Technology
Product/Service
Apple Inc. is a consumer electronics and computer technology company. Its products range from mobile communication and media services, portable digital music players, personal computing products, networking solutions, and software products.
Production Process/Operational Process
The production of award-winning products at Apple Inc. is a complex affair that involves a wide array of players who include the designers who come up with products. Software designing for respective products follows to ensure high-end and good products that consumers find worth when using them.
Intellectual Knowhow
Apple Inc. has one of the most elaborate and complex intellectual knowhow as evidenced by its intellectual property rights and patents for its products, which ensures that the company’s products remain unique.
Processing of information
Processing of information for technology companies such as Apple Inc. is not a difficult task, despite the less input from the consumer on key decisions, which are left to a few people. These decisions relate to different operational segments of the company.
Expected quality and guaranteed reliability
Apple Inc. products are proven high-end and high quality. The company guarantees the reliability of its commodities at all times.
Skilled people
Apple Inc. employs over 50,000 skilled individuals to work in its different departments that range from designers, software engineers, programmers, and human resources.
Market
The company’s products are targeted to general populations, as well as corporate customers. For instance, its mobile phone and computer devices are targeted to the affluent members of the general population. Its products are sold worldwide.
Pioneering for profits
The highly innovative Apple Inc. The company creates its market segment, rather than taking over from other competitors. Its high-end portable music players introduced a new twist to the existing mp3 market.
Innovation
In the world of business, firms are keen on bringing forth products that will not only be unique but also ones that will act as leaders in the respective segments of the business world. Companies can achieve innovation through two types, namely breakthrough innovation or incremental modernism. Breakthrough innovation refers to the process where companies make products, which act as the first of their kind concerning the services or needs that they serve. Breakthrough is the key to innovation that companies seek to achieve, although it is hard to be realised. According to Bajarin, a good example of breakthrough innovation is the iTunes music store that revolutionised how people interacted and bought music1. Previously, music was not sold online. It was becoming a major challenge for music owners and producers. Infringement of rights through illegal online music downloads was common as shown in the figure below as Bajarin demonstrates2.
Incremental innovation refers to progressive improvements that are done on the existing products to make them more desirable and differentiated from the previous products of the same kind. Breakthrough requires a lot of research and resources that many companies are not ready to spend. Innovative commodities are a source of competitive advantage for a company. Firms spend more on incremental innovation is the fact that it is easier to build on an already existing model of a product that to create a new one from the scratch while at the same time having no assurance of any tangible results. Many improvements on touch screen phones are examples of incremental innovation from the first touch phones that were developed. A good example of incremental innovation is evident through Apple’s iPhone, which since its introduction, has grown incrementally over the years as represented in the pictures below as Bajarin reveals3.
Kodak’s Strategy
Definition of the firm’s strategy
Kodak is one of the world’s photography and imaging product makers in the world. For a long time, Kodak’s strategy was to be a market leader in the film and imaging sector. However, as the traditional films became obsolete, the company had to shift its strategy towards market leadership in digital photography.
The Role of George Fisher and his Strategy for Kodak
When George Fisher took over the helm of Kodak as the CEO, the film and photography industry was undergoing serious changes that threatened to change the industry forever. He had his mindset on hardware-based digital strategy, which was a shift from the film-focused strategy. His strategy was a major blow, especially from people who felt that it was going to compete with the film segment. Fisher claimed that electronic imaging could not do away with film production. However, the period marked the beginning of the fall of the mighty Kodak, which culminated in bankruptcy.
Opportunities and Risks after Fisher’s Views
With the hardware-based digital strategy by Fisher, the company had an opportunity of emerging as a global leader in digital photography and imaging. The risk was that the digital approach would slowly deteriorate its film business, which it had strongly relied on in for over century.
Avoiding Kodak’s Fiasco
Kodak saw the opportunities. However, it shied away from taking the first step because it was a move to the unknown. By the time it turned around and entered the market, digital photography and imaging had already been taken over by the company’s competitors. As a result, organisations learnt to be ready to see the opportunities and take necessary steps towards the change direction.
Change Management
The world of business is ever-changing. Although developing strategies of coping with change has always been a challenge to many organisations, it is crucial to note that any new and well-calculated change is bound to yield positive results. Organisations must always ensure that their activities reflect the best practices in the industry. According to Goldratt, to guarantee this goal, organisations must evolve with the changes that are occurring in their industries4. Organisations use various models to implement change to ensure that they are competitive. For instance, to create an organisation’s work climate that upholds active participation, open communication, and labour productivity for everyone, Lewin’s change management model can be of great importance and relevance. Some of the key areas of priority for such a change include the development of an incentive policy, creating job satisfaction, and formulating clear function descriptions.
Under the Lewin’s change management model, an organisation can follow three key steps to guide its change process. The first step is referred to as unfreeze. In this step, an organisation needs to realise that it is currently in a state of inefficiency that requires changing. For example, from the areas mentioned above of priority, it is evident that the organisation does not have an effective incentive policy, employees not have job satisfaction, and that there is lack of clear function descriptions. By unfreezing, Box says that the organisation must take stock of where it is failing in its current state and unfreeze or open up its policies for suggesting the change to cater for the needs of the organisation5.
After preparing the organisation to receive suggestions of change, the next step as per the model is the change itself. The stage marks the time when the people in the organisation start to resolve the various uncertainties that arise due to change processes that are initiated at the first stage. This stage involves the process of moving towards the new direction that has been put forward as per the suggested change. For instance, in the above case, the organisation starts by implementing various recommendations that have been suggested for the incentive policy. It has to create job satisfaction while establishing clear function descriptions. It is important to note that a change does not occur overnight. It requires a considerable amount of time to ensure that the proposed changes are working as expected. It is also a good period where whatever is not working is reviewed while any shortcomings are identified and corrected early in advance.
The third stage of change as per Lewin’s change management model is referred to as the ‘refreeze’ process. Once the organisation has found its ground on the various changes and that employees are adapting to the new changes, the next step is to cement the change into the organisation’s policies. Finally, the organisation will achieve consistent job descriptions. It will also record increased job satisfaction and a good incentive policy that the employees are satisfied with. It is important to have a sense of stability with the changes that have been undertaken to ensure long-term benefits to the organisation. Such an approach is very important to ensure that the organisation is not constantly on the perpetual change process. However, this situation does not give the organisation the leeway to recognise important trends and changes in its industry.
Value Creation and Technology Management
Value Network and the Impetus to Innovate
A system view of service architecture is an important step in guiding an organisation in understanding how its various activities and functions are embedded and hierarchically nested as Christensen demonstrates6. For instance, upon looking at an organisation that offers social network services, the work of Christensen makes it easy to understand its various services through a nested architecture diagram as represented below7.
The above system view of service architecture represents the nested architecture for a social network service provider such as Facebook or Twitter. In this architecture of services, it is evident that the process of providing network services is an interaction of various processes and services at various levels. At the highest level is the architecture of the social network service provider, which is composed of the servers. These legal frameworks govern the offering of such services, mainframe computers for controlling the business and for ensuring consistency of services, terms, and guidelines that the company adheres to for its business.
The second level of the architecture of services is the social network website. A social network provider must provide an elaborate website that can allow people to interact through the platform. To ensure that the website can adequately offer such a platform, different aspects come into play. Firstly, there must be programmers and web designers to set up the page, maintain it, and troubleshoot it in case of any technical issues. Further, the website must have a host and the internet service provider to ensure that it is up, running, and accessible to its potentials users.
The third level of the architecture of services is the individual social network account or the platform that allows users to register and login into the website, meet other users, and share information. The accounts must firstly offer registration options to collect personal details for the individual users. The process must also ensure that the privacy of users is guaranteed and that their information is not accessible to unauthorised parties. Further, the accounts must have the features of a social network platform. They must allow the sharing of information such as video, texts, audio, and pictures.
Value Network
The following diagram is a representation of the value network for a social network service provider business, as Christensen reveals8.
Metrics of Value
The social network ensures that the end-user can access and find a good platform for meeting friends and new people. Hence, such a business model must use various metrics of value. Firstly, the customer experience is a major parameter for measuring whether users are satisfied and if not, identifying the key areas that need more improvement9. The second metric of value is the cost of providing such services.
In most cases, social network services are offered for free or at a small fee. Therefore, the company needs to keep in mind that the cost of offering such services should be realistic for the company. Revenues that are achieved through advertising or other means that the organisation has formed another major metric. The platform must bring enough finances to cater for the costs that are incurred while providing services to social network users. Lastly, competition is another parameter for measuring value. In this era of numerous social media platforms, it is important to understand the trend in the sector to ensure that the business remains relevant. Experiences from major social media platforms that collapsed, or are declining, reveal the lack of innovativeness or lagging behind in terms of trend observation.
Summary of Managerial Decision-making and Disruptive Technological Change
This chapter addresses the key factors or value networks that determine and guide how a company earns its money. It also shows how this process affects decision-making in the face of a firm’s disruptive technology. At the time of new disruptive technologies, the concept can easily be shoved behind a firm’s priorities since it may not seem a financially viable idea or as a viable replacement of the existing technologies10. In many situations, while well-established firms do not have problems when developing disruptive technologies, these projects often fail to take off due to lack of adequate resource allocation. Goodwin and Wright provide a detailed analysis of the steps that people and organisations can adopt to develop working managerial decisions11. The companies do not see their value or relevance to the value networks. In other words, firms are more motivated to uphold the status quo. They maintain the existing business models that are earning them adequately. Managers follow a consistent pattern in the face of disruptive technologies.
Firstly, well-established firms develop disruptive technologies because many established firms are always on the lookout for new opportunities. They have the resources for innovation. The second step that follows is seeking reactions from lead customers by the firm’s marketing personnel. The marketing personnel must check whether the new technologies will find a market12. However, these ‘lead customers’ are often okay with their current products. Hence, they may not take the new product. This situation becomes a major blow to the new technology. The third step that follows is that firms focus on stepping up the pace of sustaining technological development. In other words, rather than focusing on the new disruptive technologies, they put more resources on bettering their existing products to continue to serve the well-known needs of the existing customers. The fourth step involves the formation of new companies and markets for disruptive technologies. In many cases, frustrated engineers from the established companies who are keen on exploiting the new architecture establish the new companies13. While these new companies are unsuccessful in bringing on board the established firms and potential customers, they now focus on bringing new customers. Through this method, the new companies soon have a well-established customer base for their products.
The fifth step is that new entrants advance the market as they continue to cement their position in their new market segment. They make various improvements to new component technologies, which are accepted slowly not only by the established market segments but also the existing market competitors who had previously stopped further developments on the disruptive technologies. The sixth step involves a realisation by the former heavyweight stakeholders that the market for the disruptive technologies is threatening their market and hence the need also to jump over and join the bandwagon. However, it is usually too late to catch up. These formerly established firms are slowly driven out of the market.
Summary of Implications of the Value Network Framework for Innovation
The section highlights the nature of technological change and the problems that successful firms face concerning the value network framework for innovation. Firstly, the organisation’s environment has a significant influence on where it focuses on and what it seeks to prioritise with reference to its resources towards innovation. Secondly, established firms tend to focus their resources on innovations that address the needs within their value network. Thirdly, well-known firms often ignore technologies that do not serve the needs of their customers within the value network. However, this situation may turn into a fatal mistake when other technologies emerge, and new competitors take over. Fourthly, new entrants often have an advantage over established firms, especially when they take over the emerging technologies that go on to disrupt the dominance of the established firms. However, the reason why new entrants have an advantage is their flexibility and willingness to try new opportunities compared to the established firms.
Bibliography
Bajarin, Tim. “Six Reasons Why Apple is Successful”. Time. Web.
Box, George. Statistics for Experimenters. Hoboken, NJ, John Wiley & Sons, 1978.
Christensen, Clayton. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston: Harvard Business School Press, 2010.
Goldratt, Eliyahu. The Goal: A Process of Ongoing Improvement. Great Barrington, MA: North River Press, 2014.
Goodwin, Paul, and George Wright. Decision Analysis for Management Judgement. Hoboken, NJ, John Wiley & Sons, 2009.
Footnotes
- Tim Bajarin, “Six Reasons Why Apple is Successful,” Time. Web.
- Bajarin, Para. 4.
- Bajarin, Para. 6.
- Eliyahu Goldratt, The Goal: A Process of Ongoing Improvement (Great Barrington, MA: North River Press, 2014), 54.
- George Box, Statistics for Experimenters (Hoboken, NJ, John Wiley & Sons, 1978), 33.
- Clayton Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Boston: Harvard Business School Press, 2010), 39.
- Christensen, 41.
- Christensen, 42.
- Christensen, 45.
- Christensen, 52.
- Paul Goodwin, and George Wright, Decision Analysis for Management Judgement (Hoboken, NJ, John Wiley & Sons, 2009), 78.
- Christensen, 61.
- Christensen, 63.