Apple- Scenario Based Assessments – Running Head: POSITION PAPER ON APPLE’S ORGANIZATIONAL STRUCTURE – Studocu

Running Head: POSITION PAPER ON APPLE’S ORGANIZATIONAL STRUCTURE 1

Position Paper on Apple’s Organizational Structure

Saikat Bose
GGU MBA

18 th February,

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Position Paper on Apple’s Organizational Structure
Apple was created in 1976 and now in 1997, the company is yet to achieve its full
potential. We are losing potential customers to IBM and Microsoft and have been losing money
for years. No innovation or new idea is coming out and we are just selling upgraded versions
of the Macintosh’s that we started in the founding years. In other words, if we want to remain
competitive, we need to embrace change sooner or later. Otherwise, our competitors will leave
us in the dust.

Challenges with the original organization structure
Today, the company is running as a typical large company divided into business
units run by general managers, each with their own bottom lines. Our general managers do not
have deep knowledge of the products we are making and obviously cannot add value by giving
innovative ideas. Each GM is trying to show, their own business unit is performing better than
the other in the P&L statements, working against each other and this is causing disharmony
and ultimately the company is suffering. I believe this conventional management structure has
created silos and has stifled innovation.

Benefits of proposed new structure
I envision this company to be a leader in innovative design and products in the future
and that can only happen if we move out of this conventional structure.
In this new Functional structure, I propose, besides the CEO, the company will operate with
no conventional general managers: “people who control an entire process from product
development through sales and are judged according to a P&L statement”. Instead it will be a
company where experts lead experts.
The key advantages of this hierarchical functional structure are

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Typically, the head of the department or senior-level management communicates with other
departments and distributes key information to the rest of their team.
Advantages that you will get from this structure are:

High productivity levels
Most employees within a department will have unique skills which will allow them to
work more efficiently, leading to increased productivity across the company. Employees
under this system who showcase greater productivity often receive promotions to higher
positions in the company’s hierarchy.

Skill Growth
There will be several departments made up of small teams. In each group,
experienced managers will have the opportunity to extend knowledge of the skills they
possess to their team members. The result of this is an enhanced skill set for all the members
involved. Their hard skills and soft skills may improve over time as teams work together to
find unique solutions and overcome work-related challenges.

Clarity
When companies bring people with the same skill set or specialty together, it
establishes clarity. The structure clarifies the specific tasks and obligations of every member
of a particular department. When a person within the company requires high-level
information regarding something, it’s clear who they can contact to get the right information.

Decreased Cost of Operation
The structure allows assignment of tasks to employees who possess the right skills
which saves money because the work gets done more efficiently.
The structural changes will bring more autonomy to what you do within your departments
and since you will be already grouped based on your skills you would obviously perform at
your best. Being in a department of likeminded and skilled people will also help you grow in

POSITION PAPER ON APPLE’S ORGANIZATIONAL STRUCTURE 5

your role. As mentioned, you will have more clarity as you would know what you are
working on and for whom. Since the functional structures would be based on the products, no
one structure will have more importance than the other.

Conclusion
Restructuring work never stops. Companies go through cycles of centralization (as
technologies, operations, and/or customers converged) and decentralization (through
disruptive and novel business models and/or technologies). Structures are not forever but
must evolve to fit the times, that every company must find a custom-built solution. The key is
to let the strategic context and reality guide these changes.
At this point we need to pivot to a functional structure as that’s what is required to get most
of the resources and people we have. The discretionary leadership model preserves the
fundamental principle of an effective functional organization at scale—aligning expertise and
decision rights. Apple can effectively move into new areas when leaders take on new
responsibilities outside their original expertise, and teams can grow when leaders teach others
their craft and delegate work. We believe that Apple will continue to innovate and prosper by
being organized this way.

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Recommendation on Apple’s Organizational Structure
Apple’s present organization is based on a functional organization model. The structure
is split up by functions or specializations. All the specialists that look after specific functions
like software or hardware or cameras work together on a part of a product and not the whole
product. The only person who looks after all the products is the CEO.
The key principles behind this structure are:

1. One Profit and Loss centre
   One large target everyone is working towards, hence more unity.
2. Focus on expertise – Those with the most expertise makes the decisions in their own
   functions.
3. All must work together to release a product.
   Unless all work together you won’t have one whole product, so they have to work
   together.
4. Only the CEO is responsible for all areas.
   My recommendation
   I would suggest Apple stick with its present model as that created several
   opportunities for the business, ranging from innovative human resources practices to business
   expansion and product differentiation.
   The leaders are made to be more accountable for the functions and objectives. The employees
   have minimal influence on the operational dimensions the company takes.
   The chain of command depicted in Apple’s organizational structure positions the top
   management to effectively control the business. CEO and the senior vice presidents can
   exercise sturdy control over the firm as they have the departmental heads report directly to

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them, thereby providing primary organizational needs or information that is essential for
decision making and planning.
The Senior VP’s are selected based on the three below characteristics of leadership Apple
believes in, which are the pillars of success for Apple’s organization structure.

Deep Expertise
Its fundamental belief is that those with the most expertise and experience in a domain
should have decision rights for that domain. Apple works in a fast advancing and disruptive
market, where every day there is a new technology, so it has to depend on leaders who are
technically competent and can think about products or changes that would start a disruption
in the market. The leaders need to understand the market and the technology to get a feel of
the next innovation. Unless the leaders know the technology, they cannot convince the team
members on their vision for a product. The leaders are less worried about short term goals
and instead focus on building the best product in the market. They can do that because the
bonuses are based on company performance numbers and not on department/product cost or
revenue. Only because the leaders have deep expertise in their areas can they get the right
balance between costs and the value their change adds to the user experience which
ultimately results in more revenue. Also, experts leading experts means that specialists create
a deep bench in each area, where they can learn from one another, instead of being scattered
across the Apple product lines which would mean not using their collective expertise.

Immersion in the details
The principle that is embedded in Apple is that all Leaders are expected to know
intricate details of their team, down to the third level. It is required for speedy and effective
cross-functional decision making. They should be able to Push, Probe and Smell an Issue.
They know which details are important and where to focus their attention. It is obvious that
as the company grows the senior leaders will not be able to remain immersed in the details of

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in a space of cutting-edge technology you need phenomenal talent come and work for you.
The only way they will work for you is when they know they will be respected; their ideas
will be respected, and they can learn from mentors who are already there. This helps attract
people which ends up with a lot of innovation. Thus, experts leading experts was a very apt
saying that Steve Jobs had said at the onset of starting this organization structure.

Forces Collaboration
This structure forces and promotes collaboration as you cannot build the whole product
together in one functional area, without the participation of all the functional lanes. For
example, one cannot sale a product by missing out marketing or sales. They need to be
bought into the pros and cons of the product, so that they can market the final product. So, all
the people from various functional lanes are brought together and have healthy debate. They
discuss the different ideas as to how they all need the product to look like and how much it
should cost and if it is realistic, etc. Every time at any point when there is doubt or a problem
or a question they come together and deal with it together as they must create a successful
product.
It also forces you to put forward your very best ideas. When you collaborate with experts you
will always come out with more knowledge and you will learn more, that’s the environment it
creates. Also, because one’s targets are tied to the company wide target you bring your best
idea forward. This principle promotes collective responsibility for the whole product which
ultimately unites the organization for the success of the company.