Apple Inc. Managing Technology and Innovation

Executive summary

This article presents the innovations process of technology giants Apple Inc. Apple Inc. is a U.S.-based global corporation that develops and produces consumer electronics as well as computer software goods. Apple already had a strong foothold in the personal computing markets. The firm came up with the portable music player Apple iPod capitalizing on the technology and market needs. Digital merchandise had been born quite some time before Apple entered that market. Apple, at the moment, wants to increase its market share and dominate the smartphone arena. A number of Apple’s rivals have publicized their intent of aiming at Apple’s major markets, counting software, video editing, iPod®, iTunes.

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Introduction

Innovative contemporary technology has brought about a remarkable transformation in the mold of modern-day society. The spectacular and radical transformations that have occurred in the past few decades are indicative of the consequences of human endeavor to embark on countless new inventions and incessant search and quest for new things. With regards to such development courses, the economic arena and business scenario have dynamically engaged in taking on a variety of inventive enhancement systems so as to proactively take part in the trend of globalization aligned with the constraints set by time.

Such phenomenological happenings have given birth to a range of global or multinational business organizations that monitor with erudition the rapid alterations in the field of organizational management and structural background of a certain corporation. In an attempt to bring about an assortment of modifications based on human resources management needs, output levels, and market demands, multinational commercial sectors tend to spend huge budgets in return for efficient economic production, organizational structures, and management frameworks to gain a competitive advantage. The transformations in contemporary business scenarios are implicative of a noteworthy swing from the classical tradition to post-classical tradition in terms of business orientation and operations. (Shah 2007)

Nevertheless, the dramatic and speedy transformations have forced large organizations to respond in a different way dependent on the extent of the impact on its management framework and its organizational standards and strategies. Hence, the economic background of a given corporation becomes an important consideration with regards to its ability to manage its innovation and capability to handle the rapid transformations.

In this document, we inevitably drawn on an overabundance of facts and information brought forth by different schools of thought and disciplinary spheres, and believe that one of the central and key factors in the development process of any business and its entire operating system is the fundamental construct known as innovation. In a range of researches, carried out by well-established and appreciated business and management experts and scholars in the field of social sciences, explication of the term has experienced a sense of conflict. Even though the case presented is not a new argument for any discipline, it should be understood that there exists no absolute within the limits of spatial and temporal spheres. This simply implies that a definition is not essentially erroneous and rather must be applied to the appropriate scenario.

Managing Innovation

In Dr. Franz Beeler’s (2005) work on Critical Success Factors in Innovation and Technology Management, he highlights the vital conceptions which gave birth to effectual outcome techniques like Technology Management Concept, and Innovation and Venture Management Concept. Such constructs are valuable instruments with regard to the deployment of innovation plans for a number of small and medium enterprises. In addition, the fundamentally important issues in enhancing the innovation process of a business are related to the value of technology usage. (Beeler 2005)

It is quite obvious that technology emerges as an archetypal component that facilitates the deployment and implementation of innovation and makes sure that the process is effective. Furthermore, the usage of management technology requires rigorous study and examination with regards to the extent of success of induced innovation. With the world experiencing a rapid transformation, the necessity for incessant innovation and technology management, so as to emerge as leaders in the new world order rather than remaining on the outside edges, needs to be reflected on and observed prudently. The random and unprecedented happenings make the world interesting and individuals tend to be observant in their own way of living. A similar construct is applicable to the economic and business scenario as well wherein each organization finds itself in an alert state. Eleanor Glor’s article Key Factors in Influencing Innovation in Government puts forth a significant report on existing issues that play a key role in influencing innovation processes within governmental structures and classifications. She throws light on three key factors which are most important and identifies them as a person’s motivation in terms of innovation, workplace culture, and challenges experienced by an organization in relation to innovation. The three key factors affect the process of impacting the governmental framework or public structure in coping with innovation. The author, in the report ornately explicates these factors in a methodical and structured fashion. As portrayed by her dissertation personal motivation has two separate aspects involved, namely: intrinsic and extrinsic face value. Extrinsic motivation relates to “arbitrary rewards and goals” which characteristically generates an extrinsic motivation for an individual whereas intrinsic motivation relates to the accomplishment of particular objectives realized by using various means like “meaning”, “competence”, “self-determination”, and “impact (Thomas and Velthouse 1999).” If such factors are successfully put into effect and stressed in a given organizational framework, it essentially offers an opportunity for innovation not only in terms of the systems, products and services but also on the productivity of the public employees.

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The importance of organizational work culture in contrast should be acknowledged across both individuals as well as on the collective planes. Etzioni, cited by Glor, recognizes three forms of consciousness that influence the actions of people working in an organization, and identifies them as awareness in terms of the environment, the acting self, and controlling over layers. Such factors influence the collective consciousness of workers which leads to a higher level of autonomy and innovative performance. The impression of organizational work culture is usually used to “describe the social environment in a workplace.” (Glor 2007) This sociological and organizational enhancement point of view helps us to appreciate the essential implications of the “power within the organization.” (Glor 2007) Finally, the enormity and scope of the challenge emerge as important considerations wherein challenges and opportunities manifest themselves in a variety of forms. They appear in the “amount of money, time, work, and psychic energy that would be given or received to implement the innovation (Glor 2007).”

These three key aspects as proposed by Glor have an effect on the implementation and deployment of the innovation processes in the governmental frameworks or public systems. Indisputably, the extent of success of the deployment is only judged based on the way individuals within an organization react to such innovative procedures. However, only in cases where the entire organization realizes and acknowledges the scope of such an endeavor, the project would turn out to be a successful venture and would expectantly lend the organization a more prolific face and help them balance the competitive field. Innovators consequently should monitor such efforts and raise awareness about pertinent and key factors that if and when dealt with reluctance may be unfavorable to the deployment of any innovation process in the given organization.

Organizational Background

This article presents the innovations process of technology giants Apple Inc. Apple Inc. is a U.S.-based global corporation that develops and produces consumer electronics as well as computer software goods. The company’s most widely appreciated hardware product lines include the immensely popular range of Macintosh computers, the iPod and the iPhone. In the software segment, the best-known product from the house of Apple is the Mac OS X operating system, the iTunes media browser, the iLife suite of multimedia and creativity software, the iWork suite of productivity software, Final Cut Studio, a suite of professional audio and film-industry software products, and Logic Studio, a suite of audio tools. The company operates through above 250 retail outlets spread across nine countries along with a web-based store through which it markets and sells its hardware and software products. (Nerkar 2008)

Set up in Cupertino, California on April 1, 1976, and incorporated on 3rd January 1977, the organization was initially known as Apple Computer, Inc. for the first 30 years of its operation. The term “Computer” was erased from the name of the company on the 9th of January, 2007 to implicate the company’s continuing spread out endeavor into the consumer electronics industry besides its customer base as a personal computing industry. Apple boasts of in excess of 35,000 talented employees on a global scale and recorded an all-inclusive annual sales figure of US$32.48 billion in the fiscal year ending September 29, 2008. On account of reasons as varied as its viewpoint in relation to its comprehensive visual design schemes to its characteristic promotion operations, the form has been able to earn a distinctive status in the consumer electronics market. This takes account of a customer base that is loyal to the firm and its brands, especially across the United States. The Fortune magazine recognized Apple Inc. as the most admired company across the United States in the year 2008 and the title was expanded to the most admired firm across the world in the subsequent year. (Shen 2009)

Apple operates through a vertically integrated structure, developing its own operating system, software, and hardware, and marketing and selling these produces using its own chain of retail outlets. The firm emphasizes this vertically integrated structure in order to make sure that the most feasible retail dollars used up to design, develop, manufacture, market, and sell an Apple product can be presented on Apple’s own balance sheet. To hang on to the competitive advantage in the severely competitive Personal Computing and Consumer Electronics market segments, Apple adopts a policy wherein it raises budget spending on research and development, along with marketing and promotion to expand market reach. In June 2005 the company publically made known its intention to start using Intel microprocessors in its Macintosh computers. Through April 1st, 2006, the firm launched the new iMac®, MacBook® Pro, and Mac® mini computers, all driven by Intel microprocessors. Apple successfully anticipated the attainment of the transition phase of all of the Macintosh® computers to be run on Intel microprocessors by late 2006. (Dombrowski 2007)

When the records about Apple Computers Inc. are considered all throughout its history one is forced to be thoughtful about the ups and downs which the firm has encountered. Undeniably, the firm literally exemplifies the concept of innovation and re-invention through its course of actions. Superficially it may seem that Apple’s strategy was to adapt to the transformations in the industry and flow along with it. However, it is now clear that the company clearly did more than just adapting to transformations.

The Setting

In the beginning of the new millennium, the firm was completely ignored by the mainstream market. For quite some time, the market analyst predicting dooms for the company were being proved correct. The stock values crashed and the company’s hopes were largely based on the devout customer base they had established due to their expertise in manufacturing of computer products. Undoubtedly, a loyal customer base is an essential asset for every company. However, it alone is not sufficient to generate a wide market reach and to sustain the development process.

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At that particular moment digital media forms were being developed and were at a very early stage. Everything ranging from digital pictures, audio as well as video could now be dumped on the computer storage. Sales figure of digital still and video cameras were optimistic such products were generating a curious interest particularly among the younger consumer population. Digital music was also kicking off at that same moment. Software that allowed users to play music through the computer, and application that enabled one to “RIP” (or convert) audio CD into digital format were being designed and developed. Thus, it led to a trend where people would simply borrow CDs from friends and store them as digital media on their PCs to enhance their collection. (Leiblein 2009)

A number of companies surfaced in a short span of time that helped make this “borrowing” procedure better-heeled. They came up with applications that allowed the user to “share” digital music with “friends”. Thus, the technology that allowed, unacquainted individuals to upload their music collections for a virtual friend and likewise download the music uploaded by those friends was developed.

This led to a world of opportunities and possibilities driven by electrifying and speedily shifting technology.

The Innovation

Apple already had a strong foothold in the personal computing markets. The most important innovation of the firm’s management was to spread out into related markets of consumer electronics. The firm came up with the portable music player Apple iPod capitalizing on the technology and market needs. The product introduced the world to the amazing capability to stock up and playback digital audio, by means of a portable and convenient piece of equipment. It gave birth to a new “user interface” replacing the convention play, pause, stop buttons of ordinary portable music players. In layman’s terms, it brought forth a fresh and innovative way for humans to communicate with an electronic device.

The conventional portable CD player was substituted with a more convenient, compact, and user-friendly gadget that could store numerous songs as compared to just the 10-12 that an average audio CD could store. However, this portable equipment, though a major breakthrough in itself, was not the summit of the achievement that the firm achieved. In addition to this extraordinary device, Apple came up with a scheme that allowed consumers to pay under a dollar to listen to their favorite song, in place of conventionally having to purchase an entire album to listen to the songs they like. To add to that, it also allowed the customers to download radio shows, lectures, and even video data on the portable equipment. Thus “PODCAST” was added as a completely new word to the English dictionary. (Lopez-Cabrales 2009)

Digital merchandise had been born quite some time before Apple entered that market. However, the firm integrated their device, the content producers, and the customer base of the digital merchandise through a legitimate framework. That brought about a straightforward but drastic transition to the mode of business operations. However, the story had more to it. The accomplishments of Apple, iTunes, and overall digital merchandise also revived another market segment that was on the verge of stagnancy. At the time, during which Apple was experiencing a low, the business of hard-disk producers was also witnessing a falling curve. PC sales were down experiencing saturation, and customers were not keen on upgrading their computer configurations. However, with the advent of new technology, digital merchandise gained popularity, and the need for more storage space stirred up. This rejuvenated the digital storage equipment industry.

In only a span of few years, the iPhone, through which Apple entered the lucrative worldwide smartphone markets, has been able to revolutionize the entire industry. Phone manufacturers and hardware producers equally have stepped up their efforts to respond to the iPhone’s features such as the touchscreen interface, easy Internet accessibility, and lively App Store that undoubtedly made it the best product in the category a few years back. With their businesses affected due to the increased popularity of the Apple iPhone and later the iPhone 3G other market players like Palm, Google, Nokia, and Research in Motion have launched a smartphone war by enhancing their own products. (Li 2009)

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It is well known that prior to the launch of the iPhone the mobile phone segment, particularly the smartphone market, operating in an oligopolistic manner, with just a few markets giant dominating the scenario with very little competition. However, through the iPhone and iPhone 3G, immensely successful computer manufacturers Apple, already known for its innovation, entered the smartphone market and practically took over revealing its vulnerability. Apple, at the moment, wants to increase its market share and dominate the smartphone arena. If Apple becomes as successful in its push for innovation with the new iPhone 3GS as it is with the iPod other key players in the market like RIM and Palm might just end up becoming mere corner entities.

Apple was amongst one of the few triumphant organizations founded during the 1970s that overhauled the conventional ideas of a corporate culture with regards to organizational structure (flat versus tall, casual versus formal attire, etc.). (Prajogo 2008) Apple is accredited with bringing Silicon Valley to the recognition, and generation of Silicon Valley’s diligent but corporate-casual image. Even today, Apple’s corporate work culture is exemplified by its passionate work ethic and relaxed dress code. Findings of the Apple workplace assessments implicated a “relaxed”, “casual,” “collegial” work environment with “long hours, weekends included” and “no end to challenges and cool projects.” (Leiblein 2009) During the time when Steve Jobs assumed the responsibilities of the interim CEO in late 1997, he was well-known for roaming about the Apple premises barefoot in cutoff shorts and a casual shirt. A lot of trend-observers, like the LA Times, acknowledge Steve Jobs and Apple with producing the corporate-casual ideology that has had a tremendous influence on the business culture within the Silicon Valley, as well as the general American corporate culture by and large. The LA Times cites employment specialists John Challenger and Miriam Wardak, stating that, when the employees belonging to the younger generation workers look at “T-shirt-and-jeans donning Steve Jobs, chief executive of Apple Computer Inc.”, they appreciate the fact that they the can “doff their suits and still get rich.” (Leiblein 2009)

Over time with the company growing and being guided by the philosophies of a number of powerful leaders, each with their own inspirational technique, some of its creative temperament has perhaps gone astray. However, to date, Apple has a repute of promoting individuality and fineness that consistently attracts talented individuals to its employee base. To acknowledge the finest of its workforce, the firm has devised the Apple Fellows program. The Apple Fellows are those individuals who amazingly and inspiringly made technical or managerial contributions to the field of personal computing during their tenure with Apple Inc. (Lopez-Cabrales 2009)

It should be noted that all of this was made possible with a passion for innovating, questioning, and challenging even the most enrooted and extensively conventional theories. Apple acknowledged the fact that opportunity may even be found in the space of conventional systems and traditional processes. Apple proves that innovation is not just magic and calls for and progressive and enthused leadership. (Shen 2009)

Challenges

Many detractors of the firm like TVPredictions.com implicate that Apple TV will not be capable of drawing a substantial consumer base for the reason that it doesn’t receive or tape satellite television channels, necessitates pre-download of applications to the computer, faces compatibility difficulties, doesn’t provide DVD playback support, and materializes as one more set-top device which users will need to install into their entertainment devices. As per the Wallstreet Journal, Apple’s premier product – the iPod, is destined to experience tough competition from players in the smartphone industry, which have started adding in most iPod attributes. Apple has at present started countering this challenge by manufacturing and marketing its exclusive brand of smartphones and digital music players. Apple also experiences stiff competition from the innovative Microsoft Zune, which has started gaining popularity as the “iPod killer.” (Lopez-Cabrales 2009)

NASDAQ issued a notice to Apple for prospective delisting by August 11 as a consequence of not providing a quarterly filing. Apple is regurgitating previous earnings to compensate for illegal dealings of employee stock option backdating.

Apple publicized a recall of 1.8 Million Sony Batteries on account of citing trivial injuries due to overheating. (Li 2009)

A number of Apple’s rivals have publicized their intent of aiming at Apple’s major markets, counting software, video editing, iPod®, iTunes. Several of Apple’s major opponents have better financial, advertising, manufacturing, or production resources, in addition to stronger customer bases.

Apple’s returns and operating costs are susceptible to interest rate changeability across the U.S. and overseas. Interest rate increases impact Apple’s gross interest on cash, cash equities, short-term assets, in addition to foreign currency hedges. Apple’s principal disclosure to market risk for interest variations lies in the firm’s investment portfolio, which is constituted by a variety of short-term investment schemes with principal maturities varying in the range of 3 months to 5 years. (Li 2009)

Conclusion

Apple also relies on returns based on non-U.S. economies. Consequently, variations in exchange rates, principally the escalation of the price of U.S. dollars may influence Apple’s overall sales and gross earnings. However, the firm has traditionally priced its produces at a 5-10% premium overseas (Li 2009) which is made possible because of Apple’s stronghold on the distribution networks and localized hardware – more or less totally eradicating the chances of parallel imports and it might easily be understood Apple would respond rapidly to bigger changeability through price hikes. Thus it eliminates the majority of currency risks and actually adds to the revenue stream by taking advantage of the risk premium.

Bibliography

Dombrowski, C. (2007) ‘Elements of innovative cultures’, Knowledge and Process Management, vol. 14, no. 3, pp. 190-202.

Franz Beeler’s (2005) ‘Critical Success Factors in Innovation and Technology Management’, The Innovation Journal vol. pp-270-291.

Glor, E.D. (2007) ‘Key Factors Influencing Innovation in Government’, The Innovation Journal vol. pp-176-188.

Leiblein, M. (2009) ‘Unbundling competitive heterogeneity: incentive structures and capability influences on technological innovation’, Strategic Management Journal, vol. 30, no. 7, pp. 711-735.

Li, Y. (2009) ‘How entrepreneurial orientation moderates the effects of knowledge management on innovation’, Systems Research and Behavioral Science, vol. 26, no. 6, pp. 645-660.

Lopez-Cabrales, A. (2009) ‘Knowledge as a mediator between HRM practices and innovative activity’, Human Resource Management, vol. 48, no. 4, pp. 485-503.

Nerkar, A. (2008) ‘Determinants of invention commercialization: an empirical examination of academically sourced inventions’, Strategic Management Journal, vol. 28, no. 11, pp. 1155-1166.

Prajogo, D.I. (2008) ‘The relationship between innovation and business performance – a comparative study between manufacturing and service firms’, Knowledge and Process Management, vol. 13, no. 3, pp. 218-225.

Shah, S. (2007) ‘The accidental entrepreneur: the emergent and collective process of user entrepreneurship’, Strategic Entrepreneurship Journal, vol. 1, no. 1-2, pp. 123-140.

Shen, H. (2009) ‘Toward a framework of innovation management in logistics firms: A systems perspective’, Systems Research and Behavioral Science, vol. 26, no. 2, pp. 297-309.

Thomas, K.W. and Velthouse, B.A. (1999) ‘Cognitive elements of empowerment: An “interpretive” model of intrinsic task motivation’, Academy of Management Review, vol. 15, pp-666-681.

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