978-1259278211 Case 16 Solution Manual Part 3

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4. What is leadership’s role in Apple’s strategic implementation?

Referencing Chapter 10: Creating Effective Organizational Designs

Strategy consists of analysis (setting goals, assessing the internal and external environment of the

firm), formulation (deciding which industries to compete in and how to compete in those

Chapter 10 stresses that organizational strategy has implications for a firm’s structure. Students

should relate concepts from Chapter 10 such as the differences between various structures and

the effectiveness of each possible structure for Apple’s possible choices of strategy.

Structure identifies the executive, managerial, and administrative organization of a firm and

Factors that facilitate the effective coordination and integration of key activities include having a

common culture and shared values, horizontal organization structures, horizontal systems and

An effective organizational design can encourage the flow of information and enhance working

relationships between functional departments and activities. However, achieving the coordination

and integration necessary to maximize the potential of an organization’s human capital involves

Apple’s structure was divisional, based on product and technological specialty. Key management

Jobs was famous for being fanatic about keeping each department and each project separate from

NOT IN THE CASE: At Apple, since Jobs’ death, there had been attrition and restructuring in

the top ranks: Ron Johnson, former head of Apple Retail, responsible for the success of Apple

Stores, left to try his luck as head of J.C. Penney. This meant Philip Schiller, head of Apple’s

worldwide marketing, had more on his plate. Scott Forstall, head of software design, was

Apple employees tended to be specialists, and weren’t typically encouraged to work or interact

outside their area of responsibility. Under Jobs, Apple was run as a “star” or “hub & wheel”

In 2013 the structure changed again. For one view of Apple’s 2013 upper management structure,

see http://www.asymco.com/2013/07/03/understanding-apples-organizational-structure/

Reportedly, Jonathan Ive was encouraging employees to collaborate across projects. This would

In 2013, Tim Cook also hired Yves Saint Laurent ex-CEO Paul Deneve to work on “special

projects”, presumably to help with the iWatch and other design processes. This was speculated to

be a move to make Apple products more “fashionable”. See

So far, in 2015, it appears the hierarchy still applies, implying “Apple’s organizational structure

Referencing Chapter 9: Strategic Control and Corporate Governance

Strategic control involves the process of monitoring and correcting a firm’s strategy and

performance. In a traditional control system, top management formulates strategies and sets

goals. These strategies are implemented, and then performance is measured against the

This approach utilizes two different types of strategic control: informational control and

behavioral control. These two types of control play a role in the formulation and implementation

Informational control is concerned with whether or not the organization is “doing the right

things”, while behavioral control is concerned with whether or not the organization is “doing

Chapter 9 emphasizes the importance of aligning both informational and behavioral control

systems with organizational strategy. The information gained from the internal and external

environment is reviewed against the firm’s strategy and goals. If the results are not what was

Both the informational and behavioral components of strategic control are necessary, but not

sufficient, conditions for success. What good is a well-conceived strategy that cannot be

Apple practices a contemporary control system using informational control via feedback from the

marketplace. As one of Steve Jobs’s legacies, Apple had traditionally kept the specifics of its

research and development a closely guarded secret and fiercely protected its innovative patents.

Regarding behavioral controls, especially under Jobs, Apple was notoriously unforgiving when

things went wrong. Employees were held strictly accountable for success and failures.

NOT IN THE CASE: For one story about this use of behavioral controls, see the 2011

explanation of “how Apple works” in Forbes, especially the following: “at Apple there is never

Referencing Chapter 11: Strategic Leadership

See the concept of leadership, the process of transforming organizations from what they are to

what the leader would have them become. Leadership is proactive, goal oriented, and focused on

the creation and implementation of the creative vision. This definition implies dissatisfaction

with the status quo, a vision of what should be, and suggests a process for bringing about change.

Leaders are change agents whose success is measured by how effectively they formulate and

implement a strategic vision and mission. See Exhibit 11.1. This involves:

●Setting a direction

The interdependent nature of these three activities is self-evident. Consider an organization with

a great mission and a superb organizational structure, but with a culture that implicitly

Leaders need to set the direction for the organization by continually scanning the environment to

develop knowledge of all stakeholders, and knowledge of salient environmental trends and

Leaders are responsible for designing the organization: a strategic leadership activity of building

structures, teams, systems, and organizational processes that facilitate the implementation of the

Leaders play a key role in changing, developing, and sustaining an organization’s culture. An

In nurturing a culture dedicated to excellence and ethical behavior, managers and top executives

must accept personal responsibility for developing and strengthening appropriate behavior;

Through Steve Jobs’ vision and the example he set for his firm, it seems likely he was able to

nurture a culture dedicated to excellence, especially in the behavioral controls he established –

Leaders, especially those who have responsibility for some degree of public trust, must also

maintain at least the outward appearance of an ethical business culture. See the definition of

organizational ethics toward the end of Chapter 11: organizational ethics are the values,

attitudes, and behavioral patterns that define an organization’s operating culture and that

Organizational ethics helps to define what a company is and what it stands for. The ethical

orientation of the leader is a key factor in promoting ethical behavior, promoting an ethical

orientation. A strong ethical orientation can have a positive effect on the organization’s

The ethical organization is characterized by a conception of ethical values and integrity as a

driving force of the enterprise. Ethical values shaped the search for opportunities, the design of

organizational systems, and the decision-making process used by individuals and groups. They

CEO Tim Cook was hit in 2012 with accusations of failure to provide proper oversight of

operations at China’s Foxconn manufacturing facility where iPad and iPhone products were

assembled. After news media exposed wrongdoing, violations in wages, overtime, and

NOT IN THE CASE: See a January 2012 report on the FoxConn violations, plus video on

working conditions in China at http://www.nytimes.com/2012/01/26/business/ieconomy-apples-

ipad-and-the-human-costs-for-workers-in-china.html?_r=1

Although Apple is certainly not the only electronics company doing business with Foxconn and

other Asian factories, it’s perhaps the one with the most to lose if its reputation is damaged (Dell,

HP, IBM, Lenovo, Motorola, Nokia and others routinely use the Asian factories as well). Apple

Regarding the culture of excellence, Jobs also had gone further at Apple to create a learning

organization, one able to continue his ideas and ideals by encouraging all employees to use their

intelligence and apply their imagination. Learning organizations are organizations that create a

Higher-level skills are required of everyone, not just those at the top. The learning environment

involves organization-wide commitment to change, an action orientation, and applicable tools

Jobs said: “we hire people who want to make the best things in the world.” Cook said Apple had

“35,000 employees, all of whom are wicked smart.” Giving credit to the people who do the work

So far Cook had been able to demonstrate that the company’s values – true passion for

Referencing Chapter 12: Managing Innovation and Fostering Corporate Entrepreneurship

Innovation involves using new knowledge to transform organizational processes or create

commercially viable products and services using the latest technology, experimentation, creative

insights, and information from competitors. However it comes about, innovation occurs when

For instance: There are “five disciplines” for creating what customers want:

●Identify important customer needs

●Create solutions that fill those needs

Apple appeared to be able to do all of the above, especially the last one. (Source: “Getting to

‘Aha!’,” Business Week. September 4, 2006.)

Before proceeding, firms must first define the scope of the innovation efforts, and must ensure

A strategic envelope defines the range of acceptable projects. Strategic envelope means a firm-

specific view of innovation that defines how a firm can create new knowledge and learn from an

innovation initiative even if the project fails. The strategic envelope also gives direction to a

firm’s innovation efforts, which helps separate seeds from weeds and builds internal capabilities.

In defining the innovation scope, a firm should answer several questions:

●How much will the innovation cost?

●How likely is it to actually become commercially viable?

●How much value will it add; that is, what will it be worth if it works?

●What will be learned if it does not pan out?

Referring back to Steve Jobs’ statement about innovation, one of the most important things he

wanted Apple to do was to be “always thinking about new markets”, but with a discipline that

made sure Apple didn’t “get on the wrong track or try to do too much.” Jobs was very clear about

The challenges of innovation involve:

●Choosing when and how to continue to innovate

●The scope and pace of future innovation

●Whether or not to collaborate with innovation partners

Steve Jobs seemed to have been an innovator all his life. As the firm continues to develop new

In addition, it helps if leadership can embrace the entrepreneurial orientation – autonomy,

innovativeness, proactiveness, competitive aggressiveness, and risk taking – necessary to sustain

Was Steve Jobs essential to Apple’s success? There is no one right or wrong answer here.

Arguments can be made on both sides, but given Jobs’ original drive, dedication, and discipline,

For advanced students, the instructor might want to assign the 1996 article by Lumpkin & Dess,

which gives more information about the entrepreneurial orientation.

NOTE – ADDITIONAL READING, VIDEO LINKS RE STEVE JOBS:

Many believe Steve Jobs was a true visionary leader:

See Snell, J. “Steve Jobs on Mac’s 20th Anniversary.” Exclusive Interview. Macworld. February

1, 2004, http://www.macworld.com/article/1029181/themacturns20jobs.html

Goodell, J. “Steve Jobs in 1994: The Rolling Stone Interview”, Rolling Stone, January 17, 2011:

http://www.rollingstone.com/culture/news/steve-jobs-in-1994-the-rolling-stone-interview-

20110117

What did Steve Jobs offer that might be different from other innovative leaders?

View a video of Steve Jobs’ famous commencement speech at Stanford University in 2005:

http://www.youtube.com/watch?v=D1R-jKKp3NA

What can we learn about entrepreneurship from this speech?

Here is a multimedia time line of Steve Jobs’ impact on Apple (contains a concise

photographic overview of Apple’s product development):

http://www.nytimes.com/interactive/2009/01/22/technology/20090122_JOBS.html

Although much speculation occurred when Jobs first went on medical leave,

(Watch a brief video explanation of Jobs’ absence: http://www.youtube.com/watch?

v=6oFTD2Rd7gU )

here is a report on his return on June 30, 2009, including how Apple’s operations fared during

his first absence (Apple’s stock jumped 67 percent since Jobs stepped away):

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/30/BU0018FQK2.DTL

Here is video containing an analysis of Steve Jobs’ affect on Apple’s stock, reported in January

of 2009:

http://www.5min.com/Video/How-Jobs-Figures-Into-Apples-Value-Morningstar-85820534

This is a story from the All Steve Jobs part of the World Wide Developer Conference Keynote on

Monday June 6, 2011 and includes his opening remarks, introduction of Apple’s newest product,

the iCloud, and closing thoughts. Regarding the iCloud, although Microsoft got the jump on

Apple with their personal cloud for Windows users that was announced in 2010, Apple seems to

How important, really, was Steve Jobs to Apple?

CEO Tim Cook was interviewed at the All Things Digital conference in May 2013, and didn’t

really have much new to say: the iWatch continues to be just a rumor, or perhaps “a year or two

away”; the existing product line (iPhones, iMacs, iPods) are doing just fine, thank you – as Cook

said, “For us, winning has never been about making the most. Arguably we make the best PC, we

don’t make the most. We make the best music player, we wound up making the most. We make

Another Apple-watcher points out that “the most obvious contrast between Tim Cook and his

predecessor is that Steve Jobs was a visionary. He saw it all in every detail and was just

impatiently waiting for everyone else to catch up with him. This may have been infuriating, but it

was also inspiring and (for the most part) productive.” Reporting on Apple’s 2nd quarter 2013

earnings call, the analyst felt Tim Cook was business-like and fairly underwhelming:

“Everything he said today was consistent with Apple being a successful and stable company. It’s

probably a much more reasonable place to work under Cook than Jobs. But that’s not what we

In 2015 Apple CEO Tim Cook was named the “world’s greatest leader.” Here is more

information that provides “a closer look at Cook’s transition from a soft-spoken operations

manager to a high-profile leader at Apple, and reveals how Cook has managed the pressure that

comes with his new role.” http://www.macrumors.com/2015/03/26/tim-cook-post-jobs-era-

fortune/

See what you think about Cook’s passion and commitment to Apple, and his apparent innovation

strategy going forward. Is he the leader of an innovative Apple, or is Apple now just a well-

performing company??

References

Harrigan, K.R. 1985, “Vertical integration and corporate strategy”, The Academy of Management

Journal, 28(2): 397-425.

Lumpkin, G.T. & Dess, G.G. 1996. “Clarifying the entrepreneurial orientation construct and

linking it to performance”. The Academy of Management Review, 21(1): 135-172.

Mintzberg, H. 1990. “The design school: Reconsidering the basic premise of strategic

management”. Strategic Management Journal, 11: 171-195.

Porter, M.E. 1996. “What is strategy?”, Harvard Business Review, 74(6): 61-78.