13 Pages, Grade: A
Innovation and creativity have long been regarded the lifeblood of organisational success. Yet in the 21st century innovation practices and initiatives have become more important than ever due to a fast and unpredictably changing global business environment. When it took decades for great inventions to be unveiled in the past, in today’s business world it is just a few years. It is therefore quite obvious that only those organisations that embrace the principles of innovation management will achieve sustainable competitive advantage and be capable of effectively outpacing their competitors. Peter Drucker, a great management thinker, “ had continued to stress over the years that organisations that do not innovate will not survive ” (Swaim, 2010, p. 78).
This paper deals with innovation and creativity in today’s organisations and outlines how Apple Inc. has established itself as one of the leaders in the hardware and software and consumer electronics devices industry. It devotes considerable ink to the key aspects that make an innovative and creative organisation and attempts to highlight how Apple’s approach differs from contemporary innovation management principles. Finally, the paper focuses on the reactions of employees to Apple’s work environment, possible shortcomings of its approach to innovation and recommendations that need to be considered in order to overcome increasing competitive pressure and ensure organisational success from a long-term perspective.
Since its foundation in 1976 Apple has developed itself from a mere computer manufacturer to a successful all-rounder that has extended its product range by various consumer electronics devices and a new pioneering online business model. Indeed, it doesn’t only have its high performance iMac computers, stunning MacBook notebooks and its own easy-to-use and multifunctional operating system called Mac OS X. What’s more, in 2001 it introduced its breakthrough product the iPod mp3 player with its innovative click wheel, followed by the iTunes Store in 2003, the iPhone in 2007 and, finally, the brand new iPad in 2010 which is Apple’s response to the netbook boom (Dalal, 2009), (The Economist, 2010, p. 11). Thanks to its innovative products Apple has been so successful that its share price has risen from approximately $ 12 in 2000 to more than $ 200 in 2010 (Finanzen.net, 2010). It therefore comes with no surprise that Apple’s competitors already fear to be trounced. Yet this was not always the case. Michael Mace, a former Marketing Director, who worked at Apple between 1987 and 1997 described Apple’s culture as “ diseased and dysfunctional ” at that time. Employees didn’t share any knowledge and weren’t receptive to new ideas. Daily infighting was another serious problem. And although Apple had skilled and bright people, its culture inhibited effective collaboration, which is so vital for being innovative and creative (Kahney, 2003). During this time Apple was struggling to survive and its founder Steve Jobs who was ousted in 1985 was able to turn around the ailing company when he came back in 1997. Today, Apple is not only considered the most innovative company in the world, but also the most admired (BusinessWeek, 2009), (Fortune, 2009).
But what is Steve Job’s secret formula of success? What has made Apple so successful? According to Research & Markets, as cited by Gene Quinn (2010), “ Apple has managed to sustain its innovation efforts with calculated, consistent increases in R&D spending and rapid-fire launches of new products and upgrades. What lies behind Apple ’ s success is not luck - the company has very deliberately focused its efforts on generating better ideas faster. ”
It is quite clear that innovation and creativity are the major drivers of Apple’s prosperity. But being innovative and creative is easier said than done. There are many aspects which need to be taken into account. What is key here is that the times where employees were seen as cogs in a machine have gone. Many studies have shown that there is a significant correlation between the management of people and organisational success. Per se, all people are endowed with the ability to solve complex problems and adapt to a changing environment (Tidd and Bessand, 2009, p. 99). But in order to make use of the inherent potential of employees and effectively foster innovation, companies need to adopt an enlightened approach and effectively deal with the people involved in order to become a truly innovative and creative organisation.
Tidd and Bessand (2009, p. 100) perfectly describe the fundamental characteristics of an innovative and creative organisation, which are shared vision, leadership and the will to innovate, appropriate organisational structure, key individuals, effective team working, high-involvement innovation, creative climate and external focus. The extent of each of these characteristics will depend on the organisation and the industry it operates in. In this respect Tidd and Bessand (2009, p. 101) add that organisations must strike a balance and avoid placing too much emphasis on single prerequisites. However, Apple’s approach to innovation is somewhat different, since it doesn’t completely adhere to the management and innovation principles advocated by management thinkers and certainly places much emphasis on particular characteristics. As such it has developed its own principles and guidelines which have obviously paid off thus far.
Apple has adopted an “ integrator approach ” , meaning that it operates design, engineering and retailing on its own rather than licensing its products to network partners (Hawn, 2007). This affects its whole product range from software to computer hardware to consumer electronics devices and means that when you buy an Apple product you get an Apple product.
“ If you smooshed together Microsoft, Dell and Sony [and even Nokia] into one company, you would have something like the diversity of the Apple technological biosphere. ”
At first sight this might sound irrational, but it is just because Apple wants its products to work properly, which is difficult to achieve when many different companies make a contribution. This approach gives Apple more control and enables it to react more quickly to changing circumstances, as there is no dependence on network partners (Grossmann, 2005). Furthermore, Apple only focuses on a few products for every single market and tries to make them as perfect as possible. It therefore pays significant attention to product design, functionality and usability in order to differentiate Apple from competitors, and also to contribute to customer loyalty in terms of high perceived value (Morrison, 2009).
When it comes to innovation management it is widely argued that in today’s business world it is essential to focus on both a market-pull and technology-push approach in order to ensure that the products developed are innovative and meet customer-needs. Yet Apple doesn’t conduct market research, nor does it concentrate on what its competitors do. As such it has no external focus. It solely focuses on a technology-push approach and completely relies on its intuition and perfectionism (Burrows, 2004), (Morrison, 2009).The reason for this, as argued by Apple’s Senior VPs, is that "customers don't know what they want, [rather] you have to tell them what to buy" (Applepeels, 2005). And as Steve Jobs put it, if you make a really great product “ then everybody will want to use it ” (Morris, 2008). It is worth mentioning that a similar approach was adopted by Henry Ford more than 100 years ago, which as such set the cornerstone of the automobile mass market. He is reputed to have said that “ If I had asked my customers what they wanted they would have said ‘ faster horses ’” (Merrill, p. 8).
Given Apple’s notion about product development it comes with no surprise that it doesn’t have a system or pre-determined process to foster innovation either. At Apple it’s all about communication, open-mindedness and collaboration, where people are encouraged to express their ideas. According to Steve Jobs “ it's ad hoc meetings of six people called by someone who thinks he has figured out the coolest new thing ever and who wants to know what other people think of his idea ” (Burrows, 2004). Moreover, there are no sequential development stages. Rather the emphasis lies on simultaneous 3 development processes in all departments, be it design or engineering. “ When the challenges are that complex you have to develop a product in a more collaborative, integrated way ” , says Jonathan Ive, head of design. Thus Apple pays remarkable attention to effective collaboratio]n and is proud of its internal communication, meetings and the myriad of interdisciplinary design reviews (Grossmann 2005).
Steve Jobs argues that in order to be innovative you need to create a product-oriented culture and a “ gravitational force ” that puts all the bright and creative people together, which as such are the critical determinants of innovation success. Apparently this gravitational force was one of the missing components of Apple during the 1990s. Today, it’s is nobody less than Steve Jobs himself, because he has the ability to inspire people and effectively convey the company’s vision, which is to make the world’s best products rather than making high profits (Burrows, 2004).
Without question it is essential that employees share the company’s vision, as this is a key prerequisite to establish a creative climate. Matt Kingdon, chairman of “?What If!” an innovation consultancy, argues that a company’s vision and purpose are the “ lifeblood of innovation energy ” . If you expect employees to be fully committed to what a company does, to be willing to put in many hours and even work on weekends, you need to make sure that they “ like what the body corporate is ‘ going for ’” and feel proud being part of it (Tidd, et al, p. 133).
As Trott (2002, p. 78) reminds us: ” Creative people will be attracted to those companies that themselves are viewed as creative. ”
In effect, Apple has a remarkable reputation of being innovative and creative and hires people who are passionate about its products and are willing to make the best products in the world. An Apple employee is never satisfied and is fanatic about every single detail of Apple’s products (Morris, 2008).
Yet Apple clearly distinguishes between rank-and-file employees who are given clearcut directives as well as close supervision, and its proven talents who get a freer hand. Apple actively empowers its creative people and gives them the freedom they need to create amazing products. Its industrial design group, for instance, works behind unmarked and restricted access doors and even listens to background music in order to nurture creativity. This is not to put them in prison, rather to provide them the atmosphere they need to “go crazy” (Morrison, 2009). And although this approach might sound unusual, it eliminates the ways that “ work pressures get in the way or discourage the experimentation in the early stage ” (Motee, 2008).
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