Introduction
As competition and customer needs increase in every market, companies are forced to innovate to maintain their competitiveness. Innovation refers to the process and outcome of developing creative ideas or inventions and transforming them into value-added solutions. Innovation enables businesses to improve their competitiveness by developing new products, achieving cost-efficiencies, and providing excellent customer service. This paper will discuss the application of innovation at Apple. It will highlight the cultural barriers and enablers that facilitate innovation at the company. The innovation opportunities and challenges that are facing the company will also be discussed.
Company Background
Apple is a California based company that was founded in 1977. It is one of the leading producers of mobile communication devices, media devices, and computers. The company produces high-end smartphones whose brand name is iPhone. Apple’s multi-purpose media devices include iPod and iPad (Apple 2014).
In the computer market, the company produces and sells high quality desktop and portable computers. Apple also develops and sells a variety of application software and entertainment products. Having realized $170 billion in sales and $37 billion in net income in 2013, Apple is considered as one of the most successful companies in the US today (Apple 2014).
Apple serves customers in five major regions namely, Europe, Americas, Japan, Greater China, and Asia Pacific where it targets various market segments (Apple 2014). These include education, consumer, government, and enterprise markets. The target customers in these markets are individuals and organizations that are interested in reliable, high quality, and multipurpose communication and entertainment products.
Apple uses a hierarchical organizational structure albeit with very few levels of management. At the top of the organizational structure is the company’s board that consists of the CEO and non-executive directors (Apple 2014). Below the board is the CEO whose main responsibility is to ensure that the company is operating profitably. Below the CEO are several senior vice president positions, which include chief finance officer, chief operating officer, and software engineering.
Innovation Challenges and Opportunities
Challenges
Apple is facing the following challenges as it strives to maintain its innovativeness. First, the company no longer has access to cutting-edge technologies that enabled it to develop superior products such as iPad. This can be illustrated by the quality of the products that the company has launched in the last three years. For example, iPhone 4S is not significantly different from its predecessor iPhone 4 in terms of physical characteristics, functionality, and technological capabilities.
Similarly, iPhone 5S is inferior to most of its competitors such as Nokia Lumia 920 (He 2013, pp. 112-120). For example, it lacks expandable memory and NFC capability. Moreover, its battery life is very short and the size of its screen is smaller than those of its competitors. Lack of advanced technologies will limit Apple’s ability to achieve product innovation.
Second, the company is facing leadership challenges, which arose after the death of its former CEO, Steve Jobs. The current leadership lacks the charisma that enabled Steve Jobs to lead innovation by providing a clear vision for product and technology development (Jun & Park 2013, pp. 890-907). As a result, inspiring the employees to embrace change by developing new technologies and superior products will be difficult.
Third, Apple is grappling with the problem of increased commoditization. Companies such as Samsung, LG, and Google have been able to acquire the technologies used by Apple to produce substitute products such as Androids and Galaxies at a very low cost. This will eliminate Apple’s differentiation advantage in the market. Thus, the company has to change the status quo by developing new innovative products.
Opportunities
Apple has the following opportunities to innovate. To begin with, the demand for mobile communication devices and computers is on the rise in emerging markets in Asia, the Middle East, and parts of Africa. In these markets, customers are rapidly shifting from basic devices to high-end smartphones and computers. Unlike in the US and most European countries, customers in emerging markets are price-sensitive (Jun & Park 2013, pp. 890-907). This means that they prefer high quality products at a low cost. This is an opportunity to Apple to develop high quality smartphones and computers that are inexpensive to increase its sales.
Producing affordable high quality products will stimulate change by encouraging the company’s employees to utilize innovative processes to manufacture smartphones and computers at a low cost. Emerging applications of smartphones and computers in areas such as healthcare, education, finance, and research are also opportunities for innovation. By developing new multipurpose devices or improving the capabilities of the existing ones, Apple will be able to stay ahead of its competitors in product innovation.
Organizational Culture
Enabling Elements of Apple’s Culture
The elements of Apple’s organizational culture that promote innovation include the following. First, Apple’s organizational culture promotes autonomy and self-motivation. The rationale of this culture is that self-motivated employees will maintain high productivity if their work is not micromanaged by a boss (Lee & Yu 2008, pp. 340-359). Accordingly, Apple has a flexible organizational structure where the CEO engages the employees directly to supervise various projects.
The employees are organized into small teams that are responsible for making and implementing product design decisions. In addition, the teams report directly to the CEO to eliminate bottlenecks in decision-making processes. The culture of autonomy and self-motivation stimulates ideation, which ultimately enables the company’s employees to achieve product and process innovation.
Second, Apple promotes the culture of accountability and clear communication. Most decisions that relate to product development and innovation are swiftly made by the top management and communicated to the employees (Lee & Yu 2008, pp. 340-359). The culture of accountability promotes innovation by ensuring that every employee is directly responsible for achieving specific job targets. Accountability motivates employees to enhance their creativity, which in turn leads to innovation. In addition, articulating decisions clearly from the top eliminates confusions and delays in decision-making processes that might negatively affect innovation initiatives.
Third, Apple’s organizational culture values simplicity and consistency. The company focuses only on a few projects at a time to ensure success. For instance, the company produces new products only once a year. The employees are expected to maintain consistent behavior patterns that promote high creativity and novelty.
This culture enables Apple’s employees to utilize their efforts and the resources of the company to achieve specific project outcomes. Generally, concentrating on one project at a time promotes innovation by enabling employees to allocate ample time to conduct research, to evaluate their ideas, and to test new products before rolling out mass production (Tidd & Bessant 2011, pp. 78).
Fourth, Apple owes its success to the culture of specialization. The company’s employees do not have responsibilities in areas that are outside their expertise. Specialization leads to improvement of knowledge and skills in specific business processes. The resulting improvement in competency facilitates incremental and radical innovation (Shehabuddeen 2007, pp. 10-120).
Finally, innovation at Apple is supported by the culture of diversity and cross functionality. As a multinational corporation, Apple employs individuals from various parts of the world. Consequently, it has access to the best talent to undertake critical processes such as research and development. Talented employees have advanced skills, experience, and ability to think critically in order to achieve innovation.
Cultural Barriers to Innovation
One of the factors that discourage innovation at Apple is the power culture. A power culture is a situation where the organization uses minimal rules and regulations to manage its employees and business processes. In addition, control emanates from the center or key leaders in the company. For several years, Apple has been using the power culture where control, influence, and inspiration come from its CEO (Lee & Yu 2008, pp. 340-359).
Specifically, the company piggybacked on the ability of Steve Jobs to combine technical, managerial, and marketing skills to lead innovation in the company. Although Apple can still find a leader with these skills, the power culture is no longer effective due to the large size of the company. Given the large number of teams that are working on various projects in the company, a single individual cannot lead innovation without the support of other senior managers.
Another aspect of Apple’s organizational culture that discourages innovation is secrecy. Right from the inception of the company, its founders insisted on maintaining secrecy over their business processes and product development strategies. Although this strategy enables the company to prevent its competitors from imitating its products, it negatively affects innovation.
The culture of secrecy discourages sharing of information about various business processes among employees and external stakeholders. As a result, the company does not receive adequate internal and external feedback during product development. This prevents the company from gaining valuable insights into its business processes, thereby preventing innovation.
Addressing Key Innovation Problems
The key challenges that hamper innovation at Apple are lack of access to new advanced technologies, leadership gaps, and commoditization. These challenges can be addressed in the following ways. To begin with, limited access to new technologies can be addressed by crowdsourcing innovation. This involves obtaining the required technologies and ideas by seeking the input of a large number of third-party innovators.
In this regard, Apple can fund select startup technology companies in various parts of the world to develop new ideas and technologies that it can leverage to improve its competiveness. This strategy will enable the company to overcome the limited creativity of its employees by accessing new ideas from external entities (Shehabuddeen 2007, pp. 10-120). As a result, the company will be able to revert to its initial strategy of developing new profitable products through radical innovation.
The leadership problems that are facing the company can be addressed by introducing change leaders to spearhead innovation. This strategy will require the company to identify its employees who have always been deeply involved in major projects and are highly committed to innovation. Employees who are committed to innovation and have a clear understanding of its benefits are likely to motivate or inspire their colleagues to embrace change (Shehabuddeen 2007, pp. 10-120).
Specifically, the leaders are likely to create a sense of urgency for change and inspire their colleagues to be more creative to achieve the desired innovation. The benefit of this strategy is that the process of innovation will be owned by the employees rather than being associated with an individual. This will facilitate continuity as innovation becomes part of the company’s culture.
In order to overcome the problem of commoditization, Apple should focus on continuous incremental innovation to improve the quality of its existing products. This will involve studying market trends to identify the needs that have not been satisfied by the existing products. Improved versions of the existing products should be developed to address emerging needs rather than simply replacing existing products to resuscitate the brand (Shehabuddeen 2007, pp. 10-120).
As a result, customers will continue to associate Apple’s products with superior quality and functionality. The company should launch improved products regularly to discourage its competitors from imitating them. Continuous incremental innovation will enable Apple to de-commoditize its products.
Conclusion
Apple owes its success to radical innovations that enabled it to achieve a differentiation advantage. However, this advantage is quickly dissipating as innovation declines in the company. The factors that hamper innovation include inadequate change leadership and limited access to technologies. On the other hand, the factors that drive innovation include the company’s organizational culture that promotes autonomy, accountability, simplicity, and specialization. The company can take advantage of innovation opportunities by de-commoditizing its products, introducing change leaders, and crowdsourcing innovation.
References
Apple. 2014. Apple Inc. Annual Report: 2013. Web.
He, N. 2013. How to Maintain Sustainable Competitive Advantages: Case Study on the Evolution of Organizational Strategic Management. International Journal of Business Administration, vol. 5 no. 3, pp. 112-120.
Jun, S & Park, S. 2013. Examining Technological Innovation of Apple Using Patent Analysis. Industrial Management and Data Systems, vol. 113 no. 6, pp. 890-907.
Lee, S & Yu, K. 2008. Corporate Culture and Organizational Performance. Journal of Managerial Psychology, vol. 19 no. 4, pp. 340-359.
Shehabuddeen, N. 2007. Innovation in Real Life: A Hands-on Guide to Genuine Innovation. Open Innovation, Liverpool.
Tidd, J & Bessant, J. 2011. Managing Innovation. John Wiley and Sons, New York.