See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/340607402

LEADERSHIP AND INNOVATION AT APPLE INC

Research · April 2020

DOI: 10.13140/RG.2.2.12573.87526

CITATIONS READS
3 33,651

1 author:

Pranay Patel
University of Waterloo
8 PUBLICATIONS 3 CITATIONS

SEE PROFILE

All content following this page was uploaded by Pranay Patel on 13 April 2020.

The user has requested enhancement of the downloaded file.

 CASE STUDY III
LEADERSHIP AND INNOVATION AT APPLE INC

Pranay Patel

Dr. Muhammad Umair Shah (Lecturer) | Abbas Attarwala (TA)

MSCI 606 - Foundations of Senior Management
 P age |1

Heights of Success

Apple is arguably one of the most innovative and transformative companies in the world. Under
the leadership of Steve Jobs, the market capitalization of Apple Inc. saw an extraordinary surge from
$2bn to an astonishing $741 billion, an increase of ~ 37,000% in less than two decades (Heracleous &
Papachroni, 2016). By 2015, the company topped almost every KPI measure, including sales, profits, and
assets among the world's largest technology companies. Apple continued to exhibit remarkable
performance by launching innovative serial products and cultivating a loyal customer base that was not
easily matched by any competitor. Their unprecedented growth continued under the leadership of Tim
Cook when he took over as the CEO in 2011; the company recorded revenues in the north of $200bn,
and a net profit of whopping $45 billion in April 2015 (Heracleous & Papachroni, 2016).

While the overwhelming success and fame of Apple are noteworthy, the company witnessed its
fair share of failures during the absence of Steve Jobs. Due to internal rift between the apple executives,
Jobs left Apple in 1985 to conquer his new venture NeXT Inc. Shortly after Jobs' departure, Apple
inflated its prices, causing a slump in sales. Series of leadership blunders, and due to plunging sales,
losses started to pile up, creating a drastic drop in market share. By early 1997, Apple had just 3.3
percent of the personal computer market, and stock that was down to $14 a share (Rose, 2011). With
the annual loss of more than $1 billion, the company went through three CEOs in less than a decade.
With the return of Jobs in 1997, he faced the task of restructuring an organization that was on the brink
of bankruptcy. He revived Apple's broken leadership and led Apple towards renewed success. Jobs axed
over half of new product development and refocused resources towards projects that offered
breakthrough potential (Heracleous & Papachroni, 2016).

Apple's Secret sauce & Innovative Culture

With the return of Steve Jobs, Apple found its lost success and much-needed leadership. A
streak of innovative products was launched in record time. Apple revamped its operating system and
redefined how personal computers functioned. It introduced the iPod, which completely transformed
the digital music industry, and finally, the iPhone, which symbolizes the early push towards the
smartphone revolution. In 1998, Apple introduced the iMac, reinforcing the company's turnaround, and
shortly after, in 2001, the launch of the iPod marked a new era in the consumer electronics industry.
 P age |2

Apple's vision and innovation set them apart from the rest. Apple's fluid business plan and
obsession with perfection can be credited for its overwhelming success. One of the major elements in
Apple's success is its approach to design thinking. They make products, which follow the simplistic
design, without compromising the features. Apple adopted an organizational culture for creative
innovation, with a focus on challenging the status quo. Excellence, creativity, innovation, and secrecy
were at the heart of their operating model. They ensured that each manufacturing and software detail
was improved until they achieved perfection. Apple's corporate culture promoted and expected top-
notch excellence among employees by recruiting talent of the highest caliber (Heracleous & Papachroni,
2016). Apple's management highly valued creative thinking and operated as a start-up team; they
resented red tape bureaucracy and 'big company' behavior. Apple's commitment to innovation is
cultural, not process-driven. The most successful products at Apple started with only a few people
without formal structure or hierarchy and little corporate oversight. Also, secrecy plays a big part in the
company's strategy to minimize theft of proprietary information and intellectual property while
maximizing its leading-edge against competitors (Meyer, 2019).

Maintaining an innovative culture through leadership

Steve Jobs was a visionary driving force behind Apple's success, and he recognized that Apple
needed an engaging and sustainable culture that energized the commitment and talents of people
across the organization. Apple is known for its unique 'no-compromise' work culture and devotion
towards perfection. It was all made possible by Jobs’ exceptional leadership that enacted clear
expectations and fostering work culture around living the apple values. For Jobs, everything Apple did
came back to core value: which was to make the best products in the market. He believed that this
would be the longest-standing aspect of the company's legacy, and that attitude permeated throughout
the organization (Brandculture, 2019).

Apple maintains its leadership position in innovation by improvising both its devices and its
business model. Apple proactively looks for ways to improvise on innovation systems to harnesses
creativity in its people, stimulate new ideas, streamline the design process, and launch successful and
profitable innovations (Nary, 2008). Apple has been successful than many of its rivals in incorporating
novel features and technological solutions in its products while making them very attractive to a broad
 P age |3

set of customers. While their competitors may argue that they were the first to introduce or invent a
product or a feature, it doesn't change the fact that Apple was often the one to commercialize it with
the most considerable degree of success (Nary, 2008). For example, Diamond Rio PMP300, a portable
music player, was quite successful and was released three years before the first iPod. However, Apple
seemed to singlehandedly conquer the music world with the success of its iPod. Apple's approach
established markets and dominated them with simpler products that were better built and marketed
(Murphy, 2017).

Competitors that chase Apple's latest release find themselves lagging when just a few months
later, Apple introduces its latest and greatest offering. While many firms pursued extensive market
research to understand what customers want, Jobs believed that you could not solely rely on your
customers to tell you what they want, since their knowledge is limited to what they already know
(Kawasaki, 2019). Apple, under Jobs’ leadership, invented a whole new line of businesses by anticipating
where the market was heading. Regardless of whether you think that Apple has lost its way since CEO
Tim Cook took over from Steve Jobs, the strategy has pretty clearly stayed the same. If Microsoft and
Samsung released a tablet; so will Apple. If Samsung and others release large smartphones and small
tablets, so will Apple. Apple will only do it better through their art of perfection.

Staying afloat amid competitive pressure

Apple has shown unprecedented growth over the last two decades; Tim Cook has taken the
inherited legacy of Jobs and continued the momentum of growth at Apple. However, just like any
corporate stardom, they are prone to hurdles and looming competitive threats. With Apple reaching
new profit and sales records under the leadership of Cook, the company is under mounting pressure to
perform and continue to beat the records that they had initially set. A hyper loyal customer base and its
ability to unite innovation with marketing have allowed Apple to reach the heights of success. But a
question remains on whether this is enough to keep the company moving forward or whether Apple is
finally losing momentum after years of ruling the consumer electronics world (Wharton, 2017). By the
second half of 2016, the company witnessed the end of Apple's uninterrupted sales growth, mainly due
to sinking revenues in China, seeing a decline of 26 percent of revenues in the second most crucial
region (Heracleous & Papachroni, 2016).
 P age |4

Despite Apple's apparent investment in its future, threats to its success are prevalent. Apple has
been criticized for falling behind in the emergent technologies of recent years, such as artificial
intelligence, augmented reality, virtual reality, and self-driving cars (Murphy, 2017). Despite some
sizable acquisitions in AI and the initial launch of Siri, Apple has ceded ground in the fields of machine
learning, natural language processing to companies like Google and Amazon who are already successful
in this area (CB Insights, n.d.). Furthermore, Apple faces fierce competition in its media and
entertainment business, lacking original content. Apple is late to the original content game in
comparison to Netflix, Amazon, and even Hulu, who is leading in the original content trend (CB Insights,
n.d.).

However, the company is actively investing in new platforms and acquiring different aspects of
the supply chain to create its parts. That strategy shows Cook is thinking about the future. Existing
reliance on iPhone sales is an apparent threat to the company, considering that it accounts for more
than half of Apple's revenue and gross profit. Cook knows something will come along to destabilize the
smartphone market in the same way that Apple disrupted the phone market with the launch of the
iPhone in 2007 (Wharton, 2017). While Apple is clinging to the legacy that Jobs left behind, under Cook's
leadership, Apple is looking for a way to secure and differentiate its products. Considering the global
trends in tech, the company should continue to develop tech products in emerging categories like AR
and self-driving cars to keep up the pace of revenue growth in this segment. As per the business insider
report, Apple's Wearables, Home, and Accessories segment are gaining traction and helping cushion the
iPhone revenue losses (Business Insider Intelligence, 2019). To continue growing this segment, Apple
can focus on expanding the range of health offerings in the Apple Watch, as they are a major driving
force in purchase decisions.

Furthermore, the focus towards Artificial Intelligence, Augmented reality, and self-driving car
space can open up the potential to capture additional revenues. With Apple's early investments in
autonomous software via Project Titanis, there's an opportunity for Apple to create a new interface for
consumers to interact with vehicles. A move that could help Apple capture a significant share of the
global autonomous vehicle market, which is on track to be worth $556 billion by 2030 (Business Insider
Intelligence, 2019).
 P age |5

Leading when facing unforeseen circumstances

Apart from competitive threats, organizations need to safeguard themselves against possible
external threats. Ongoing COVID-19 pandemic has forced many organizations across the world to alter
their operations and think about how they respond during this situation. Organizations across the globe
have taken a massive hit to their profits, employee morale and productivity. Large-scale quarantines,
travel restrictions, and social-distancing measures are driving a sharp fall in consumer spending (Craven
et al., 2020). Also, Business investment contracts and corporate bankruptcies are soaring, putting
significant pressure on the banking and financial system.

While the pandemic is having a growing impact on the global economy, it demands disruptive
overnight changes to cope with it. With growing fear and anxiety among employees and your
consumers, leaders during this time must step up to support and protect their employees and customers
by imposing various social distancing measures. For corporate employees, imposing 'no-travel' and work
from home policies, or when necessary, mandating physical distancing at work. For an organization like
Apple, which takes pride in its high caliber workforce, it should balance the needs of the business with
expectation setting and morale building. A loyal customer base is crucial for Apple; bad press should be
avoided at all costs to maintain the brand image. It is also important to note that consumers are
experiencing a new way of living and, as a result, may adjust their spending habits. Apple should be
ready to adopt such changes and put greater focus towards their other lines of business that could
provide earning opportunities such as entertainment and digital media.

The coronavirus crisis is a story with an unclear ending. With the tragic human impact at stake,
Apple must protect its employees and customers while addressing crucial business challenges and risks
to mitigate the outbreak. The disruption of the current outbreak is already shifting industry structures,
and an immediate and effective response is vital. During these hard times, Apple should focus on
workforce and consumer protection, stabilizing its supply chain, and customer engagement.
 P age |6

References

Brandculture. (2019, December 12). Discover how Apple has used leadership to strengthen their culture.

Brand Culture. https://brandculture.com/insights/employee-engagement-leadership/

Business Insider Intelligence. (2019, March). The future of Apple. Business Insider.

https://www.businessinsider.com/intelligence/future-of-apple

CB Insights. (n.d.). Apple strategy Teardown: Where the world’s most valuable company is focusing. CB

Insights Research. https://www.cbinsights.com/research/report/apple-strategy/

Chelsom, J. V., Payne, A. C., & Reavill, L. R. (2005). Management for engineers, scientists, and

technologists. Wiley.

Craven, M., Liu, L., Mysore, M., Singhal, S., Smit, S., & Wilson, M. (2020, March). COVID-19: Implications

for business. McKinsey & Company. https://www.mckinsey.com/business-functions/risk/our-

insights/covid-19-implications-for-business

Heracleous, L., & Papachroni, A. (2016). Leadership and innovation at Apple Inc.: entering the post Jobs

era.

Kawasaki, G. (2019, April 9). Guy Kawasaki: At Apple, Steve Jobs divided people into 2 groups—'insanely

great' and 'crappy'. CNBC. https://www.cnbc.com/2019/04/05/apple-steve-jobs-divided-

people-into-2-groups-insanely-great-and-crappy-people-says-ex-employee-guy-kawasaki.html
 P age |7

Meyer, P. (2019, February 15). Apple Inc.’s organizational culture & its characteristics (An analysis).

Panmore Institute. https://panmore.com/apple-inc-organizational-culture-features-

implications

Murphy, M. (2017, June 10). Apple has never been first on anything and it isn’t about to change now.

Quartz. https://qz.com/1001840/apple-has-never-been-first-on-anything-and-it-isnt-about-to-

change-now/

Nary, P. (2008, October 30). Is Apple losing its innovation edge? Knowledge@Wharton.

https://knowledge.wharton.upenn.edu/article/apple-innovation-edge/

Rose, F. (2011, August 24). The end of innocence: What happened after Apple fired Steve Jobs. WIRED.

https://www.wired.com/2011/08/the-end-of-inno/

Wharton. (2017, September 15). How can Apple remain on top? Knowledge@Wharton.

https://knowledge.wharton.upenn.edu/article/new-iphone-hit-miss/

View publication stats