Apple company
Apple company Research Paper
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Contents
Background of Apple Company. 3
Why iPhone and iPad products can be called Innovative Products. 4
Apple’s Innovation Strategy Behind the iPad and iPhone. 7
The Components of Apple’s Organization that made it an Innovative Organization. 11
Conclusions and Recommendations. 13
Introduction
For an organization to be successfully innovative, it must be based upon the higher level principles of innovative organizing. Unfortunately, only a limited number of leaders of these high technology companies see the manufacturing process development as one of the main source of competitive advantage. This is why, over the last ten years, trends indicate that more companies are deciding to outsource the manufacturing process to other third party contractors. The reason for such an action is that these high tech companies are trying to avoid the expenses of the manufacturing process as well as having to lose focus on the process of product research and development. They view this research and development to be the major source of competitive advantage. Contrary to this, research conducted in the pharmaceutical industry between 1985 and 1995 suggests that such a view greatly costs organizations as it negatively impacts their competitive health. Different studies support the idea that such high tech companies that encourage the development of organizational capabilities so as to support an innovative, efficient, and effective process development, are better placed to introduce new products faster. This is alongside the higher yields and also the controlled processes that will present the company with a better cost advantage over competitors. With such a step, less capital investment and fewer development resources are usually required, compared to what the competitors will have to apply. Apple has managed to be chosen constantly as the most innovative company in the world. This is because its strategy for innovation is inclusive of amazing new products as well as innovative business models. It always pioneers into untapped business spaces thereby creating new market niches. This is why its innovation strategy is the best to use so as to enable Microsoft/Nokia mobile phones division to also be more innovative. The aim of this report is to properly analyze Apple’s innovation strategy and innovative organizational structure, particularly focusing on the iPhone and iPad products, so as to identify factors that can also be implemented by Microsoft/Nokia mobile phones division to make it more innovative.
Background of Apple Company
Apple Inc., an American multinational corporation, was co-founded by Steven Paul Jobs, Steve Wozniak and Ronald Wayne in 1976 (Finkle & Mallin 2010: 50).Among its best known hardware are the iPhone and iPad products. Research conducted in June 2014 showed that Apple has 425 retail stores in fourteen different countries (‘Event Brief of Q1 2014 Apple Inc. Earnings Conference Call – Final’ n.d.). With an approximate of $446 billion market capitalization, this company is the largest publicly traded corporation in the globe (Mallin & Finkle 2011: 65). In 2012, this company had 72,800 permanent employees who worked fulltime, 3,300 temporary employees working fulltime as well (Sahoo 2012:39). In 2014, its five year growth was registered at averagely 39% for the top line growth and 45% for the bottom line growth (‘Event Brief of Q1 2014 Apple Inc. Earnings Conference Call – Final’ n.d.).
The period between 2007 and 2010 acted as the time when Apple finally started achieving success with its mobile devices. The iPhone and iPpad products introduced innovations in mobile phones and personal computers respectively. With these devices, software applications could only be purchased in a store implemented by Apple, thus the company created a new business model. In mobile phones, touch screens had already been noted before, however, Apple introduced a user interface with specific preprogrammed touch movements that was unique and interesting to consumers (Mallin & Finkle 2011: 66). The cofounders made a great effort to push this company towards attaining an innovative structure. Together, they encouraged innovation as they also innovated, and hired innovative employees. They also had good marketing skills that enabled the public to be informed effectively about the benefits of any newly innovated products, thus sales were boosted within months of release.
The release of the iPhone and iPad products gained Apple great success. This is proof that innovation success goes hand in hand with commercial success. This company managed to increase its customer base by introducing products that would also be important for the newly introduced business model. Therefore, Apple does not rely on specific products, but on unique products, although they perform similar functions. Thus, customers with different needs will always find what they want from the products of this company. As a result of innovation, Apple frequently introduces new products, month after month.
Why iPhone and iPad products can be called Innovative Products
The iPhone and iPad can be referred to as innovative products judging from how the ideas involved in the new product development were noted to be promising. The new product development process will only be successful once there has been a creation and evaluation of the new product ideas. These two tasks can be influenced positively when there is more than one idea and idea creators, when decisions are made as a group and not as an individual, and when there are methods that combine idea creation with evaluation. These three factors can be combined with the aid of idea markets method. This method makes use of virtual idea stocks to act as a representation of new product ideas, enable participants to order and trade stock shares on the virtual marketplace, and thus uses the market efficiency and resulting stock prices as determinants of the likelihood that the new product ideas will be successful (Soukhoroukova, Spann & Skiera 2012: 105).
First, the iPhone and iPad products were generated as a result of many ideas and idea creators, as expected in the idea markets method. This company has employed thousands of employees to work in the different stores around the globe. Therefore, the company has a big number of idea creators, a factor that will also benefit the company as it presents many ideas since each creator will come up with a unique idea for new products. The new product idea quality is important for the commercial success of the final product. However, it is always difficult to choose which idea creator is the best, or what the new product idea should consist of. This is usually as a result of the stochastic nature of creativity, whereby even better ideas may arise unexpectedly where there is actually no demand, and the fact that diversity of skills from the many idea creators may improve the chances that an unconventional new product idea may be developed (Soukhoroukova, Spann & Skiera 2012: 107).
To increase the number of idea creators, Apple Inc. has made it clear that innovation is everyone’s task, and not the task of specific developers (‘DATAMONITOR: Apple Computer, Inc’ 2008:6). Therefore, to make the most of its idea creators, the company makes use of diverse sources including employees, suppliers, customers and researchers (Breen 2014:5). This is very important as all these groups offer important feedback for the organization to use to its advantage. Through feedback from consumers, the company will know what the current trend is all about. This will enable employees to focus on that direction when developing new product ideas. Suppliers and researchers also contribute since during their activity, they can identify a gap in the market. Since this point of having many ideas and idea creators for high quality new product ideas has been achieved, the iPhone and iPad products qualify as innovative products.
Second, Apple has always focused on group decisions rather than individual decisions when it comes to product development. When the different idea creators engage in an exchange of opinions, even better product ideas are developed. This is usually because some ideas may be improved when used alongside other ideas. When it comes to decision making, doing so in a group improves the quality of the outcome. This is because participants may learn from each other, and hence be better placed to understand why a certain idea may not be of quality, and why it should not be implemented. This also makes the decision making process to be accurate in that it will reduce bias. Apple’s iPhone and iPad products are an example of innovative products in that not one individual is involved in the decision making process of the product development, but instead a group of individuals are involved (Castelluccio 2013:59). Hence, these products were developed only after a group of experts decided that the ideas were reliable and promising. If only one person was involved, then the products would not qualify as innovative since the decision making process would have been biased. Eventually, they would not have been as successful in driving the company upwards in its industry. Hence, they are innovative products as they are the result of more than one great idea combined together.
Third, iPhone and iPad, according to the idea markets theory qualify as innovative products since Apple combines idea creation with evaluation (Cusumano 2011:26). Most techniques used in idea generation either support creation of ideas or the evaluation of these ideas. Although participants can be very imaginative when the two actions are separate, a threat is posed whereby creators cannot receive immediate feedback on the ideas they form. It is important to use these two factors side by side as it saves time, reduces costs of screening, and saves resources. Thus, with immediate evaluation and feedback, more time will be saved that can be used for working towards the more quality ideas. Thus, their screening will be more critical and there will be extra resources to be used in the in-depth analysis and implementation of the new ideas. This is what makes iPhone and iPad products to be considered innovative products.
Idea evaluation for the iPhone and iPad that make them innovative products can also be analyzed through the Analytical Hierarchy Process (AHP) approach. This method takes a hierarchical approach to the idea evaluation and decision making processes. A single idea is assessed on multiple criteria before it is structures according to its relative importance (Borade, Kannan & Bansod 2013: 969). The reason why the iPhone and iPad products are innovative products is that Apple ensured to only implement the best ideas brought forward. All ideas cannot be effective for a single product; however, more than one can be used together. Judging from the success of these two products, it is clear that the company took time to identify what the resulting product would consist of, its target market, and its benefits. Since the success was amazing, it is highly likely that only the best ideas were implemented. This is because the target market is highly satisfied with the products being released constantly by Apple Inc. For instance, the iPhone and iPad products were introduced alongside another business model, the app store, that was intended to provide these devices with various applications required (Simmons 2007: 35). Apple saw an opportunity and used different ideas side by side to promote sales while also fully satisfying customer needs.
Apple’s Innovation Strategy Behind the iPad and iPhone
Strategy can be described as an integrated yet overarching approach of how a company intends to achieve its objectives. There are three types of innovation strategy; offensive innovation strategy, defensive innovation strategy and imitative innovation strategy. Apple’s strategy behind the iPad and iPhone is the imitative innovation strategy as the company works towards modifying the already existent products to provide an even more sophisticated and unique product (Davis, Muzyrya & Pai-Ling 2014: 39). Therefore, instead of focusing on creating entirely new products, this company works on identifying areas of improvement and thus works towards promoting these. Thus, the focus is on producing thinner, faster and lighter iPads instead of cheaper hybrid and new offerings. The new innovations made at the current time, will therefore, not lead to the development of new products, but instead will be used to further improve the already available products. For example, the innovations developed for the iPhone 5S are expected to soon be used to further improve the cheaper iPhone 5C (Connolly 2011: 18). The difference is in price and quality as this strategy is supposed to ensure that all customers willing to spend different amounts will be able to get what they need from Apple.
The iPad and iPhone have proven to be the best innovations to drive Apple to commercial success. This happened because Apple was able to implement new product ideas that could be used side by side to facilitate profits. Therefore, the new products were implemented alongside a new business model. Hence, the company was able to use new ways to create, deliver and capture value for consumers. For example, the iPhone is a product that has been matched with the App Store where consumers can go to when they need to purchase software and other applications to customize their iPhones (Maisto 2014: 8). Therefore, the innovation strategy used by Apple is not the development of new products frequently, but the improvement of already available products with the aid of quality ideas. If Apple only focused on new product developments, then chances are high that a similar level of success would not have been achieved. For an innovation to become successful, it must first be acceptable to the customers in the marketplace. Once this happens, the product will sell faster and effectively, thus leading to commercial success. Therefore, commercial success and innovation success may be driven by the New Product Ratio (NPR). The strategy of Apple can be looked at from two perspectives. First, it featured an introduction of new products that were not actually present in the market place. Thus, it attracted a majority of the population as it offered the satisfaction of a need which was not being met by other companies. This is why the innovation became highly successful and, hence commercial success was also achieved.
Another means through which innovation success can drive commercial success is by offering product improvements. This is the current strategy adapted by Apple after the iPhone and iPad were successfully introduced. Instead of working towards other new products, the company has decided to first make use of the available products by introducing new innovations that improve the products (Connolly 2011: 20). When a product is further developed, customers view it as an entirely new product as it may feature newer features and have various capabilities that were not present previously. Thus, the present strategy used by Apple for the iPhone and iPad products is still capable of driving commercial success as it can promote innovation success.
The strategy used by Apple may also be analyzed from how the company is adapting innovation across various industries. So far, these two products have a link in the hardware, software, entertainment, and also logistics (Maisto 2014: 8). So far, the company has managed to master most of the parts of all these industries so as to improve its competitive advantage. In the development of the iPhone and iPad, Apple had a choice of outsourcing some of the manufacturing activities such as software development. However, to improve its profitability, it decided to develop its own software that would be used for the products as operating systems. For instance, the iPhone uses the iPhone operating system (iOS). Most of the applications involved in this product were developed by Apple and not a third party contractor.
Innovations across industries, therefore has a commonality in that in all industries, customers are in search of a product or service that will meet their unsatisfied needs. Therefore, in any industry, a new and unique product that meets an unmet need will flourish. And by providing consumers with everything they need all in one place, the company will be boosting its customer base. Apple managed to grab this new opportunity by introducing the iPhone and iPad and also producing software, entertainment applications and many more that would make these products even more exciting to use. This factor has greatly improved the competitive advantage of the company in that it will appear at the top of all industries as it has more to offer than companies specializing in a specific industry.
Apple’s innovation and design process are usually influenced by commercial, social and political factors. Design is more of invention while innovation is aimed towards implementing this invention. The strategy used by Apple, therefore, is influenced by the above factors in that the company has to adhere to certain rules when developing any new innovation and design ideas. In developing its products, Apple has to consider the commercial, social and political situations first before moving ahead. For example, social influences may be positive in the process of innovation and design as it can provide information on what consumers are really in need of (Castelluccio 2013:60). Therefore, this information will influence innovation and design by providing ideas that can be used to develop new and exciting products. Social influences may also limit innovation towards a specific direction, a factor that is not entirely positive. This is because it may lead to the innovation of similar products with no new ideas, as most consumers will want to purchase a phone with features similar to what was noted in a friend’s mobile phone. Innovation and design may also be influenced by commercial factors such as the enforcement of various legislations and policies. As a result, Apple may realize that it is expensive to be innovative and to come up with a unique design. Lastly, political influences on innovation arise from the fact that innovation is usually considered to be a political aspect. If the research and development process is seen to be promising, the government may offer to fund the innovation and design process. Such an action will definitely be a positive influence on the process as it will not cost the company to indulge in deeper research. This will also promote the innovation policy within an organization.
The Components of Apple’s Organization that made it an Innovative Organization
Apple did not become a successfully innovative company until years after it was founded. There are certain factors that played a major role in making this company an innovative organization. At the beginning, Apple was merely a computer manufacturer. Today, it has developed into a company offering a wide range of products including different consumer electronic devices and a pioneering business model (Edwards 2005: 2). Therefore, there is more to the high performing iMac computer, amazing MacBook notebooks and the multifunctional operating system Mac OS X. All the consecutive new innovative products are what enhance Apple’s share price to increase drastically. In 2000, the increase was $ 12, and in 2010, the increase was more than $ 200 (Finkle & Mallin 2010: 50). Currently, the competitors have found a reason to worry over losing to Apple. This is as a result of its innovation that came about through many factors. First, the company managed to create and implement an innovative culture, compared to the previous situation. Before this implementation, employees worked individually and selfishly (Nussbaum, Berner & Brady 2005: 63). They were not united and hence always engaged in fighting amongst them. Therefore, despite the presence of highly skilled employees, the company could not be productive as a result of the culture which inhibited collaboration. This collaboration is an essential element for innovation.
This situation changed upon the return of Jobs, the co-founder of Apple, in 1997 after being ousted in 1985 (Stone 2011: 39). As the company’s leader once again, Jobs encouraged calculated and well thought increases in R&D spending, and frequent launching of new products and upgrades. It is important to note that Apple did not apply the exact principles of innovation as developed by scholars. Instead, the company developed its own principles, which turned out to be more effective in enabling it to achieve its objective (Stone 2011: 40). Steve Jobs managed to encourage the company employees to work together by clearly educating them on the importance of adapting a product oriented culture. With such a culture, employees understood that they all have a common goal, thus, must work together towards ensuring they get the best results possible. Aside from having an innovative organizational culture, the leadership of this organization has also encouraged the development of an innovative organization. Ever since Steve Jobs, the next leaders have not taken steps to interfere with what he started. Jobs understood that for the organization to become innovative, he had to stir them towards that direction (Hof, Burrows, Hamm, Brady & Rowley 2004: 198). Therefore, through transformation leadership style, Steve Jobs encouraged and supported various forms of innovations presented by employees (‘Apple Inc.: The Steve Jobs Effect’ 2012: 3). He encouraged employees to work on what they love. He made this rule having in mind the fact that innovation cannot happen without passion. Therefore, employees got the opportunity to work on their various ideas and present them for evaluation. This is what resulted to the many innovation products that followed shortly.
Another factor that contributed to Apple’s innovation is how it does not simply focus on customer needs, but focuses on providing for all these needs, alongside ensuring an improvement of the customer experience (Nussbaum, Berner & Brady 2005: 65). This is what happened with the iPhone and iPad products. Therefore, it also relies on creativity and not only customer feedback. This is a factor that has encouraged the company to use different ideas to create ways of promoting customer interactions. The customers experience is very important, as many people look for a product that will make things easier for them. Therefore, the company assumes that customers, at times, may not have a clear idea of what they want. However, by offering them a high quality product that improves their experience, they will definitely like it.
Apple also managed to become innovative through the business model it adapted after implementing iPhone and iPad products. This new App store business model enabled the company to create and deliver value to customers, thus increasing their level of satisfaction (Schlender & Chen 2000: 70). The App Store will not be beneficial to consumers without the iPhone. This is why Apple has designed a model that captures value beyond the product.
Conclusions and Recommendations
From this analysis conducted on Apple Inc., it is clear that innovation requires great effort. There are many factors that have promoted the innovativeness of Apple. First, the company was careful when choosing ideas to implement for new products. To improve the quality of the new product ideas, employees were encouraged to work together and appreciate one another’s inputs by creating an innovative organization culture ad structure. This was very important as it promoted various working conditions that enhance innovation. Second, the company has developed a strategy for two of its most prominent products; the iPhone and iPad. Instead of focusing its innovation on the development of new products for release, the company focuses on the innovation that will improve the already available products. This is in line with the time frame set by the company that within every 10 years a new product must be developed. Therefore, the company is still on schedule, despite the various claims that it is losing its innovativeness. These two products were implemented within the past 10 years, and the current innovations are supposed to improve their quality and hence the quality of user experience. Third, this company had a leader who knew exactly how to achieve innovation. Some of the tactics used by this leader have never been mentioned in any management model, however the result was amazing. Every leader, therefore, must learn to understand the ideas that will work for its organization, just as Steve Jobs did for Apple. For instance, he understood that innovation will need the employees to work together, a factor that was not present in the current culture. Therefore, he decided to show them that they were not competing against each other, but instead they needed one another. This was very important as the organization soon realized that they need to share ideas so as to come up with good and competitive new products.
The Microsoft/Nokia mobile phone, therefore can borrow a lot from Apple’s innovative strategy. First, the division needs to take extra caution when choosing the ideas of new products to implement. This is because not all ideas are of high quality. Therefore, it is important to incorporate this process with the evaluation process. This will enable the division to develop a habit of ranking ideas in terms of their importance and quality. Thus, only the best will be implemented. To improve the chances of ending up with top quality ideas, the division should also adapt a system of involving everyone in the organization, in the innovation process. Employees with different skills may be asked to work side by side so that they may have a better position of borrowing ideas from one another and coming with an eventual proposal that is of high quality.
Next, Microsoft/Nokia mobile phone division needs to adapt a reasonable product development strategy. This is important as it saves costs and time, and also maximizes revenue for the already available products. Thus, instead of always wanting to develop new types of mobile phones, the leaders need to encourage employees to think of ways and ideas that can b implemented for the already available mobile phones to make them more effective. Third, the company needs to ensure that this department has a leader who is effective in his job. The leaders should be encouraged to use a leadership style that will not limit employee innovation, but instead one that will support it.
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