organizational analysis (a case study of apple inc )

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How Apple Is Organized for Innovation

• Joel M. Podolny
• Morten T. Hansen

When Steve Jobs returned to Apple, in 1997, it had a conventional structure for a company of its size and scope. It was divided into business units, each with its own P&L responsibilities. Believing that conventional management had stifled innovation, Jobs laid off the general managers of all the business units (in a single day), put the entire company under one P&L, and combined the disparate functional departments of the business units into one functional organization. Although such a structure is common for small entrepreneurial firms, Apple—remarkably—retains it today, even though the company is nearly 40 times as large in terms of revenue and far more complex than it was in 1997. In this article the authors discuss the innovation benefits and leadership challenges of Apple’s distinctive and ever-evolving organizational model in the belief that it may be useful for other companies competing in rapidly changing environments.

It’s about experts leading experts.

Idea in Brief

The challenge.

Major companies competing in many industries struggle to stay abreast of rapidly changing technologies.

One Major Cause

They are typically organized into business units, each with its own set of functions. Thus the key decision makers—the unit leaders—lack a deep understanding of all the domains that answer to them.

The Apple Model

The company is organized around functions, and expertise aligns with decision rights. Leaders are cross-functionally collaborative and deeply knowledgeable about details.

Apple is well-known for its innovations in hardware, software, and services. Thanks to them, it grew from some 8,000 employees and $7 billion in revenue in 1997, the year Steve Jobs returned, to 137,000 employees and $260 billion in revenue in 2019. Much less well-known are the organizational design and the associated leadership model that have played a crucial role in the company’s innovation success.

• Joel M. Podolny is the dean and vice president of Apple University in Cupertino, California. The former dean of the Yale School of Management, Podolny was a professor at Harvard Business School and the Stanford Graduate School of Business.
• MH Morten T. Hansen is a professor at the University of California, Berkeley, and a faculty member at Apple University, Apple. He is the author of Great at Work and Collaboration and coauthor of Great by Choice . He was named one of the top management thinkers in the world by the Thinkers50 in 2019. MortentHansen

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Apple Organizational Culture and Structure: A Case Study

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Need to analyze organizational culture of Apple corporation? Use this case study to get inspired! It focuses on Apple company culture, leadership, and the system of decision making.

Introduction

• Organizational Structure
• Organizational Culture
• Decision Making

Apple Inc is an American corporation that produces electronics, software, and many other online solutions. Steve Jobs and Steve Wozniak founded this company in 1976 as a small company specializing in software products. This company has experienced massive growth over the years to become one of the leading electronic companies in the global market. Its dedicated team of managers, strategists, and employees saw its brand ranked the best in the world in the year 2010 and 2011. The sales volume at this firm has been very impressive, especially because of its unique capacity to bring new innovative products to the market. The management of this firm has been keen on tapping special skills of its employees to the advantage of the entire firm. In this study, the researcher seeks to analyze the structure, culture, leadership, human nature, decision-making, and employees’ goals and objectives.

Apple Organizational Structure

According to Lüsted (2012), organizational structure defines the manner in which an organization is governed. At Apple Inc, the organizational structure is designed into three levels of top management unit. The figure below helps in defining the organizational structure at Apple Inc.

At the top management level of this firm is the board of directors who are responsible for all the strategic decision making processes. The chairperson and all other board members except three officers hold non-executive positions in this board. This means that other than their role as the board members, they do not hold any other executive position in this firm. However, they play an important role in policy formulation and approving major decisions that may have serious impacts on the firm. The other three board members who hold executive positions are the chief executive officer, chief operating officer, and the chief financial officers. These board members have specific executive roles to play besides sitting in the board as directors. The chief executive officer is the executive head of the firm that heads the firm in its quest to achieve strategic objectives.

Below these top executives are the departmental heads. They include the head of marketing department, head of the logistics unit, head of production department, head of the insurance unit, and the chief accountant. These departmental heads work very closely with the three top executives to ensure that the policies of the organization are implemented as per the desires of the shareholders of the company. Under the departmental heads are operational managers who are responsible for specific tasks within various departments in the organization. As mentioned before, Apple Inc is a multinational corporation that has successfully penetrated the global market. In order to ensure that its operations at the global market run smoothly, the top management has created regional heads under the office of the chief operating officer. These regional heads are located in various continental headquarters of this firm in Europe, Asia-Pacific, South America, and Africa. They work under the directives of the head of marketing department, but are answerable to the chief operating officer. These regional heads are responsible for the appointment and supervision of all the activities of representatives of Apple Inc in various countries under their jurisdiction. The junior most officers at this firm are the employees in various departments who do not hold any managerial positions at the firm.

Apple’s Organizational Culture

Organizational culture is one of the most important aspects of organization that the management of Apple Inc has been keen on defining. According to Lüsted (2012), employees form a very important aspect of a given firm. Sometimes it may be challenging to find a way of making them reason from the same perspective, especially for a firm that is operating in a global market such as Apple Inc. Organizational culture helps in defining the behavioral pattern of all the stakeholders within the firm. Every employee is able to determine what he or she should do and what should be avoided when handling various tasks within an organization. This way, the management unit is able to predict the possible cause of action that a given stakeholder will take when addressing various duties.

At Apple Inc, organizational culture is deeply rooted in the firm’s values and beliefs. One of the most important values of this customer is to maintain integrity in all its operations. This value has been instilled in all the stakeholders that it has become a cultural practice in this firm. Maintaining the integrity at this firm does not only involve avoiding bribery but also any other negative practices that are meant to give the firm undue advantage in the market over others.

In its value statement, Apple commits to deliver high quality products that meet the needs of customers in a unique manner. This value statement has defined the behavioral pattern of the employees not only at the production centers, but also in the entire production chain. According to Bach (2007), Steve Jobs created a belief among the employees of this firm that they can be perfectionists if they gave it a serious thought. This belief has had serious impacts on the behavioral pattern of the employees, especially those in the production unit. They are always keen on using their skills to develop unique products that they know will meet the demands of the diversified clients. It is out of this concerted effort of the employees that has made Apple Inc be classified as the most innovative firm in the world for three consecutive years (Lüsted, 2012). Cultural tolerance has been an important practice at this firm. Apple Inc employs people from varied cultural backgrounds. In most of the cases, these employees find themselves working within the same setting, making it necessary for them to integrate in order to achieve a common goal. The management has been keen on championing programs that are meant to enhance cultural tolerance and integration at the workplace. These values have worked closely to create a unique culture at this firm where employees work without any close supervision, and diversity is looked at as strength, not a source of rift within the firm. These forces have played a major role in enhancing the position of this firm as one of the top electronic companies in the global market.

Leadership in Apple

According to Lüsted (2012), leadership is one of the most important factors that define the success of a firm in any given organization. Apple achieved its success because of the leadership skills exhibited by its top management unit, specifically Steve Jobs. According to Gillam (2012), it is almost impossible to talk about Apple Inc without talking about the leadership qualities of Steve Jobs. It is important to analyze history of this firm briefly in order to understand the role of leadership. When this firm was established in 1976, Steve Jobs and his co-founders embarked on a serious program to expand the production capacity of Apple Inc. Although the three agreed to share the top management role, it was apparent that Steve Jobs was in control of the firm at this early stage. His management skills enabled the firm to expand rapidly. After a few years, it grew into a large company that had to be run by a board of directors. In 1985, a new chief executive was brought in to help in taking this firm to the next level. Mr. John Sculley was hired as the chief executive because of his wealth of knowledge in this industry.

However, his management strategies created confrontations between the new chief executive and Steve Jobs. At this time, Jobs was the head of production unit. The differences between these two executives became irreconcilable, and when the board of directors came in to address the issue, Jobs was demoted from his post as the head of operations of this firm. These developments forced Jobs to resign from this firm, opting to run his own firm. The era that followed the departure of Steve Jobs was very disastrous for this firm. The leadership under Mr. John Sculley failed to provide a lasting solution to some of the problems that the firm was facing in its expansion program. Mr. Sculley failed to come up with an effective strategy of integrating all the stakeholders and addressing their interests in the best manner possible. He did not stay at the head of this firm for long before he was replaced. Apple Inc realized the real success in the market after the return of Steve Jobs as the chief executive officer in 2007.

As Zylla-Woellner (2013) notes, Jobs was a visionary leader. Under his tenure at this firm, Apple had a flexible leadership structure that was keen to be the driver of change. The management encouraged the employees to be innovative in all their areas of work in order to improve their efficiency and productivity. Tim Cook, who replaced Steve Jobs at the helm of this firm, inherited this leadership structure.

Apple’s System of Motivation

Understanding human nature and motivation is one of the best ways through which a firm can achieve success in the market. According to Lüsted (2012), Apple Inc is one of the best employers in the United States because of its employee management strategies. In order to achieve success through employees, a firm needs a system that would allow it to maintain their levels of motivation in order to boost their performance. Having a team of motivated employees eliminate the need for constant supervision because workers will be self-driven towards achieving an overall success for their employer. Apple uses two main strategies to motivate its employees. The first strategy is the material benefits that employees earn based on their performance on a yearly basis. According to Zylla-Woellner (2013), Apple is running programs where every year, employees with exceptional performance are selected from various departments are then given financial rewards for their effort. The program has been a motivating factor to the employees because they know that their effort will always be noticed.

The firm also uses other non-monetary strategies to maintain the employees’ motivation. Before his retirement as the chief executive officer of Apple Inc, Jobs introduced a system where employees are promoted based on their performance. Other than academic qualifications, an individual’s performance in the market played a major role in his or her career development at the firm. The firm has also been using an integrated communication system to enhance free flow of information from the employees to the management and back. This has created an environment where issues affecting individual employees are addressed as soon as they occur. It has played a major role in boosting the morale of the employees.

Decision Making at Apple Inc.

Decision making process remains one of the most vital management processes in any organization. Like many other organizations, Apple Inc has been using new technologies such as Decision Support System (DSS) to guide the management when making important decisions (Lashinsky, 2012). However, Tim Cook introduced a new system of making decisions that is based on the views of all the stakeholders, especially the employees of the organization. In this system, every sub-department is expected to make decisions that will enhance their operational activities. The decision each sub-department comes up with must be based on the views of individual employees within that unit. The head of sub-department will then draw a report explaining some of the best alternatives to solving a given problem. The report from all the sub-department will be submitted to the head of that department will sit with his panel in order to evaluate the options that each sub-department has given. The head of the department will then compile a report, explaining why a given approach of solving problem was chosen among the alternatives provided. This report will then be presented to the top management unit that will then be expected to make decisions based on the facts presented before them.

Strategy formulation at this firm is always based on the systematic approach that has been defined above when making decisions. The management has always emphasized on the importance of using the information from the junior employees when formulating its strategies. These junior employees are always on the ground, and therefore, they understand the reality in the field. This makes it necessary to involve them in the strategy formulation process in order to come up with practical approaches of addressing different tasks at this firm.

Employees & Apple Corporate Culture

It is vital for the management to understand the employees’ goals and objectives in order to find a way of aligning them with the objectives of the organization. The management of Apple Inc has not performed well in this area of management. Although the firm has effective systems that are meant to enhance employee motivation in the firm, there is yet to be a strategy used by this firm to define the employees’ goals and objectives. This means that Apple is yet to find the best strategy of aligning these personal goals to the overall goals of the firm

Apple Inc is one of the most successful firms in the current global society. The success of this firm can be attributed to its effective management structure and a team of dedicated employees. Steve Jobs played a major role in enabling the firm to attain its current glorious position in the electronic market.

Bach, B. (2007). Implications of enabling technologies for Apple Inc: Cybermarketing & enabling technologies . München: GRIN Verlag GmbH.

Gillam, S. (2012). Steve Jobs: Apple icon . Minneapolic, MN: ABDO Pub. Co.

Lashinsky, A. (2012). Inside Apple: How America’s Most Admired–and Secretive–Company Really Works . New York: Grand Central Publishing.

Lüsted, M. A. (2012). Apple: The company and its visionary founder, Steve Jobs . Minneapolis, MN: ABDO Pub.

O’Grady, J. D. (2009). Apple Inc . Westport, Conn: Greenwood Press.

Zylla-Woellner, J. (2013). Business Analysis of Apple Inc . New Jersey: John Wiley.

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Apple’s Organizational Structure & Its Characteristics (An Analysis)

Apple Inc.’s organizational structure contributes to effective and rapid innovation, which is a critical success factor of the business in the information technology, online services, and consumer electronics industries. The company’s organizational structure or corporate structure is the combination of workforce groups, resources, and interconnections among these groups and resources in the business. The organizational design determines how the organizational structure is developed and managed. In this business analysis case of Apple Inc., the company structure supports strategies that push for further technological innovation. The computer technology company’s structural characteristics maintain a traditional hierarchy, with some key elements from other types of organizational structure. Business success and the satisfaction of Apple’s mission statement and vision statement are linked to innovation and organizational leadership, and its business structure is partly responsible for ensuring support for such leadership. With Tim Cook’s leadership, Apple has changed its company structure to suit current global market and industry demands.

Apple’s organizational structure is effective in supporting business performance to ensure leadership in the industry, especially with regard to competitors, including the information technology, consumer electronics, and online services of Google (Alphabet) , Samsung , Microsoft , Amazon , and Sony . Apple TV Plus also competes with the video streaming services of Netflix , Disney , and Facebook (Meta) . The Five Forces analysis of Apple Inc. determines that these competitors impose a strong force in the company’s external environment. Through its company structure, Apple continues to improve its capabilities and competitive advantages, such as in rapid and creative innovation and product design for competitiveness in the international market for smartphones, tablets, laptops, and online services.

Apple’s Organizational Structure Type and Characteristics

Apple has a hierarchical organizational structure , with notable divisional characteristics and a weak functional matrix. The company’s hierarchy is a traditional structural feature in business organizations. The divisional characteristics refer to the product-based grouping within Apple, such as for iOS and macOS. The weak functional matrix involves inter-divisional collaboration, while the company’s hierarchy is preserved. The following are the main characteristics of Apple’s structure:

• Spoke-and-wheel hierarchy
• Product-based divisions
• Weak functional matrix

Spoke-and-Wheel Hierarchy . A bird’s-eye view of Apple’s organizational structure shows a considerable hierarchy that revolves around the company’s headquarters. In the past, everything went through the office of Steve Jobs, who made all the major strategic management decisions. Today, under Tim Cook’s leadership, this hierarchy in Apple’s company structure has slightly changed. The company now has more collaboration among various offices, departments, and teams in the organization, such as software teams and hardware teams. Apple’s vice presidents have more autonomy, which was limited and minimal under Jobs. Thus, the company’s organizational structure is now less rigid, but still has a spoke-and-wheel hierarchy where Tim Cook is at the center. The upper tier (innermost tier in the spoke-and-wheel circle) of the business structure has function-based grouping, which is an element derived from the functional type of organizational structure. Senior vice presidents who report to Tim Cook handle departments based on business functions. For example, Apple has a senior vice president for retail, and a senior vice president for worldwide marketing. In this structural feature, the company’s top leaders address business needs in terms of business function areas.

Product-based Divisions . The upper and lower tiers of Apple’s business structure have product-based divisions, which is an element derived from the divisional type of organizational structure. There are senior vice presidents and vice presidents for different outputs or products. For example, Apple has a Senior Vice President for Software Engineering (iOS and macOS), a Senior Vice President for Hardware Engineering (Mac, iPhone, and iPad), and a Senior Vice President for Hardware Technologies (hardware components). The distribution channels in Apple’s marketing mix or 4P are linked to this structural characteristic. This aspect of the company structure is used to manage specific products or product components that the business organization delivers to its target customers.

Weak Functional Matrix . Apple’s weak functional matrix refers to the collaborative interactions among various components of the business. In a weak functional matrix, top management determines project direction, while project heads have limited authority and control. For example, Apple’s business structure allows hardware teams to collaborate with software teams. In this way, the company facilitates information dissemination that is necessary for innovation processes. This structural feature contributes to effective and rapid innovation processes, which are a major business strength shown in the SWOT analysis of Apple Inc . Through this characteristic of the organizational structure, the company maintains strong innovation processes that support brand development and the use of premium-pricing strategies.

Apple’s Structure: Advantages, Disadvantages, Recommendations

Strong Corporate Control . The hierarchy in Apple’s organizational structure supports strong management control in the organization. Theoretically, hierarchy empowers top leaders, like Tim Cook, to control everything in the organization. Through this hierarchy, business functions and product-based groups are effectively controlled through the decisions of the CEO and other top executives. This advantage of Apple’s corporate structure facilitates rapid and effective strategic management implementation and helps in establishing coherence throughout the entire company.

Limited Organizational Flexibility . Apple’s company structure has the downside of low or limited flexibility. Hierarchy typically prevents lower levels of the structure to flexibly respond to current business needs and market demands. For example, Apple’s product-based divisions must wait for directives from the CEO or other top executives to proceed in implementing changes that address trends in the market for consumer electronics. However, Tim Cook has already made slight improvements by increasing collaboration among various parts of the firm. Such collaboration improves organizational flexibility. Still, Apple’s organizational structure does not support rapid changes in business processes because everything must go through Tim Cook and the top management team.

• Albert, D. (2023). What do you mean by organizational structure? Acknowledging and harmonizing differences and commonalities in three prominent perspectives. Journal of Organization Design , 1-11.
• Apple Inc. – Form 10-K .
• Apple Inc. Leadership .
• Doan, T. N. T., & Nguyen, H. H. (2022). Value creation and value capture: Analysis of Apple company. International Journal of Current Science Research and Review, 5 (4), 1089-1095.
• Xia, Y., Li, X., & Wang, X. (2023). The influence of organizational structure on the dynamic capability of enterprises: The regulating effect of technological innovation. Science, 11 (2), 57-66.
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About The Author

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Apple Inc. in 2020 – Select Market Data

• Apple Inc. in 2020  By: David B. Yoffie
• Apple Inc. in 2020 – Select Market Data  By: David B. Yoffie

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Zooming in and out of Apple Inc.: An Organizational Behavior Analysis of Individual and Team Levels

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Apple Inc. is widely recognized as a prominent global corporation. This study undertakes a comprehensive investigation of Apple Inc., including the leadership of CEO Tim Cook, the internal dynamics of the design team, and many organizational and external influences. By employing analytical frameworks such as Industry Analysis and PESTEL, this study examines the competitive advantage of Apple Inc. and identifies potential areas for enhancement. The findings indicate that Apple's dedication to innovation and ethical conduct has resulted in the establishment of a robust brand and a devoted consumer following. However, in order to remain competitive in a rapidly evolving technological environment, Apple Inc. must persistently adjust its strategies. Additionally, it is imperative for Apple to acknowledge and rectify concerns regarding labor and environmental practices that have been raised by critics. The objective of this study is to provide a comprehensive comprehension of the factors that establish Apple Inc. as a prominent player in the worldwide market.

Apple Inc., global market, Organizational Behavior

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Individual Case Study Analysis of Apple Inc.

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