Lessons from Apple: Getting your company structure right to compete with the world’s best

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

When Jobs arrived back at Apple, 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. General managers ran the Macintosh products group, the information appliances division, and the server products division, among others. As is often the case with decentralised business units, managers were inclined to fight with one another, over transfer prices in particular. Believing that conventional management had stifled innovation, Jobs, in his first year returning as CEO, 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 organisation.