Analyze innovation dynamics in a company of your choice and the sector in which it operates
Apple Inc.
Abstract
Apple Inc is one of the most successful and innovative companies globally. These paper traces
the origins of the company, it’s innovative and growth strategies together with the company
policies that promoted its ideals and organization culture throughout its developmental stages.
Apple Inc has over the years been a trend-setter in digital technological research and
advancement whose successful outcomes has enhanced its revenues placing it among the top
rated companies in the industry in terms of financial capabilities, digital research and marketing
abilities. Its designs and successful creation of customer loyalty have made Apple and its
products the envy of many phone and electronic manufacturing companies. The core competence
for Apple Inc has been its innovative strategies that were ideally promoted by Steve Jobs and his
innovation leadership, broad vision and the organization climate that existed at the company
(Verganti, 2009).
Introduction
Analyzing Innovation Dynamics 2
Apple Inc was founded in 1976, in a garage of a house by Steve Jobs, Steve Wozniak and Ronald
Wayne. The first product, Apple 1 was actually without a keyboard, monitor or case and it only
served as a mother board with functions similar to the current CPU and RAM. It retailed for
$666.66 at the time.
Apple Inc is a technological company that is based in Cupertino, California. It designs and
develops electronics such as personal computers, iPhone smart phones, iPad tablets, software’s
and other digital devices. In 2014, Apple Inc registered a turnover of US$182.795billion and a
Net Income of US$39.510 billion. The company has more than US$231.839 billion in assets
while it employs more than 98,000 employees (Apple’s Form 10K 2013 – 2014)
For more than ten after the company was incorporated in 1977 on 3 rd January 1977, the company
largely concentrated on the manufacture of personal computers that included among others
Apple II, Macintosh computer models and Power Mac personal computers (Price, 1987) Thirty
years ago, in 1985, the computer market was very competitive and it was heavily dominated by
other companies in the market besides Apple Inc. Apples competitors were more advanced and
innovative and the market was highly unfavorable to the company. Apple’s business was very
low and the company was in dire need of new innovative ideas. Steve Jobs was ousted from the
company in the same year (1985) and John Sculley was left to implement his experimental
innovations that included newly designed digital cameras, speakers, portable CD music players,
TV appliances and video consoles. The company’s lack of focus and clear strategy led to the
unsuccessful performance of these products in the market. Despite the introduction of other
computer designs like the Centris line, Macintosh LC, Performa line and the Quadra, Apple
ended up confusing the consumers who could not understand the differences between the
Analyzing Innovation Dynamics 3
different computer models (Young & Simon, 2005) Though the Macintosh LC was a success it
lasted only for a few years and none of the products helped Apple shares in the market and stock
prices from sliding down further. John Sculley’s ideas were unrealistic and they never resonated
with the public. He was later replaced by Michael Spindler as the new CEO. However, Apples
misfortunes never changed much until 1996 when Steve Jobs returned to the company with his
new branded company NeXT that was purchased and incorporated into Apple Inc computers the
same year. Jobs was later appointed as the organizations CEO a year later. According to Kirton’s
theory of adaptative-innovations (1976) that most adaptors wish to excel in their performance
and to do things better but innovators largely seek to perform given tasks differently. The theory
explains the differences in creativity and it forms the basis of cohesion and possibly
collaboration between the team members. It basically explains the differences between the
leadership styles of John Sculley and Steve Jobs. Just as much as Steve Jobs was very creative,
John Sculley was equally creative but his leadership skills were not. According to Jack, Dodd
and Anderson (2004) Social networking and promotion of entrepreneurial skills are critical to the
successful performance of any organization. John Sculley could not balance his social skills and
innovative skills. Infact, the basis of the current MacBook Pro and iMac can trace their origins to
the first new discoveries of the Powerbook in 1991 and the Macintosh portable which also
formed the architectural basis for the Mac OS. These early innovations were associated with
John Sculleys whose only mistake was lack of focus and ineffective marketing strategies that
largely stemmed from weak coordination systems and teamwork (Stum, 2009).
Starting with the simple unique and original brand of iMac, Jobs founded an organization culture
that was based on corporate philosophy and competence that identified innovative products by
their simple design, quality and customized enhancement that were user friendly. He branded
Analyzing Innovation Dynamics 4
them independently creating unique differences between the models that were exhaustively
advertised and their capabilities fully explained to the public. These innovations finally led to the
new discoveries of one of its most profitable segments, the iTunes music store that was
discovered in 2003, the iPod in 2001 and later iPod Touch, the iPhone, and lately the iPad. These
branded products catapulted Apple Inc to be one of the largest publicly traded multinational
company not only in the US but in the entire world going by its market capitalization whose
value is estimated to be slightly over US$ 700 billion as at the end of the financial period that
ended in September the year 2014. Job introduced an environment that nurtured growth and
rewarded talent in Apple Inc (Jack, Dodd and Anderson, 2004) He relieved the fear of
retrenchment from the employees when Apple’s performance improved and addressed all the
needs of the design team including the reward packages and limited shareholding rights for
successful innovations. According to Anderson, Dodd and Jack (2010) Entrepreneurial
promotion at the workplace provides immense motivation to workers to perform better. Steve
Jobs ensured that employees were well taken care off. Apple employees were given free paid
time off to work on their individual preferred projects some which eventually culminated into
successful products for Apple Inc (Young & Simon, 2005) The discoveries of the Apple’s iTunes
music stores led to one of the most profitable discoveries for Apple. It also revolutionized the
entertainment music industry as most of the songs could be sold directly to the consumers at
affordable rates and also conveniently. The superior designs of Apple Inc products and their
quality brands have created loyal customers whose need for superior and faster internet
connectivity phones were addressed by Apple. In year 2004, Apple received about 3.4 percent of
its total revenues from the iTunes downloaded music products. In 2003, it received slightly less
than 0.6 percent of its revenues from the downloaded music products while in 2002 it was a low
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of 0.06 percent. This showed an encouraging rate of growth in the general sales of the company’s
downloaded products (Kotler, Keller, Brady, Goodman & Hansen, 2012). While Apples
marketing strategy was to utilize the new pricing objective to maximize the returns from the
downloaded products while the general sales on Apple’s other brands have been mostly
promoted by the sales from the iTunes music store products including the subsequent
improvement of its share prices and the market value of its ordinary stock. For instance between
2003 and the year 2005, the stock prices of Apple ordinary shares improved rapidly from $7 per
share to about $46 per share. The digital music vendors sold more than a one billion dollars
worth of songs in 2008 while the Apple iTunes store sold songs that were valued to be slightly
more than $6 billion since its official launch in the US alone in the year 2003.
http://online.wsj.com/article . The new discoveries led Apple Inc to maximize its revenue on all
downloaded music from Apple products. The company’s major objective was to develop a sound
working relationship with the artists’ record companies. Apples iTunes music download store
were faster, reliable and better managed than most recording companies that were in the music
industry.
The major threats to Apple Inc in the next thirty years would be almost the same like what it
went through in the last thirty years. The major threat would be from its competitors. The
advancement in digital research is constantly evolving and the dynamic nature of digital
technology is taking different formats as each day passes. The developments since Apple 1 was
discovered in early 1980’s to the current iPhone 5S and 5C, a lot of other brands and new
discoveries have been passed. The best and most effective brands are the only ones that will
survive the competitive nature of the digital technology era (Jobs, 2009).
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The other major threats are the suppliers of Apple Inc. Being a technological company most of
the products that are utilized by Apple are supplied from other companies including such
multinational companies that manufactures computer components like Intel corporation and
others that also manufacture various interface software’s and applications. These companies have
their own challenges that may affect their performance as well as their sustainability. Apple has
to make adequate provisions to cushion itself from such eventualities.
The other problem that may occur in the next thirty years is the looming threat of Apples
competitors rebranding themselves and retaking the market share as happened in the early
eighties when Apple was facing leadership crisis. Companies like Samsung and Nokia are also
strategically positioning themselves to penetrate the markets that are largely dominated by
Apple.
The threat of counterfeits is also real and has to be dealt with. Billions of dollars are lost globally
when fake brands of brand products are exported to countries without any legal barriers. These
products water down the quality of the products and also discourage customer loyalty.
Counterfeits products are common mostly in Asian countries despite legal measures that have
been taken to address the problem.
The only way that Apple would remain afloat is if they maintain competitive staff and adopt new
technological advancement. For instance, Apple is currently working on creating high quality,
efficient and life-changing products that target retention of Apple’s loyal customers.
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If Apple implements the above strategies and it maintains its innovative systems as established
by Steve jobs, it would still retain its number one flagship position as the US top rated
technological company (Tidd & Bessant, 2013).
To conclude, Apples iTunes music store creativity has greatly improved the image and also the general
sales and Apples revenue base. The discoveries by Apples technical staff have largely influenced the
financial status of the company making it one of the largest globally in terms of assets base and market
capitalization. Apples discoveries have also contributed and led to the music industry gaining from the
sales of digital music. The distribution and sales of music has also been impacted positively. Apple will
definitely struggle in the next thirty years to maintain its market share on the distribution of digital music
market by enhancing and developing other innovative ways of influencing and improving its general
revenues as well as maintaining its monopoly on the mobile or digital music sales download sector. These
is one of the most profitable of Apples inventions and it forms the basis of its selling strategies as it
targets the entertainment industry. It appealing to both the consumers as well as the artists who have
needs the Apples innovative systems to make their sales as well as to provide entertainment.
Analyzing Innovation Dynamics 8
References
Anderson, A.R., Dodd, S.D., & Jack S. 2010, Network practices and Entrepreneurial growth,
Scandinavian Journal of Management, 26 (2) 121-133
Apple’s Form 10K 2013 – 2014
Jack, S.L., Dodd, S.D. and Anderson, A.R., 2004, Social Structures and entrepreneurial
networks: the strength of strong ties, The International journal of Entrepreneurship and
Innovation, 5 (2) 107-120.
Jobs, S., 2009, “Apple Media Advisory” . Apple Press Info. Apple Inc. Retrieved March 11,
2015.
Kirton, M., 1976, Adaptors and innovators: A description and measure. Journal of applied
psychology, 61(5), 622.
Kotler, P., Keller, K. L., Brady, M., Goodman, M. & Hansen, T., 2012, Marketing Management. 2nd
edition. Essex: Pearson Education Limited.
Price, R., 1987, So Far: The First Ten Years of a Vision. Apple Computer.
Stum, J., 2009, Kirton’s adaption-innovation theory: managing cognitive styles in times of
diversity and change. Emerging Leadership Journeys, 2(1), 66-78.
Tidd, E. & Bessant, J., 2013, Managing Innovation: Integrating technological, market and
organizational change, (5 th edition), Wiley
Analyzing Innovation Dynamics 9
Verganti, R., 2009, Design driven innovation. Boston, MA, US: Harvard Business School
Publishing Corporation.
Young, J.S. & Simon, W.L., 2005, iCon Steve Jobs: The Greatest Second Act in the History of
Business , John Wiley & Sons
