Innovation and Change Management - Apple Inc - Case Study Example

Innovation and change management

Apple Inc. appears to be widely considered the world most innovative company. Suffice it to say that Apple is a leader in its industry, and often a lot of mainstream trends are introduced by it. This company has managed to build up one of the most recognizable brands in a history and its worldwide popularity from a scratch. Currently, there is seemingly no one unfamiliar with such brand products as iPhone, iPod, Mac, etc. Apple's strategy, in a nutshell, can be formulated as to supply its customers with easy-to-use products with an emphasis on aesthetic attractiveness and several key features (Adams, 2015).

Briefly mentioning Apple's history, the first Apple computer was developed by three engineers: Jobs, Wayne, and Wozniak. Since then, it is possible to speak about the revolutionary products’ introductions of Apple. As an example it can be said that iPod was a breakthrough in the music industry, outperforming Sony Walkman series. On the contrary to the pure innovativeness inherent for Apple during the settlement, the subsequent products were launched into the markets, which were already taken by major companies. In this respect, Apple owes its success to the strategy called "disruptive innovation". In a nutshell, this concept implies for a company to enter the market that is already taken by major producers who are aimed at the most profitable and beneficial customers, and then to identify the minority of the customers whose needs were overlooked by the majors and to satisfy them. Although usually such companies provide their products and services at the lower prices until they catch up with competitors, Apple has chosen a bit different modification of this strategy known as a "high-end disruption". This innovative policy assumes that company should outperform its competitors’ products in their most vital aspects. The main distinction is that Apple oriented on the most profitable customers in the market, those who are the least price-sensitive. As this strategy has proven to be efficient, every new product developed by Apple has launched accordingly, begging from IPod, as it was already mentioned, then IPhone, which has revolutionized the smartphone industry, and finishing with IPad and IWatch.

In terms of the organizational structure, it must be said that Steve Jobs in the development of this system has largely oriented on the possibilities of implementation of his truly innovative ideas. To this end, the typical hierarchy organizational structure was established. Steve Jobs as a manager is broadly recognized by his micro-management policy. As he had a broad vision of the company's future, he strived to control every little aspect of the process that had at least a slight significance for him. Although some experts criticize this system as too much autoreactive, it allowed Apple to become the worldwide leader (Lashinsky, 2011).

After the death of Steve Jobs, some amendments to the organizational structure were introduced by the new CEO Tim Cook. Though a lot of critics were extremely dubious about the Apple's future without Jobs, Tim Cook managed to double company's share price. In this respect, it is necessary to consider the changes that he has implemented to the company' management (Shaughnessy, 2013).

Firstly, he provided more freedom for the vice presidents of the company, which was almost absent under Jobs. Thus, the company’s organizational structure became less stiff, but still has a spoke-and-wheel hierarchy where Tim Cook was at the center. (Meyer, 2015) Such alternation helped to streamline the collaboration among the companies divisions, which was an inherent problem of Apple.

Secondly, product-based grouping is another important feature of Apple organizational structure. Each product within Apple portfolio such as iPad, iPhone, iPad, Apple TV and iWatch is a result of a collaboration of product-based groups (Dudovskiy, 2016).

As the company works in several related markets it also has some features of a functional management system. In this respect, there are a number of senior vice presidents reporting directly to Tim Cook upon the matters like Marketing, Sales, Production, etc. This policy provides for better specialization that leads to the increasing number of satisfied customers.

One cannot be omit to say that Apple is famous for its branding strategy. According to the Bowman Strategy Clock, Apple is a clear example of the differentiation strategy. This means that Apple produced products somehow similar to the others, but managed to dwell on its superiority and differential advantages. If the firm is operating under the differentiation policy, its main target is to make the perceived value of its product higher. In order to achieve this, it is necessary to communicate to the customers the unique characteristics of the product. For instance, the simplicity of use of the Apple products allows the company to provide its products to a more wide range of customers than its competitors. That not only broads its target audience extensively, but also increases the fidelity of already established consumers.

Another strategy that Apple has managed to perform was Lock In strategy. Strategic Lock In means the position of the company when it has been established in its market so significantly, that it will be somehow problematic for the customers to switch to another brand. Gerry Johnson points out two major ways of reaching such a position in the market. First one states that it is necessary to create a product, which will be a standard for the whole industry. Such a product must be well-branded, quite known and used among the majority of customers. Then it will be problematic for the people and institutions to move to another product because of additional cost or efforts required for that. The second way is to control complementary goods or services. The best example here will be razors and blades. It is obvious that if someone buys a razor, this person will require blades for that razor to function. Everyone knows that all Apple devices require specific cables to charge them, which clearly represents such a strategy. Nevertheless, this policy is risky because it is possible that using such methods Apple may distract loyal customers. That is why it is necessary firstly to establish in the market and only then make attempts to lock in there.

However, in spite of everything expressed above, Apple still faces huge challenges in terms of innovations. Currently, almost every Apple's competitor seeks to introduce something innovative in order to increase its market share. The vast majority of them determine themselves to increase productivity. Indeed, it will be fair to say that a lot of breakthroughs are about to come and it is almost impossible for a single company to keep abreast of a time in all niches. For instance, such technologies as holographic projecting, augmented reality, block phones, bending screens and many other developments are about to become a reality. In terms of Apple, it either has to develop everything mentioned above alone or provide for some alternatives in order to hold the fidelity of its customers (Baker, 2016).

Although it will be hard for Apple to regain its popularity if any of the developing innovations becomes mainstream, it can be justly said that the company remains in constant evolution itself (Brodo, 2015). In this very respect, one needs to understand what principles underline the whole innovative processes in Apple. In the point of fact, this company makes an assumption that proves to be correct so far, that customers do not like to have a very wide choice. They just want something simple in usage, but still productive, preferably better than the others. So it can be concluded that the task of the innovator turns out not just to keep abreast of the times and to provide customers with all the innovations available in the market, but to choose the minority of them, those that the innovator believes to be the most important for the customers (Gustin, 2012). As Barry Schwartz has explained, too many choices confuse customers, and that can make them unhappy. He cites research showing that, given too much choice, “consumers are less likely to buy anything at all, and if they do buy, they are less satisfied with their selections.” (Davies, 2012) Moreover, it the Apple case, they have managed not only to anticipate those most prominent innovations but to create a solid demand for the innovations, they invested in (Yarow, 2012).

Doing little and more seems to be a good strategy when it comes to R&D. Apple’s success comes despite spending much less than its peers on research and development. It spends about 3% of revenues; other technology titans such as Microsoft, Google, and Nokia spend multiples of this, in some cases, several times as much. Apple has an outstanding R&D productivity as an outlier back in the iPod era. In 2007, prior to the original iPhone’s launch, The Economist underscored it again. Of course, we know that, as research by Strategy& back in 2005 demonstrated, “Money doesn’t buy results.” Its analysis found “no relationship between R&D spending and … measures of … corporate success, such as growth … profitability, and shareholder return.” The key to realizing returns is to focus on the most promising projects (Davies, 2012).

As one of those projects can be mention voice control and responding system Siri. It is broadly considered to be the best among competitors’ offerings. One of the most trending technologies is the face swap program, which is only available on IPhones, that immensely contributes to the growth of their popularity among youngsters. All things considered to sum up, Apple has a strong organizational and management structure to provide innovations, although its hierarchical system may be not as flexible as the market demands it to be.

On the contrary to everything expressed above, a lot of critics say that apple has grown unable to introduce any innovations (Robertson, 2012). According to them, Apple only copies the innovations of its competitors and after adding some minor augmentations market them as breakthroughs (Richards, 2016). This can be due to that the company is at the top of the industry in the terms of revenues. However, the problem with that logic is the fact that the tech world is not static. Everyone, every company is continuously trying to gain an edge over competitors. In fact, as Engadget’s Aaron Souppouris puts it: When did Apple become the boring one? Among the three giants in the US – Apple, Microsoft, and Google – Apple is now the least innovative. Microsoft has its Hololens, and Google has its self-driving cars and its internet balloons. Apple… has none of these moonshot projects. (Wang, 2015)

It will be fair to mention that currently Apple Inc. has amassed more 130 billion dollars. A lot of experts accuse Tim Cook of his unwillingness to spend this money on innovation. It is of the greatest importance to invest in such researches, because all that money might be wasted in attempt to rescue the company's position, in case its competitors would develop some innovations like holograms or bending displays so that Apple may appear to be unable to implement that technology in its products. For that reason, a new innovation strategy has to be implemented. First of all, it is necessary to engage the best people into the most progressive research studies. Apple has quite enough resources to set up new divisions responsible for the development technologies that might be read in 5-20 years. Such expenditures are essentially indispensable for maintaining company’s position over time.

In order to carry such a change into the company, Kotter Management Model may turn out to the most applicable. The most recent Kotter Model assumes that company's organizational structure must consist of a hierarchical system, that should keep it running stable and profitable and of the network system that must ensure that the company keeps evolving and adjusting to the new realms of the market.

To begin with, it is necessary to determine the informal leaders among Apple employees. Then it is necessary to explain them, how such money-saving policy harms the company's position in the long term. To be more persuasive it is possible to show to the prospect team members company’s income statement. It is important not to be too obsessive because then people will stop perceiving the information. If it is fulfilled properly, then the leaders, who are now inspired with the idea, will spread this word to their informal subordinates and the ground to your network will be laid.

If the first step was performed properly, the second one would not be a problem. With the environment that is friendly to this particular change it necessary to bring them altogether involved in the amendment process. Those should be a flexible people with a variety of skills because everything and everyone may make some difference. Another important thing about forming a coalition is that it is necessary to appeal to the emotions of the people because they can believe that the change is needed but not be caring about it at all. That is why each person in the coalition must be highly motivated. According to Kotter, 75% of managers should support the initiative for the goal to be attained. That means that not only informal leaders should be engaged, but also the majority of executives, especially those of the higher levels.

Then there is a vision that must be determined. Such vision can play the significantly important role in the process of the alternations. It may accurately emphasize that Apple is not simply the industry leader, but the company which is going to revolutionize the technology market again and again. Consequently, much more research studies and investments have to be undertaken for Apple to remain in the constant process of seeking the possibilities to make significant improvements, but not the minor ones.

Conclusion

In conclusion, it is necessary to say that Kotter Change Management Model was designed to ensure really fast and efficient changes in the big companies, which cannot be amended by the simple hierarchy management. That is why this model is widely recognized among managers of the world's top companies and is still being augmented and complemented. If implemented, such amended innovative strategy may assert company's position in the long run as the leader of the industry. However it will require a vast amount of resources, with the possibility of even negative outcomes such as fortune wasting, it of the greatest importance for Apple to stay the most innovative company, otherwise new inventors might take its place.