Strategic Changes at Apple Inc.

Overview of Company

Steve Jobs is best known to the world as the CEO of Apple, which he co-founded in 1976 (APPLE 1). He is also the co-founder of Pixar Animation Studios. Apple is one of the topmost technological companies in the world with its award-winning Macintosh computers, OS X operating system, and consumer and professional applications software. Apple also leads the digital music revolution, having sold over 110 million iPods and over three billion songs from its iTunes online store (APPLE 1)).

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Apple has recently entered the mobile phone market with its revolutionary iPhone. The Pixar Animation Studios has created eight of the most successful and beloved animated films of all time: Toy Story, A Bug’s Life, Toy Story 2, Monsters, Inc., Finding Nemo, The Incredibles, Cars and Ratatouille (APPLE 1). Pixar merged with The Walt Disney Company in 2006 and Steve now serves on Disney’s board of directors. In 1976, Steve Jobs and Steve Wozniak set up shop in the garage of the Jobs’ family house in Los Altos, California, with lots of excitement and a little money.

They named their company as the Apple Company and their first machine as the Apple I (Brashares 16). The first machine was a moderate success. The next machine, Apple II was a huge success. Very soon, IBM had entered the personal computer market and proved to be a fierce competitor (Munnariz 1). Three years later, Apple Computer went public and this gave the company a market capital of over $1 billion (Munnariz 1). In 1983 Steve Jobs invited John Sculley to leave Pepsi and become Apple’s president.

Soon however, many differences crept up between them (Munnariz 1). In 1985, just a few months after Woz left the company, a power struggle ensued and Steve lost. Steve took some time off to travel to Europe and inspired by a lack of high-end computerized machinery he formed NeXT (Munnariz 1). The hardware company NeXT, proved to be a big failure. That did not stop him from acquiring majority stake in Pixar from George Lucas in 1986. Pixar became a success story and he soon got involved in a production deal with Disney. Steve Jobs is currently overseeing Apple’s return to consistent profitability on the heels of the successful iMac and G3 system introductions. Since he has rejoined Apple’s stock have shot up more than 70%.

Management and System

Steve Jobs is a good example of a charismatic leader who inspired wild enthusiasm among his employees. On the personal level he has been characterized as an innovative, energetic individual who was able to excite others and stimulate their creativity in order to launch what is essentially a new industry (Cunningham and Lischeron 45). According to Gibson et al (1998) “Jobs dressed like a maverick, worked like a maniac and inspired everyone with his drive and determination” (11).

In any business organization, the corporate culture is formed through corporate philosophy and vision, product-market strategy and personnel management systems. Top management plays the most important role by manipulating these three factors that shape corporate culture (Brown, 188). Mark S. Van Clieaf points out that the factors that influence organizational complexity are product complexity, market operating complexity, and environmental complexity and the structure of an organization and its ability to transcend through these stages of higher complexity will depend upon the Level of Competence of its CEO or SBU President/General Manager (Clieaf 33). This has been especially proven through the success of Apple Company under the leadership of Steve Jobs.

Reasons for the change

There were many reasons why change was needed when the company foundered under John Sculley. For a while things were going great for Sculley. Soon, there were conflicts between Steve Jobs and John Sculley (Linzmayer 157). This conflict escalated and soon Sculley had Jobs out of his post as chairman. The competition between Mac and Microsoft Windows increased and the quality of Windows went up till it started resembling Mac. Soon, Windows overtook Mac. John Sculley depended more on advertisement than innovation.

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He was a master of event marketing as was seen in the critical acclaim lavished on Apple’s 1984 commercial which aired during Super Bowl XVIII (Linzmayer 154). However, after the media frenzy, Mac sales tapered off. For the next big promotional push, Sculley conceived the “Test drive a Macintosh” campaign (Linzmayer, 155). But this campaign was a flop as many Macs were returned slightly worse for wear.

The company also entered into a legal tussle with Microsoft for 5.5 billion dollars over intellectual property rights. The lawsuit went on for years, but the court finally decided in Microsoft’s favor. Sculley was unable to introduce new products or upgrade Mac. By 1996, Apple lost more than a billion dollars in a single year and they needed a new operating system to survive. Schulley had hired Allan Z. Loren and soon promoted him to run Apple USA (O’Reilly and Langan 1). Loren quickly earned a reputation for being very strict on enforcing disciplinary measures (O’Reilly and Langan 2).

Apple employees agonized over these changes, which was also accompanied by a huge decline in earnings (P’Reilly and Langan 2). There was stagnation in the realm of product innovation and conflicts at top leadership. There were legal problems with Microsoft. The competition with Microsoft could not be sustained. Above all, Apple Inc was losing profits. The leadership was inefficient and incapable of dealing with these issues. The working environment at Apple was no long promoting creativity but rather focused on enforcing discipline. These were the reasons why changes had to be brought in.

Strategies for Change

One June 18, 1993, Sculley stepped down as CEO and was replaced by Michael H. Spindler but he retained the role as chairman and controlled the activities of Spindler, who soon decided to exit to make way for Gil Amelio (Linzmayer 761). Apple brought on board Steve jobs as consultant. On the basis of inefficiency, Amelio was fired and Jobs promised to help find the perfect CEO for Apple and in the meantime help them get back on the winning track.

He started making big changes instantly. As keynote speaker at the Boston Macworld show in August, he told the crowd that he was getting rid of most of the members of the board and getting new, better ones. He then announced that Apple had made a deal with Microsoft and Microsoft would invest $150 million in Apple in return for Apple supporting Microsoft’s Internet Browser. Jobs said “We have to let go of the notion that for Apple to win, Microsoft has to lose.

For Apple to win, Apple has to do a really good job” (Bashares, 70). Jobs now introduced several strategic changes at Apple. He thought the changes were urgently required and couldn’t wait till another CEO was found. So he fired people, discontinued products, cut costs, and rebuilt the company from the top down and bottom up. Many people felt he was harsh and even a bully. Within a few months, he unveiled an inspiriting new advertising campaign with the slogan “Think Different” featuring beautiful black and white photographs of controversial, rebellious, troublemaking icons and geniuses of American culture such as John Lennon, Pablo Picasso and Albert Einstein (Bashares 71).

This campaign was a smashing success and placed Apple right back in the spotlight. Next year, at the Flint center auditorium at Cupertino, Jobs unveiled his Macintosh reborn now called the iMac for Internet Mac. It was a beautiful thing – one that was totally different from any computer in the world – blue and translucent white with a rounded, organic, cone like shape and a keyboard that lip up when touched (Bashares 73). It was by far the coolest, most stylish computer ever built.

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The computer’s screen read “Hello again”. The iMac was a huge success and it was followed by the success of iBook, a portable version of the iMac. Jobs was still not the CEO. He called himself interim CEO or iCEO though everyone wanted him to take the job for real. Finally, in the year 2000, Jobs agreed to be the official CEO of Apple (Bashares 74). The success of Apple Company was mainly due to Jobs’ strategy of focusing on his most profitable customers and coming up with new things to sell them rather than just chasing more market share (Skoldberg 14).

Outcomes of change

The basic shift in strategy that brought back Apple Computer to its winning ways was its return to creative ways (Bedbury and Fenichell 147). Once back in the driver’s seat, Jobs reconnected Apple with its boldly creative values that made the company a huge success in the first place. The results were almost immediately made available to consumers: the candy-colored iMac, the sleek G4, large flat panel screens and the Titanium PowerBook (Bedbury and Fenichell 212).

All combined radical styling and flash with technological innovation, the very values that Apple had exemplified until Jobs’ departure (Bedbury and Fenichell 212).The sales of the new machines have helped Apple reach bigger and bigger profits. The price of Apple Stock climbed from $13 to $150 (Bashares 73). By 1998, Apple Computer had actually managed to turn a profit of $47 million. Nobody could believe it – not the financial experts who had predicted that Apple couldn’t even hope to break even.

The more recent introductions have been the iPod and iPhone. The iPod accounted for $9.6 billion of Apple’s $19.3 billion in sales in the year 2006 including iTunes music sales and iPod services and accessories (Pauly 1). The stock of the company has gone since the introduction of the iPhone, a gadget that combines a cell phone with the iPod music and video player. IPods and music sales now account for 50 percent of Apple sales and it’s true to say that Jobs has changed the image of Apple from a niche manufacturer of personal computers to a company with its ear to the latest in consumer electronics (Pauly 1).

Conclusion

The story of the rise of Apple Computer under the influence of Steve Jobs and Steve Wozniak is legendary in the annals of computer history and provides a great study in the realm of change management. All of the problems faced by Apple Company were resolved when Steve Jobs was brought back as consultant. He ensured that the top CEO spot was not hindered by a controlling maniac.

Rather he kept the spot free and took measures to bring back the creative atmosphere at Apple and introduced new products, new campaigns and new philosophies to counter competition. The success of these changes is evident in the outcomes: profitability of the company as seen in the increase in value of shares; return of creativity in the work environment; launch of new innovative products; and absence of conflict at the top.

Works Cited

APPLE (2008). Press Information: Steve Jobs. Web.

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Bedbury, Scott and Fenichell, Stephen (2002). A New Brand World: 8 Principles for Achieving Brand Leadership in the 21st Century. Penguin Publishers.

Brashares, Ann (2001). Steve Jobs: Thinks Different. Twenty-First century Books.

Brown, Montague (1992). Health Care Management: Strategy, Structure and Process. Jones and Bartlett Publishers.

Clieaf, S. Van Mark (1992). Strategy and Structure Follow People: Improving Organizational Performance through Effective Executive Search. Human Resource Planning. Volume: 15. Issue: 1. Page Number: 33+.

Gibson, Whitney Jane; Hannon, C. John and Blackwell, W. Charles (1998). Charismatic Leadership: The Hidden Controversy. Journal of Leadership Studies. Volume: 5. Issue: 4. Page Number: 11.

Linzmayer, W. Owen (2004). Apple Confidential 2.0: The Definitive History of the World’s Most Colorful Company. No Starch Press, Inc.

Munnariz, Rick (1999). From the Garage to the Boardroom: The Steve Jobs Story. The Motley Fool. Web.

O’Reilly Brian and Langan, A. Patricia (1989). APPLE COMPUTER’S RISKY REVOLUTION John Sculley wants to tone down the sass and develop products that are less dazzling than predictable. Is he tampering too much with the Apple mystique? CNNMonitor. Web.

Pauly, David (2007). Does Apple Inc. Have a Future Without Steve Jobs? Bloomberg. Web.

Skoldberg, Kaj (2002). The Poetic Logic of Administration: Styles and Changes of Style in the Art of Organizing. Routledge Publishers. London.

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