Thursday, October 22, 2009

Apple-Innovation is the Key

David Koontz, Sumalee Mahaguna, Daniel Stiles
Chapman University


    Organizations have many distinguishing factors that make them successful in their field.  However, one factor that is apparent in great organizations is vision.  Organizational vision is necessary for an organization to be successful because creative energy begins with vision.  Creative tension is the driving force which organizations use to make their vision a reality.  “Visionary companies are premier institutions…in their industries, widely admired by their peers and having a long rack record of making a significant impact on the world around them” (Collins & Porras, 2004, p. 2).  According to Peter Senge author of the Fifth Discipline, vision is distinct from purpose.  Purpose is abstract, leading towards a general heading whereas vision is a specific heading that is concrete (Senge, 2006).  Apple is a visionary organization that has a clear vision and purpose that can be seen through their innovative products over the years.  Apple’s original vision was, “to make computers for the rest of us,” while their purpose is, “to make a contribution to the world by making tools for the mind that advance humankind” (Collins & Porras, 1991, p. 39).  A purpose without a vision prevents forward mobility in an organization.  Conversely, a vision without a purpose is also futile; they go hand in hand. 
    Besides having a vision and a purpose, organizations need to take further steps to implement their corporate vision and ensure that this plan of action is known and practiced throughout the organization.  John Kotter, a professor at Harvard Business School and author of the book Leading Change list eight important steps for change.  The eight steps for organization change parallels the steps needed to implement vision within and organization.  These steps include: establishing a sense of urgency, forming a powerful coalition, creating a vision, communicating the vision, empowering others to act on the vision, planning for and creating short term wins, consolidating improvements and still more change, and institutionalizing new approaches (Kotter, 2007).  Since the initial start of the organization, Apple has had both successes and failures in the implementation of their visions while striving to fulfill their purpose, creating tools for the mind to advance humankind.
Establishing a Sense of Urgency
    In Kotter’s model for transforming an organization, the top priority for establishing a powerful “sense of urgency”, Kotter notes that many companies start to change when someone or some group in the company sees the impending doom of a market position, or competitive opportunities.  This type of opportunity was seen by Steve Jobs when Apple was founded in 1976.  The cofounder of Apple Steve Wozniak said, “It never crossed my mind to sell computers. It was Steve who said, ‘let’s hold them up in the air and sell a few’” (Westley & Mintzburg, 1989, p. 25).  This insight resulted in the personal computer industry (Jackson, Mandeville, & Potts, 2002, p. 328).  The mainframe computer manufactures of the day did not see a need for a home computer.  Prior to Apple’s home built kit Apple I computer, the industry for personal computer did not exist (Jackson, Mandeville, & Potts, 2002, p. 326-327).
    During Apple’s thirty years of existence, Steve Jobs has established several changes because of competitive opportunities.  In the 1980s Macintosh development era, Jobs created a race to market.  The Lisa team had started work on their product years before the Macintosh team had started their project.  Steve Jobs made a bet that his team which featured the Macintosh would be the first to market.  Unfortunately, Jobs lost the bet; the Lisa did launch before the Macintosh.  However, Jobs was the true winner because the Macintosh won the longer race in the market place.
    In the decade (1987-1997) without Steve Jobs leadership, Apple continually lost market share and failed to execute a clear product vision under the direction of CEO Sculley (West, 2007, p. 7).  Apple culture was out of Sculley’s control.  Apple was able to regain their footing on the path to creating “insanely great” products (West & Mace, 2007, p. 6) upon the return of Steve Jobs in 1997.  Jobs reasserted his leadership in many areas and the first thing he did upon his return to Apple was announced a deal with Microsoft who invested $150 million in Apple stocks (Kawamoto, et al. 1997).  This move shocked the industry.
Forming a Powerful Guiding Coalition
    Apple’s internal coalition of executives and leaders are much harder to ascertain; the company is known for its secrecy.  Certainly, tight groups of people have formed around the various shared visions of products.  Early on, Jobs “organized Apple office as a circle of work areas around a central foyer.  There stood a grand piano and a BMW.  ‘I believe people get ideas from seeing great products,’” Jobs claimed (Wise, 1984, p 146; Westley, 1989, p. 20).  Apple may have been one of the first companies to use evangelism marketing.  This ability of the company to enroll and develop a very strong relationship with customers is another form of coalition building where Apple has excelled.  Customers become voluntary representatives of the company, advocating for the products and services, an early form of viral marketing (Apple Evangelist, 2008). 
    Apples success in creating a coalition of business partners has been questioned by many and recognized as a short coming by Jobs.  In a joint interview with Bill Gates, Jobs said, “Because Woz and I started the company based on doing the whole banana, we weren’t so good at partnering with people” (Gates, et al., 2007, p. 25).  Jobs had recognized that Microsoft’s success was partly contributed to the coalition they were able to foster.  Microsoft is Apple’s longest running successful partnership.  The two companies worked together in the early days of Applesoft BASIC built into the Apple II which was credited with making the computer successful (Linzmayedr, 1999, p. 15).  Notably, they have been rivals in the eyes of many; however, the Macintosh platform was a large portion of Microsoft’s revenue (Linzmayer, 1999, p. 239).
    A holy grail for the telecommunication industry for the last 20 years has been “convergence of communication and computing” (West, 2007, p. 10).  Apple CEO John Sculley was a big proponent of convergence and championed the Newton MessagePad, creating the niche market for the personal digital assistant (PDA) (West, 2007).  Although Steve Jobs terminated the Newton product upon his return to Apple in 1997, Apple was learning to partner with other companies.  In the last decade, Apple has worked successfully with the music industry on iTunes store and digital rights management for songs.  They have also established partnerships with telecommunication companies worldwide to market the iPhone in over 90 countries (Apple, 2009).  Apple has learned to join and build communities for its products that foster organizational mission.
Creating a Vision
    Apple was created on a vision that Steve Jobs, Steve Wozniak had in 1976 in a garage.  Their vision was to create computers that the average consumer could use without possessing the technical knowledge or skills.  Computers at the time were only limited to a certain market niche and the average homemaker or sales clerk were not a part of this niche.  Apple founders saw that their technology could bring enrichment into the lives of people.  These computers would be affordable yet different enough to stand apart from all the other computers sold on the market.  The idea was to have an “Apple computer on every desk” (Ditlea, 1981, p. 1).  This idea became the foundation for which their vision was built upon.  Their vision was extremely radical compared to the other computer companies at the time.  As radical as their ideas may seemed, their vision attracted many other computer enthusiast into their business and completely set them apart. 
    Having a vision is extremely important to the success of an organization because without it, there is nothing pulling the organization forward.  “Vision is a specific destination, a picture of a desired future” (Senge, 2006, p. 138).  The organization was founded on a vision and this vision propelled the founders to continually innovate computers.  Initially, their vision was quite simple, to make computers that everyone can use.  Their vision has evolved over the years to communicate an even greater need to change the world through their innovation.  This desire lead to establishing purpose for their existence and that is “to make a contribution to the world by making tools for the mind that advance humankind” (Collins & Porras, 1991, p. 39).  Apple felt that they had more to contribute to society than just computers.  They have expanded their technology into the music industry and the phone industry.  In a special review by Business Week, Steve Jobs made a statement saying, “We have just begun” (Business Week, 2000, p.1) as a prelude to his plans for the future.
Communicating the Vision
    Apple started life as a business, not as a company.  The gradual change from a bloated garage operation into something resembling a corporation was arduous and protracted (Moritz, 1984).  What was even more arduous than the transformation was the communication of the founder’s vision to the rest of the organization.  Originally, the idea of creating computers that a normal person would be able to use was the driving force behind the organization.  Apple employees had strong feelings about this because it set Apple apart from the other computer companies.  They were even successful in recruiting employees from various companies such as Intel, National Semiconductor, and Hewlett Packard (Moritz, 1984).  These employees readily resigned from their current position at these various organizations for Apple because they saw that Apple had something different to offer. 
    Initially, communicating the vision to other Apple employees was not hard because the organization was founded on a vision.  However, as more people flocked to Apple, the harder it became to communicate this vision.  The glue that once held the organization together began to fall apart as the company grew at an exponential rate and the vision was lost amongst the new faces that continually showed up on a daily basis.  Hiring from other organizations also brought discontinuity into the organization because employees from IBM or Hewlett Packard would bring culture from these various organizations that were not compatible with Apple.  Eventually, Apple’s success became their enemy and Apple found themselves operating similarly to organizations such as IBM.  This was something they tried extremely hard to avoid but with so many people working in the organization, bureaucracy was the only way to manage everyone.  “By 1980 the company was too large and too scattered for any one manager to cover on a daily stroll to take the air and test the waters.  So for most of the employees, the corporate hand was invisible” (Moritz, 1984, p. 257).  Apple tried limiting some of these discontinuity within the organization by establishing a committee whose main purpose was to “reduce the abstract into the concrete and codify all the conflicting impulses and intentions, the clashes between individual enterprise and teamwork, between autocracy and democracy, that make up a company” (Moritz, 1984, p. 257).  The committee set out to turn the company around which included the culture and the working environment.  The idea was to get the organization into an alignment in order to start working cohesively again.  One of the methods used to reach alignment was to reestablish their cultural values throughout the organization.
    There was no doubt that Apple employees were employed because of their passion for computers so Apple founders found that the best way to communicate this value was thought their products.  Apple started a new policy for their office procedures.  No more typewriters were to be purchased or leased and the existing ones were banished.  Apple believed that before they could communicate their vision to the public, they should fully believe in their products first by utilizing it in the workplace.  Shortly after Apple did away with typewriters, the term secretary was also abolished to reflect the varied responsibilities that could be accomplished by the personal computer.  The term area associate took the place of secretary.  Apple also started a program that gave Apple employees their own personal computer once they had demonstrated minimal efficiency.  They also offered classes for family members and large discounts to friends and family members.  Apple founders wanted the work place to be more than just a place to come to, do what you had to do, then go home.  He wanted the work place to be a place where people could innovate and have the freedom to do more rewarding and enriching tasks. 
Empowering Others to Act on the Vision
    The Macintosh group was formed to examine the feasibility of developing an extremely low cost computer for the public.  Steve Jobs took over the program and “was determined to build a computer that was in his words, ‘insanely great’” (Nonaka & Kenney, 1991, p. 75).  Early on, the Macintosh team did not have an exact idea of what the computer would be like and were not given a development schedule.  An engineer in the project said that, “Steve allowed us to crystallize the problem and solution simultaneously” (Nonaka & Kenney, 1991, p. 75).  Jobs and his predecessor as group leader “set out only basic principles; it was the personnel of the team who would concretize these.  “The Mac team was self organizing” (Nonaka & Kenney, 1991, p. 76), they were empowered to innovate.
    Another example of empowerment of their employees is the loan to own program.  Apple offered employees voluntary classes on their computer applications.  When an employee demonstrates proficiency in at least two applications, they can then participate in a loan to own program.  An Apple personal computer is given to the employee to use at home after one year, it is given to them free of charge.  The employee is thus better skilled at work, and it helps to promote the vision of computer for everybody.
Planning for and Creating Short Term Wins
    One of Apple’s significant achievements has been “the implementation of the office workplace of tomorrow” (Ditlea, 1981, p. 3).  Apple “inaugurated the workplace of the future by putting computers on most of its employee’s desks” (Ditlea, 1981, p. 1).  Mike Scott, Apple president at the time said, “Apple is an innovative company.  We must believe and lead in all areas.  If word processing is so neat then let’s all use it.  We believe the typewriter is obsolete.  Let’s prove it inside before we try and convince our customers” (Ditlea, 1981, p. 1).  This internal move increased employees effectiveness, improved job satisfaction, and led to very little turnover.  It freed managers from doing mundane and time consuming paperwork tasks.  This newly available time allowed them to coach employees leading to a much improve workplace atmosphere.
In this case, Apple was able to lay the foundation for the realization of a long term goal and vision of having the general public use their computers.  They were able to start it on a small scale with a short term goal for their own employees.  As a result, some of the lowest level employees were able to begin contributing on a higher level.  Steve Jobs stated, “Not only do our area associates (secretaries) have the freedom to do more rewarding, enriching tasks, they have a chance to get involved in solving problems that ultimately affect the success of the entire company” (Ditlea, 1981, p. 2).  Apple created a long term external winning situation for itself with consumers by creating a short term internal winning situation with their employees.
Consolidating Improvements and Producing Still More Change
    The computer industry has inherently understood and acted upon this aspect of Kotter’s model.  Much of the industries success and blinding pace of improvements are attributable to the ability of a company to make refinements to their products, building faster, and more powerful computers.  In building these superior computers, the company may change the nature of its core business.  Many companies of the past have failed to manage the transition from the mainframe era to the personal computer era (e.g. Burroughs, Control Data, Data General, Digital Equipment, Sperry-Univac, Wang) (Jackson, et al., 2002, p. 330).  The companies that have excelled at keeping pace with these changes are some of the fastest growing companies in history (e.g. Apple, Dell, Cisco, Microsoft, Oracle) (Jackson, 2002, p 330).  Many of the companies that have failed did not understand the shifting dynamics of the industry and clung to outdated paradigms.  “Paradigms are a source of both strength and weakness- strength in that they tend to reinforce successful patterns of behavior, and weakness for the same reason” (Jackson, et al., 2002, p. 331).
    Apple’s ability to change paradigms as an industry leader is obvious in the history of the short lived personal computer industry.  Apple created the personal computer industry; then they innovated the graphical user interface (GUI).  Adopted by the industry the GUI, innovated the desktop and file folder metaphor that has predominated the industry.  Apple is now innovating appliance model in computing products that integrate vertically from device to network to content.  The iPod and iPhone product lines are examples of Apple’s ability to envision a paradigm change, put that vision into action and achieve game changing results.  Kotter’s seventh step is evidenced by “using increased credibility to change systems, structures, and policies that don’t fit the vision” (Kotter, 2007, p. 7).  Apple has used its very successful music industry changing iPod product line with iTunes music store credibility to also change the smart phone application market, achieving 1.5 billion downloads in the first year of App Store operation (Elmer-DeWitt, 2009).  Apple has used the “core competencies that the company has acquired over its thirty year history, notably in product marketing and innovation” to redefine market segments (West, 2007, p. 24).  On the success of the iPod and iTunes music store, Apple launched its iPhone, creating the most successful convergence device.  The iPhone has proven that Apple can both consolidate their core competencies while continuing to innovate. 
Institutionalizing New Approaches
    In Kotter’s eight step model, Apple’s ability to articulate the connections between the behaviors that have lead to corporate success are apparent in one word, innovation (Kotter, 2007).  Kotter is concerned that the corporate vision be institutionalized as opposed to being carried by a leader.  Apple’s vision is to create products that enhance people’s lives and make the use of computers in all their forms easy, intuitive, with a seamless coherent experience.  The recent success of the iPod in the music player market space is an example of the execution of this vision.  Apple recognized that the music player market was a disjointed experience for the consumer.  They built a music player device that used Apple’s core competencies in computer, networking, product design and user experience.  They partnered with the music industry creating coalitions that learned a new method for product delivery, drastically changing the music industry.  This is an example of one product line that fulfills the vision of Apple’s purpose may appear to be a fluke.  However, each of these Apple products were innovations that changed the industry: Apple I computer, Apple II computer, Macintosh, iMac, iPod, and most recently, the iPhone.  Apple has proven that it is capable of changing the institutions that it deals with externally while adapting to the required business processes and organizational change that paradigm shifts require.
    Over the past thirty years, Apple has met with many successes and failures.  They have proven time after time that they are able to overcome challenges and rise above any disparities that may come their way.  Apple was built on a vision, yet vision alone is not enough for organizational growth or success.  An organization needs to be able to communicate their vision throughout the company and they need to empower their employees to act on this vision in order to make it a reality.  In order for organizations to achieve their vision, they have to be receptive to change and provide an environment that promotes change; only then can an organization grow.  John Kotter’s eight step model for change outlines the way Apple implements their vision throughout the organization. 
    When Apple saw the opportunity in the market place for personal computers, they established a sense of urgency.  Initially, Apple did not have strong coalition in the organization but soon learned that in order to survive, they needed to form a coalition and of the biggest step they took was by partnering with Microsoft.  Creating a vision is the third step in the model but Apple already had a vision.  Communicating this vision was a harder task for the organization because it was growing so fast, but in the end, they were able to do this by redefining values.  Apple empowered their employees by allowing them to partake in decisions that could ultimately affect the success of the company.  Apple also empowered their employees to innovate and do more fulfilling tasks by providing them with their own computers.  This was also a big step towards creating short term wins.  Before Apple could sell computers that were supposed to improve lifestyles, they had to believe it themselves so they provided their employees with free computers and classes.  Apple is continually consolidating improvements and implementing more change because the market is always changing.  An organization that wants to survive needs to be able to keep up with these changes and they need to keep making improvements.  Institutionalizing new approaches is the last step in Kotter’s model and Apple is continually experimenting with new approaches.  They have mastered the personal computer industry only to move into the music industry and then to communications.  Apple’s ability to implement their vision, innovate, and adapt to change makes them a true visionary organization.    

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See Also:


Why Tim Cook is Steve Ballmer and Why He Still Has His Job at Apple by Steve Blank June, 2017.
"What happens to a company when a visionary CEO is gone? Most often innovation dies and the company coasts for years on momentum and its brand. Rarely does it regain its former glory."


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