-designed product/service. Current paper analyses the innovation structures and processes at Apple Inc.

Brief Description of the Organization – Apple

Apple is an American multinational technological corporation that specialises in designing, manufacturing and marketing digital music players, personal computers, as well as communication and mobile devices (Lashinsky, 2014). The company also distributes numerous related software applications, computer networking services, computer peripheral devices, and third-party applications and digital content such as music (Lashinsky, 2014). The main products and services offered by Apple include the iPod, Mac, iPad, iPhone, Apple TV, diverse professional and regular users software, and operating systems (OS X and iOS) (Lashinsky, 2014). Steve Jobs, Steve Wozniak, and Ronald Gerald founded Apple on April 1, 1976. (Lashinsky, 2014) The company has its headquarters in Cupertino, California, United States (Lashinsky, 2014). Among information technology companies globally, Apple ranks second in terms of revenue. The company is the third-largest manufacturer of mobile phones. Besides being the largest publicly listed company globally, in terms of market capitalization, Apple was the first corporation in the US valued at USD 700 billion. The company has about 115000 employees and operates 453 retail stores distributed in 16 countries (Lashinsky, 2014).

How Apple Manages Creativity

There no doubt that Apple is the most innovative company in the word. The innovation strategy used by Apple focuses on the development of new products coupled with innovative business models. Moreover, Apple focuses on pioneering new business spaces and developing new niches in the market. Apple has a reputation for developing revolutionary innovative products such as the iPad, iPhone, iTunes and iPod (Lashinsky, 2014). According to Fischer (2010), leaders at Apple push employees to exhibit high levels of innovation. Rival companies that often seek to outperform Apple usually find themselves lagging behind with Apple constantly releases new innovative products. The following subsections discuss the innovation and creativity management approaches used at Apple.

Using Innovative Business Models: The Platform Strategy

Apple does not only emphasise developing spectacular and innovative products but also accompanies its products with innovative business models by creating, delivering and capturing values (Gallo, 2010). An example was iPhone and iPod, which would not have influenced the market if Apple had not matched them with App Store and iTunes correspondingly. Gallo (2010) refers to this approach used by Apple as systematic innovation, which is at the core of the success documented by the company. The company cuts across the conventional industry boundaries in order to develop an innovation-friendly organisational environment. For instance, Apple operates in software, hardware, and entertainment, and has become an important player in these sub-sectors (Gallo, 2010). For example, the App Store is the largest collection of mobile applications globally, containing thousands of mobile applications that help make iPhone a better product for its users. Apple developed the iPod and coupled it with the iTunes to help deliver digital music content to people at the right price using simple interfaces. The value proposition of Apple in terms of innovation stems from the company’s mantra that views the product as a form of experience, which has been instrumental in facilitating the development of novel business models (Gallo, 2010). In this respect, the company ventured into a new business space and created a feasible business model for users to download digital musical content. As Lashinsky, (2014) elucidates, the integration of innovative business strategies and product novelty has been crucial in expanding the market share of Apple to about 30 times when compared to its original size. Using product innovation together with innovative business model also helped Apple expand its market share of personal computers.

The use of innovative business models and product innovation resulted in Apple using platform strategy to steer its innovation. According to Thomke and Feinberg (2009), companies that use the platform strategy usually envision a generation/family of products during the earliest phases of product conceptualization, planning, and development. During this stage, these companies do not only think of what will be required after the initial release of the product, but also think further about what will be needed during subsequent releases (Morris, Ma, & Wu, 2014). As a result, firms using the platform strategy often develop the original product as a platform, which has a blueprint that will be incorporated into subsequent derivative products that the company envisioned. Using platform strategy offers numerous benefits to the organization as well as its customers and suppliers. For instance, in Apple, most of time and resources are usually invested in the original design (Fischer, 2010). This makes it relatively easy to develop subsequent products that utilize the same design aspects in the product platform. This also results in efficient innovation, since the recycling of parts and same assembly process lead to lower costs and higher reliability of the innovation process, which in turn benefits the firm and its respective suppliers. Moreover, employees at the company also benefit through the knowledge they acquire from the development, production and support of the product platform, which subsequently can be effectively transferred to the derivative products (Fischer, 2010). Customers also benefit from the platform strategy, since more steady and dependable products require less service, maintenance, and repair. In addition, the universal user interfaces and design aspects imply that the product is customer friendly. Overall, it is evident that Apple develops innovative products and couples them with innovative business models. Furthermore, Apple is known for innovation along its established product platforms, which is characterized by the consistent use of its own software for its hardware components. The platform strategy enables Apple to look beyond its existing products and anticipate future needs of consumers, and embark on innovation to meet these expected needs (Fischer, 2010).

Fostering a Culture of Innovation and Creativity

The second way through which Apple manages creativity and innovation is by integrating creativity into its organizational culture. As Fischer (2010) observes, the commitment to creativity and innovation at Apple is not something that is process driven; instead, it is culturally driven in the sense that it is a central aspect of its corporate culture. Steve Jobs once stated that transforming fascinating ideas and technologies into an organization characterized by continuous innovation the company needs significant discipline. Lashinsky (2014) points out that the product innovation and development at Apple are profoundly entrenched into its history and the pivotal influence that Steve Jobs has had on its history. For example, initially, Apple had envisioned Mac as being more than just a computing device. For Apple, Mac was an exemplary illustration of how people could and should handle a computing device. This Apple’s vision was extremely powerful to the extent that the company opted to maintain the majority of Mac’s design integrity and fanatical customer base during Steve Job’s absence from the firm (1985-1997). In the course of its existence, Apple has managed to develop an effective innovation system that focuses on harnessing the creativity of its employees, stimulating novel ideas, streamlining the design process, and introducing profitable innovative products in the market (Gallo, 2010). According to Fischer (2010), there is a direct relationship between the performance of companies that promote their ideas and crucial attributes of their corporate culture such as teamwork, involvement, respect and trust. The corporate culture at Apple focuses on making a change and ensuring that the world is a better place; as a result, the company focuses on the development of best products rather than high sales volumes. Apple places emphasis on using its innovative technologies to make meaningful contributions to society, which is a corporate philosophy promoted by Steve Jobs still radiating among its employees.

In addition, the organizational culture at Apple is based on the idea that self-motivated people tend to work harder in the absence of a boss who micromanages their every move (Fischer, 2010). In terms of organizational structure, Fischer (2010) points out that Apple lacks a formal structure or hierarchy; as a result, people in the field have the power to make decisions. This flat organizational structure does not imply that accountability is not fostered at Apple. In addition, Apple uses a common physical workspace to facilitate fast and effective conversations among employees. For instance, the work environment for the design team lacks offices and cubicles, which generates an open environment that fosters creativity and nurtures a free-flow of ideas. Another important aspect of Apple’s corporate culture that spurs creativity and innovation is specialization (Gallo, 2010). Therefore, employees at the company are not exposed to tasks that are not within their expertise areas.

Fostering Innovation Using the Design Process

Some aspects of the design process used at Apple help in nurturing creativity and innovation at the company. The first aspect of the design process that nurtures creativity and innovation at the company involves matching bottom-up and top-down strategies. In this respect, senior managers at Apple usually explain to employees their dream products including their expectations from the new product (Gallo, 2010). Consequently, the design team chooses and presents the finest ideas obtained from the paired design meetings to the senior leadership to make final decisions (Gallo, 2010). Through this approach, the dream products envisioned by the senior management are transformed into deliverables. Senior executives also participate in the product development process to make sure that lower level employees do not make mistakes.

The second aspect of the design process at Apple used in nurturing innovation is through the paired design meetings, which are conducted two times a week. The first meeting is a creative meeting, where members of the design team brainstorm their ideas freely without taking into consideration any potential constraints (Lashinsky, 2014). The second meeting is referred to as the production meeting, where the design team focuses on ways of materializing their ideas into an actual product. This organization and process occur at Apple when any new product is being developed.

The CEO Acting as the Chief Innovator

Apple also nurtures the culture of creativity by having the CEO play the role of the chief innovator within the organization. According to Lashinsky (2014), it is relatively difficult to talk about Apple without mentioning Steve Jobs and vice versa. There is a strong empirical evidence suggesting that founders of companies tend to imprint their personality characteristics on the organization, and Steve Jobs was not an exception. Given the atypical circumstance with Steve Jobs as the CEO of Apple since he tenured twice, his influence was still felt during the 1985-1997 period when he was not a part of the company (Fischer, 2010). Apple continued to innovate even in his absence. Even during his early days at Apple, Steve Jobs emphasized the importance of perfection in respect to design. Fischer (2010) points out that, from Jobs’ perspective, a design is supposed to be refined and confident; these values continue to influence Apple now. He also hired like-minded individuals following the expansion of the design work. Steve Jobs lacked formal training in engineering, design or business; however, he had the ability to inspire others to follow his beliefs. According to Müller (2011), Jobs is known for his temperament and dictatorial leadership, which may be attributed to his desire for perfection and seeing his vision succeed through Apple. As the CEO of Apple, Jobs often stressed the importance of the company delivering perfect design in a timely manner. The new CEO, Tim Cook, is also adhering to the philosophies established by Jobs. In his relatively short tenure, Apple has delivered several innovative products, especially by focusing on enhancing the efficiency of the existing products (Lashinsky, 2014). By having CEOs play a leading role in innovation, employees at Apple are inspired to be creative and innovative.

Internal and Collaborative Innovation Processes

Apple also nurtures innovation through collaboration with other companies in the industry, engaging in innovative partnerships and venture acquisitions.

Innovative Partnerships

Innovative partnerships form a crucial component of the innovation strategy used by Apple. A partnership refers to a voluntary agreement between two or more companies to collaborate towards achieving a common objective, perform a certain task, or share benefits, competencies, resources, risks and responsibilities (Fischer, 2010). Partnerships play an instrumental role in enabling businesses to undertake continuous improvements. Through engaging in partnerships, a business is able to direct its capabilities and resources to prioritized projects. Apple has entered into a number of innovative partnerships, with the most recent being with IBM, where Apple sought to incorporate the data analytics capabilities of IBM into two of its products – iPad and iPhone (Lashinsky, 2014).

Venture Acquisitions

Although Apple does employ an aggressive venture acquisition strategy, the company has overinvested in its supply chain in order to be ahead of its rivals. Apple is reported to have paid a substantial amount of the factory’s construction cost in order to acquire exclusive rights for the plant’s output over a specified period of time, and then at a discount after the expiry of the agreed amount (Lashinsky, 2014). This investment allows Apple to develop new components that cannot be duplicated by its rivals. Although Apple rarely engages in acquisitions, some of the notable acquisitions made by the company aimed at enhancing its innovative capability include Network Innovations in 1988, NeXT in 1997, Emagic in 2002, FingerWorks in 2005, PA Semi in 2005, Quattro Wireless in 2010, and Beats Electronics in 2014, and others (Lashinsky, 2014).

Conclusion

In current business environment, organizations cannot survive without being innovative and creative. Apple is an exemplar model of an innovative company. Apple manages creativity and innovation through numerous strategies such as pioneering product development coupled with innovative business models, and integrating innovation and creativity in its corporate culture. The design process at Apple also nurtures innovation and creativity through paired design meetings, where the design team brainstorms on ways to implement ideas of the senior management. With the CEO playing a leading role in innovation, employees are also inspired to be innovative. Other aspects of Apple’s innovation strategy involve the use of innovative partnerships and venture acquisitions.

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