The Role and Influence of Technological Innovation in Apple Development - Coursework Example

?Innovation at Apple Contents Sr. # Topic Page Introduction 2 2. Theoretical Perspectives and Models 3 2 Theory of the firm and entrepreneurial survival 3 2.2. Theory of disruptive innovation 5 2.3. Diffusion of innovation theory 6 2.4. Technology Acceptance Model 7 2.5. Technology Acceptance Life Cycle Model 9 3. Tensions and conflicts of innovation 10 4. Technology management 11 4. Conclusion 12 References 13 List of figures 1. Technology Acceptance Model 8 2. The diffusion of innovation and technology adoption life cycle model 9 “A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets” Steve Jobs 1. Introduction: Several companies today are caught up in a relentless pursuit of innovation and intentional development of novel ideas, products and services in a bid to capture the imagination of their target consumers. The role of innovation in organizational development and its contribution in organizational success have been amply substantiated in literature, over the years. Organizational ambidexterity has emerged as one of the most influential concepts in recent times whereby highly creative and innovation driven organizations have proven their might in the market by not only sustaining their competitive advantage over their rival firms, but by leading the industry as well. Apple Inc. is one such example which has managed to successfully evade the competition by constant innovation and research and capturing a relatively larger market share through sheer creativity. The above quote aptly mirrors the collective sentiment at Apple Inc. This essay aims to discuss, analyze, and examine the case of Apple Inc., through various theoretical perspectives and models in a bid to explain the role and influence of technological innovation in organizational development. 2. Theoretical perspectives and Models: 2.1. Theory of the firm and entrepreneurial survival The theory of firm based on neo-classical economics which deals with the survival of the new entrant in the market states that the key aim of firms as new entrants is profit maximization. Organizations in their initial phase strive to survive in the market by designing their policies in accordance with the present market environment and adapt to their surrounding environment (Hart and Christensen, 2002). This theory helps in assessing and evaluating the various aspects of firm behaviour with regard to technological change and the resultant scope of the firm to survive in a new market (Loasby, 1976; Casson, 2005). Apple was founded by Steve Jobs and Ronald Wayne on April 1, 1976 which was mainly focused on designing a personal computer that was popularly known and sold as Apple I. After the incorporation of Apple as a company in the year 1977 the company grew and shifted its strategy to innovation and creativity as the key drivers to sustain the market competition. This strategy helped Apple Inc in introducing highly innovative products in the market based on latest state-of-the-art technologies that helped them differentiate their products from that of their rivals. (Innovation at Apple, p. 1). The theories of entrepreneurship developed over the years indicate judgemental decision making as a key aspect of entrepreneurial behaviour (Shane, 2003). This theory entails that entrepreneurs at times may differ greatly in terms of their strategies by displaying attitudes that exhibit a high degree of optimism which in turn is based on the critical information available at their disposal as well as their conviction to deliver positive outcomes (Casson, 2005). Steve Jobs inspired the culture of innovation at Apple Inc. and created a highly favourable working environment whereby employees were constantly encouraged to come up with innovative and creative ideas. The key focus of the management was to hire people who displayed high level of motivation and commitment towards the company (Innovation at Apple, p. 4). Various growth theories have indicated the influence of human capital and research and development on growth of new firms in the market whereby entrepreneurs are perceived to succeed in the industry through the application of knowledge, innovative ideas, and technological innovation that are not yet commercialized by their rivals (Henreckson, 2005; Acs et al., 2005; Audretsch, Keilbach, and Lehmann, 2006). In order to ensure market leadership and develop products that were innovative and not yet commercialized by their rivals Apple followed a strict work regime whereby the employees worked on strict deadlines, followed clear-cut directives under close supervision by their leaders, and worked round the clock. They were hardly left with any time to socialize with their families and relatives even during festive seasons. Such level of dedication ensured that Apple's products were ahead of its time and beat its competitors by an impressive margin (Innovation at Apple, p. 4). 2.2. Theory of disruptive innovation: The theory of disruptive innovation was put forward by Christensen (1997) which essentially dealt with the introduction and influence of disruptive technologies. According to this theory different types of innovation have different impacts on the markets. This theory mainly dealt with technological innovations, however various variations of this theory focusing on different types of technological innovations were developed subsequently by various researchers over the years (Henderson and Clark, 1990) such as business model innovation (Markides, 1998; Charitou, 2001; Gilbert and Bower, 2002; Hamel, 2000); radical product innovations (Markides and Geroski, 2005; Klepper and Simons, 2000) etc. According to Hang and Kohlbacher (2008) disruptive technological innovations can be broadly categorized into low end disruption and market disruption whereby low end disruption refer to the technological innovations which offer value-for-money and cost-effectiveness to the end consumers while market disruptions refer to the introduction of a revolutionary product idea which was practically non-existent previously in the market. In July 1999 Apple Inc introduced a new product - the Apple iBook for the low end portable market. The introduction of iPod - a portable music player, on October 23, 2001 and the subsequent launch of iTunes – an online portal that enabled legal download of MP3 files from the internet, brought about revolutionary changes in the industry putting Apple at the top of the competitive corporate ladder. This is evident from the drastic rise in sales of Apple product between the years 2003 and 2008 which indicated a more than triple sales amounting to an approximate US$ 24 billion (Innovation at Apple, p. 3). The user friendly approach of technological innovations by Apple Inc appealed greatly to the consumers who willingly lapped up the novel and highly creative products and services, practically pushing the rival firms to obscurity. The introduction of Apple's iPod and iTunes can both be described as low end as well as high end disruptive technologies simultaneously since both these innovations not only led to a drastic fall in prices of music, otherwise spent on buying CDs and MP3 players, but also changed the rules of the game, thus disrupting the market through sheer innovation and creativity (Lasser et al., 2006). 2.3. Diffusion of innovation theory: The theory of diffusion of innovation refers to the rate and extent of acceptance / adaption of new technological innovation by the market. It describes the process by which new technological development is communicated to the target consumers through various channels of communication (Rogers, 1983). Innovation diffusion theories deal with the manner in which new technological developments are communicated and assimilated within the social systems over a period of time leading to the adoption of such innovations by the participants of this social system (Trott, 2008). Long before Apple rose to popularity as the world's most innovative enterprise, it had already achieved impressive technological breakthroughs via development of novel products and ideas including the graphical user interface, networking and wireless LAN, built-in-sound, the mouse, FireWire, colour graphics etc to name a few (De Wit and Meyer, 2010). The fundamental approach of Apple's innovation-based corporate strategies was the diffusion of innovation across the value chain facilitated by the introduction of a series of low and high end products. According to Jobs: "Apple's DNA has always been to try to democratize technology. If you make something great then everybody would want to use it." (De Wit and Meyer, 2010: 685) 2.4. Technology Acceptance Model: The TAM (Technological Acceptance Model) which was developed by Davis (1985) describes the process by which users accept or reject the new technological developments and the underlying motivations behind such acceptance or rejection. Fig.1: Technology Acceptance Model Source: Davis, 1985: 10 Davis (1985) stated that the motivation for adoption and acceptance of new technological developments are dependent on three key factors namely; perceived ease of use, perceived usefulness, and attitude towards using. The concept of 'Perceived ease of use' refers to the degree of need felt by the user regarding the new product in question (Davis, 1989). Research conducted over the years indicated that the perceived ease of use was found to be relatively higher in consumer electronics market as is evident from the sharp rise in sales of highly innovative technological products introduced by market leaders Apple Inc (iPhone, iPad). The concepts introduced by Apple Inc were found to be highly revolutionary in nature which was perceived by consumers as not only easy to use but also highly useful (Cobb, 2002 qtd. in Hiraoka, 2009). The key focus of Apple Inc has always been consumer-centric. All its efforts were centered on developing innovative easy to use 'cool' products specifically targeted towards the youth consumer segment. This strategy helped the firm immensely in beating almost all its industry rivals in competition, catapulting it to become the world's most valuable technology companies in terms of market capitalization (Innovation at Apple, p. 3). 2.5. Technology Acceptance Life Cycle Model: The TALC Model helps in understanding the level, extent, and time-frame of acceptance of new technological developments and introduction of high-end products in the market. This model is concerned with studying the behaviour of consumers and their reactions towards the new technological development / product and their attitudes towards changing their current trends in favour of the new product. Fig.2 : The diffusion of innovation and technology adoption life cycle model Source: Rafinejad, 2007: 88 Certain products / markets are highly apprehensive of change and are referred to as discontinuous innovations as opposed to products which are referred to as 'continuous innovations'. Continuous innovations refer to products which are not revolutionary but are a minor upgrade over the existing technologies and do not require any significant change in consumer behaviour for acceptance. According to the TALC model developed by Rogers, new technology can be categorised into five distinct phases (as shown in the figure 2 above) i.e. lead users, early adopters, early majority, late majority, and laggards (Rafinejad, 2007). The product life cycle at Apple was focused on the traditional management philosophy of product diversification whereby the development support for a previous / old model or product was stopped as soon as a newer product / version was launched. For instance, Apple immediately discontinued the production support for iPod Mini after iPod Nano was introduced (Innovation at Apple, p. 4). This strategy helped Apple in focusing completely on the development of the new product and stay ahead of its competition at all times. 3. Tensions and conflicts of innovation: Organizational innovations are almost invariably accompanied by high level of debates, contradictions, conflicts, strategic dilemmas and tensions (Lewis et al., 2002; Miron et al., 2004; Berner and Tushman, 2003; Anderson and Gasteiger, 2007). This is mainly because the process of technological innovations is almost always concerned with managing and coordinating different sets of activities, generation ideas, brainstorming, which eventually lead to conflicts (Shalley, Zhou, and Oldham, 2004). Product or process innovation is a long-drawn process which takes place over a prolonged period of time. Hence it is highly likely that the various departments concerned often experience frequent interruptions due to heated debates and internal conflicts. After Steve Jobs handed over the reins of the company to Timothy Cook, on Aug 24, 2011; stakeholders of the company were faced with the greatest concern - that of sustaining the company's competitive and winning streak post Jobs' resignation. Jobs' resignation brought about wide spread debates and discussions with regard to the future of the company and the response of the consumers who believed in the brilliance of the previous CEO. This was evident from the lukewarm response Cook's first big product launch of iPhone 4S (Innovation at Apple, p. 9). 4. Technology Management High-tech markets necessitate the application of effective and proactive measures directed at protecting the secrecy of product innovation processes. Technological foresight in contemporary times is the key to market leadership hence sustaining technological leads is of crucial significance for the management. (Pavitt, 1999; White and Bruton, 2010). Organizations today are are required to implement stringent steps to ensure secrecy of product and process innovation in order to ensure technological superiority in the market. Apple Inc., adopts a highly strict regime whereby the designers are restricted from sharing or disclosing of any ideas or discussions carried out in company meetings. Furthermore the meeting site and rooms are checked thoroughly for electronic listening devices in order to prevent leaks. Work spaces are constantly monitored using security cameras and employees working on critical projects are required to pass through multiple levels of security checks (Innovation at Apple, p. 6). 5. Conclusion Apple has always been a consumer centric organization which believes in leading its customers rather than following them. Such strategy has helped Apple in rapidly rising to the top of the industry and become a market leader in the field of technology and innovation. In the course of such innovations and the pursuit of the elusive path to industry leadership, Apple Inc has faced several conflicts and tensions both within and beyond its organizational environment. However the unprecedented success enjoyed by Apple today indicates the excellent leadership coupled with a highly consumer centric innovation strategy, that has helped the organization in breaking boundaries and becoming the undisputed leader of technological innovations within the consumer electronics segment. 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