Planning and Operational Processes of Apple Company - Essay Example

Planning and Operational Processes of Apple Company Introduction Apple Computers and Steven Jobs will remain as indelible icons of innovation and free enterprise throughout the foreseeable future. Though IBM has a longer and more consistent record, and though Microsoft has grown in to a larger corporation, both have leveraged the brilliance of Jobs and the resources of Apple Computers during their evolution. The story is not yet over in 2006, and the world is likely to see further innovation from both the company and its founder. The history of Apple Computers makes for frustrating reading by a student of Strategy. Just as we are resigned to a conclusion of failure, the sphinx rises again with incredible dynamism and resurgence. Yet, as we look forward to a happy ending, earnings taper off and it appears as though the saga may be over after all. However, a feeling of quiet confidence gradually takes over the observer, as both Apple Computers and Jobs negotiate through each downturn with aplomb. Must a company’s journey through time be so turbulent? This document tries to draw lessons from the Apple experience and to suggest stable ways for commercial firms to manage their planning and operational processes. Change Management at Apple Computers There are two over reaching factors that seem to have influenced strategic change at Apple Computers. The first is the frenetic pace of technological change. No other industrial sector has witnessed the continuous and rapid improvements in processor speeds, storage capacity, transmission options and software development. This has been a source of strength and an opportunity for the entrepreneurial culture of Apple Computers, but it has proved to be a handful for people such as Sculley who labored so hard to bring a semblance of order and discipline to the highly individualistic style of functioning to which die-hard company employees have become accustomed. A second factor which has affected strategy in this company has been the tumultuous and disorderly change of guard at the top. There is no precedent for such a striking founder to leave his creation while remaining in the business. Even more unusual has been the return of Jobs as a mere consultant to the company which he once owned. These moves, and indeed the manner of Sculley’s departure have posed special challenges for the company. Strategy Review Systematic and regular environmental scanning seems to be a lacuna in the planning process at Apple Computers. Every enterprise needs a deep understanding of the values that its products and services deliver in an environment of global competitiveness (Ohmae, 1991, 61-74). The success of Jobs to see the opportunity in the graphic user interface which Xerox apparently missed, did not repeat itself when the company invested resources in Newton. It leads one to suspect that iPod may have come about by chance more than by a designed set of steps to understand dynamic customer needs. Environment scanning is an important and integral part of formulating strategy. We do not know if Apple Computers made the effort to reach out across the world, as for example IBM has always done, to weave market realism and new trends in consumer needs in to they way it thinks and works as an organization. The genius of Jobs could have been a drag for the company he founded, for he is clearly a person who thinks way ahead of his time. The story of Apple’s strategy could be seen in the light of essential differences between a University Research Department and the function in a pharmaceutical concern which creates solely for profit. Jobs seems to have erred in mixing business and more visionary roles in a manner that continued to haunt the company long after he had left. We do know from the case that Sculley tried hard to rectify matters, but perhaps his ‘sugary water’ background prevented him from managing the environmental scanning process with the technological orientation it deserved. This is reflected in IBM and even prime rival Microsoft making good business use of some key Apple innovations! Overall, every business needs sound and impartial technical evaluation by experts of the true nature of its products and services, and their continuing relevance in competitive terms. Apparent overlooking of the environmental scanning process must have responsible in large measure for a related lapse: Apple has flitted between publishing, the world of business and higher education in terms of focus customers and new products. It seems that the company does not have the resources to service such diverse market segments, and its fortunes have fluctuated as a result. It is known that Jobs does not have much time for Marketing as a function, but segmentation and targeting are vital competencies for such a dynamic market as we find in Information Technology (Payne, 2002, 94-121). IBM made similar errors, but has quickly separated its laptop business from its entrenched position in mainframes and servers. Apple has tried to be ‘all things to all people’, diluting its competitive edge and sense of focus. The initial breakthroughs Jobs achieved with personal computers, and indeed of late with the iPod, have not worked to the company’s advantage in terms of remaining focused on its prime customers. No company can afford to depend on technological innovation alone for its growth and profits. Services marketing has an important role to play for extended product life-cycles. Though Apple has made it possible to print Adobe documents directly, it has failed to respond to the multi-media opportunity on the Internet, which does away with many hard copy requirements altogether. Apple Computers, apart from the deleterious effects of ignoring fundamental principles of marketing, has also erred in failing to separate the functions of visionary leadership and functional management (Hammond, 1994, 97-154). The manner of Job’s departure when Sculley took over, and his establishment of a separate entity in the same sector, hurt the collective psyche of Apple Computers as a company. Jobs should have been counseled to play a leadership role while visibly supporting Sculley in his efforts to bring a semblance of order in to the way Apple Computers functioned. The company would have fared as well as Microsoft, if Jobs managed the transition as well as Bill Gates has done. Research and business development are parts of every enterprise. Jobs should not have tried to convey the impression that entrepreneurial freedom cannot coexist with commercial discipline and with industrial methods. Successful companies must learn to live with the dichotomies between inspiration and method, for both are essential ingredients for success. Management transition has always been traumatic in Apple Computers, resembling the change of guard from one political guard to another, rather than an orderly evolution which is the hallmark of professionalism in the business world. Major strategic changes should be managed in companies, so that the past is not seen in negative light. Knowledge industries will always have a large number of development projects which are not commercial successes. A Newton should not be allowed to make employees feel threatened or that they have failed. It also means that an iPod should make people overly ecstatic. There has to be a system of monitoring the market and the competition, of making deliberate trade-offs between forecast alternatives and finally, of ensuring that actual results cause no irreparable harm to the company’s basic viability. Apple Computers has been petulant in this respect, going about changes in strategy in an almost destructive manner. It is not a matter beyond repair: Apple Computers should adopt a more structured and participative strategic planning process. A related matter for Apple Computers would be to improve its knowledge management capabilities (Nonaka and Takeuchi, 1995, 225). Though the Japanese economy has been stagnant since the last decade of the previous century, post World War II Japan has seen consistent track records of managing large numbers of knowledge workers. Apple Computers may benefit from processes used by teams of highly specialized and capable Japanese engineers in sustaining innovation and keeping it relevant in business terms as well. Recent achievements in hybrid engines for automobiles are examples of how the Japanese have been able to focus diverse technologies towards a unitary market goal. Creativity in Apple has been brilliant, but it has been sporadic and almost at random. The succession of Macintosh models has not been as progressive as the upgrades of operating systems from Microsoft or the processor speeds of Intel. The impatience of Jobs and his tendency to get bored very quickly with his own innovations reflects in the business performance of the company he founded. A solution could lie in building a strong Divisional structure for the company, with investment center responsibilities, and professional management at top levels which do not stifle the technical brilliance of the engineers. Pharmaceutical companies have evolved working structures for this kind of sustained progress in various therapeutic sectors, without weakening losing their traditional lines of business. Apple Computers has to find structures which will extend its leadership in areas such as publishing, whilst making dramatic breakthroughs in new areas such as Internet music. It has also to make plans for a regular schedule of rapid new product launches to keep pace with the competition. Jobs and employee engineers should have big roles in such plans, but they must be stated in accounting terms. They should also be part of the main Apple Computers structure and no one should work for other entities and interests-least of all, the founder! Apple Computers must perform and act in a manner befitting its corporate stature. Conclusions Everything in the foregoing sections of this document is based on traditional concepts of Business Management. Each idea is built around a citation from standard thoughts on the matter of strategy. Yet history may judge Jobs by different yardsticks. There can be no dispute that the company is the creation of Jobs. He should therefore have freedom to shape its evolution. Perhaps growth, profits and ownership do not have conventional values for him. He may see the relatively chaotic progression of this company as a measure of its ethos. Apple Computers may not subscribe to the widely held belief that each financial reporting period has to be better than the past. The scrip price may not matter at all, because of which Jobs is free to decide on his course of actions without accountability to investors. He may be the only stakeholder of consequence. The jerky and uneven track record of the company’s financial performance may fit well with his sartorial style and work habits. He may subscribe to a stochastic way of working with little concern for tradition or conventions held dear by others. We may view Apple Computers as an exercise in setting objectives and appraising business performance in entirely new ways (Hamel and Prahlad, 1994, 267-296). It is not as though the company has lost money or its worth, or failed to meet any agreed obligations. The social implications, on the other hand, of the products and services of Apple Computers, have been enormous. The company, unlike its competitors, has never been accused of anti-trust and competition activity. It has never raised major concerns about intellectual rights, and has always displayed a positive outlook with becoming humility. It has certainly taken a lead in environmental conservation and other social responsibilities which arise out of its business activities. We may conclude by noting that strategy review is no substitute for setting business goals. The latter remains a prime prerogative of the controlling stakeholder of the company. References Hamel, G and Prahalad, CK, Competing for the Future, 1994, Harvard Business School Press Hammond, TH, ‘Structure, Strategy and Agenda of the Firm’, Fundamental Issues in Strategy, edited by Rumelt, RP, Schendel, DE and Teece, DJ, 1994, Harvard Business School Press Nonaka I and Takeuchi, The Knowledge Creating Company, 1995, Oxford University Press Ohmae, K, ‘Getting Back to Strategy’, Seeking and Securing Competitive Advantage, edited by Montgomery, CA and Porter, ME, 1991, Harvard Business School Press Payne, A, The Essence of Services Marketing, 2002, Prentice-Hall Read More