Team “Death Spiral” examined the stewardship and business performance of Apple Inc. by undertaking a strategic analysis of Apple Inc. ’s previous, present and potential future strategic and market performance.
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The internal workings of the firm were examined to reveal a culture of constant innovation and a drive to create easy to use, life improving products. A two tiered corporate structure with Steve Jobs and Tim Cook being at the apex of anagement and a horizontally flat structure of vice presidents the decision making process is not complicated by various vertical levels of command and decision making. Apple Inc. ’s internal structure has become flexible as divisions are specifically established to develop the latest product and maintain a competitive advantage. Apples industry segments were than explored and it was noted that it was not possible to absolutely define a market which Apple consistently performed in. Apple Inc. ’s multi-functional product base gave a clearly indication of the underlying strategic management at play.
It was accepted that Apple has defined its own market segment, that of ‘mobile electronic devices’. The four main strategic management themes of M. E. Porter (focus, differentiation and cost leadership), G. Hamel & C. K. Prahalad (structuralist), W. C. Kim and R. Mauborgne (reconstructionist) and J. Ridderstrale and K. Nordstrom (intellect, uniqueness and innovation) were examined in light of Apple Inc. ’s most recent performance. The Blue Ocean Strategy and the Funky Business Strategy models were found to be the most applicable and helped explained Apple Inc. s sustained and phenomenal rise in business performance. Finally, strategy recommendations for the future direction of Apple Inc were explored by the use of a Strategy Canvas. Possible pitfalls and hypothetical futuristic products were also explored. The single most strategic liability identified was the departure of the CEO Steve Jobs from Apple which could potentially be catastrophic if not fatal for the Apple brand. ” ! ! Apple Inc. has transformed over its 30 year existence; there have been changes in leadership, product types, company logo and name.
Apple Inc. experienced decline in the early to mid-nineteen nineties but has experienced unprecedented growth and success since the return of the founding father figure of Steve Jobs. Yoffie and Kim (2010) highlight the misdirected and turbulent time Apple experienced in the 1990’s until the turn around and change (1998) in ethos/philosophy of Apple as purported by Jobs. Job’s aim was to reduce the number of product models, change the mode of distribution to larger outlets and promote Apple as a ‘hip alternative to other computer brands’ (Yoffie & Kim, 2010, p. 4).
Apple Inc. ’s current mission statement states ‘Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and Apps Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices’ (Apple Inc, 2010c). This mission statement highlights and gives a strong indication of where the strategic direction Apple Inc. ntends to progress; not only do they strive to have the best products but they intend to stretch vertically across product lines. To emphasis this, Ostdick (2010) comments on the personal drive of Steve Jobs and his belief that all product innovations can be recycled into other projects. The underlying guiding ethos is just because one piece of technology doesn’t work in one project, how we can potentially use it outside its intended use to produce something new and successful. Parallel to the financial success of Apple Inc. is the longevity and stability of its board of directors and corporate structure of the firm.
There are seven members on the board of directors from various professional backgrounds. The average tenure of these members is six years with more than half sitting for more than ten years (Apple Inc, 2009). Organisational structure is horizontal with Steve Jobs and Tim Cook acting as chief executive and operating officers respectively. Beneath this pinnacle are nine vice presidents who preside over areas such as retail, hardware engineering and marketing (see appendix 1 for the current executive structure of Apple Inc. ) (Apple Inc, 2010c).
These vice presidents administer the day to day running of fourteen individual divisions (see appendix 2 for the current organisational chart of Apple Inc. ). In terms of strategy; Apple Inc. has dedicated divisions purely for further development of the iPhone and iPod. The flexibly of the firm is highlighted here; with ” 0 research and development, Apple are prepared to specifically develop these products. It would be logical to infer when their product life cycles reach their pinnacle; new divisions may be made to further develop the current products at th time. hat Apple Inc. ’s culture internally is a positive workplace where generous employee benefits are available. Employees are subjected however to a strict process of ethics and business processes outlined in e outline their document ‘Business Conduct: The Way We Do Business’ (Apple Inc, 2009). Externally Apple Business . Inc. is embracing the latest sustainable practices in various operational areas and hence attempting to improve their triple bottom line (economic, social and environmental) or Corporate Social Responsibility credentials (Esty & Winston, 2009).
Apple provide educational programs for their staff Esty 2009 . and are engaging the community with educational programs and scholarships (Apple Inc, 2009 Over Apple 2009). the last five years a cultural change has occurred in relation to environmental responsibilities. Apple responsibilities. recycling programs have been established, carbon emissions saving have been implemented upstream and downstream of the supply chain; and a further commitment to produce environmentally safe products (Apple Inc, 2010b). ! ” # !
The first challenge in analysing the industry that Apple operates in is defining that industry. Apple has created its own industry of “Consumer Technology” by choosing to compete in, and redefine segments of more traditional industries. Apple operates in segments of the Computer, Consumer Electronics, Music, Movie/Video, and Telecommunications Industries. positioned itself in selected segments of the market. In each industry it has Although Apple has its roots in the Computer Industry it is no longer just focused on computers.st The change of name in January 2007 from Apple Computers to Apple Inc reflects this change of direction (Honan, 2007). . Despite this Apple generated almost 14 BN USD of sales from personal computers in 2009, its second highest ” 1 level in history and 32% of the company’s total sales. Even in its traditional market segment Apple Inc. does not dominate the market with an estimated 4. 2% share of the global market in 2009 (Yoffie & Kim, 2010).
Apple Inc. continues to gain ground, particularly in their home market, the USA. Apple PC sales are estimated to be only 10. % of the US market in the 3 quarter of 2010 (see Appendix 3) (Ash, 2010), up from 8% in 2009 (Yoffie & Kim, 2010), overtaking Acer to become a distant 3rd to Hewlett Packard and Dell Computers. The personal computer industry is a USD $425 BN industry dominated by companies producing what are still referred to as “IBM compatible” machines that predominantly use Microsoft Windows operating systems. Major industry leaders include Hewlett Packard (HP), Dell Computers, Acer, Lenovo is a Chinese company that purchased the loss making personal rd
Toshiba and Lenovo. computer business of IBM in 2005. IBM no longer manufactures personal computers. The industry is can be characterised as being in a mature growth phase with rising sales and falling prices. Leading industry consultants the Gartner Group forecast sales growth in unit shipments of almost 20% in 2010 with significant falls in unit prices (Anonymous (The Australian), 2010). The industry is highly price competitive and fragmented with thousands of smaller companies competing with the major players using common commoditised components.
Apple stands apart from the pack offering a highly differentiated product, with its own operating system and unique Apple design and style. It focuses on the personal usage market rather than the corporate market and commands premium prices for its products. Despite its small market share overall Apple commanded 91% of computers sales over USD $1,000 in 2009 (Yoffie & Kim, 2010). This allows them to maintain industry leading margins of 40% in 2009. Apples margins have increased during recent years while their competitors have continued to decline (Yoffie & Kim, 2010).
The global consumer electronics market is estimated to be in excess of USD $ 700 BN a year (Anonymous, 2010b). Consumer electronics includes entertainment, office productivity and communication equipment. The boundaries of this industry are loosely defined as product innovation and technology but convergence is blurring the edges. Leading Global companies include (by one industry definition) Sony, Toshiba, Panasonic, Samsung, LG, Microsoft, Apple, Intel, IBM and Nokia (The Engineer, 2010). The industry is characterized by product lifecycles which are getting shorter, ” nd products more technologically advanced and complex. Your phone is a computer; your fridge can connect to the internet. You can watch TV on your computer or phone and watch U-tube on your television! The industry is competitive with many global players with established market presence being challenged for market share by both other established players and new emerging brands. Prices are being driven down by aggressive competition. Manufacturers are seeking to lower costs through mass production in low cost countries, notably China. In this environment, branding is critical.
Products are too complex for many consumers to rationally compare features, functionality and price in an effective manner. Products are often purchased on the basis of the perceived price performance, with consumers associating with the product brand. Apple is well positioned in this regard with a strong brand associated with Style, Quality, Useability and “Cool” despite having only a limited range of products within this broader industry definition. $ The music industry is a well-established consumer industry, traditionally controlled by the recording companies.
Major players Universal Music, Sony Music, EMI and Warner Music controlling in excess of 70% of the industry with a larger number of small “independents” making up the rest. Global sales are in order of USD $ 25 Billion in 2009 (International Federation of the Phonographic Industry, 2010b). The dominate trend in the industry is the rapid uptake of digital download of music as the consumer preferred method of distribution. This is undermining the power of the recording companies in favour of the internet based retailers and resulting in revenue contraction. Total recorded music sales evenue has been in decline for the past decade, declining by 7% in 2009. This is despite continued high growth in internet based digital music sales up 12% in 2009. Music sales through digital channels accounted for USD $4. 2 billion of music sales in 2009, representing 27% of global sales growing from a base of just USD $20 million in 2003 (International Federation of the Phonographic Industry, 2010a). Apples iTunes is a leading player in the digital sales channel revolution, arguably the industry leader in legal internet music sales. This is the segment of he industry that Apple chose to compete in and ” redefine for its own purposes. Intellectual property issues remain a major challenge for this industry with internet based peer to peer file sharing significantly eroding industry sales. $ %& ” The multibillion dollar movie industry is dominated by large movie studios with distribution traditionally handled by theatres, then a secondary market through video/DVD rentals or retail stores and a tertiary revenue stream through television rights. Apple is involved only in the distribution part of the business through film download for rent or sale.
This challenges the traditional video store business, with a new model. To date, video downloading has promised more than it has delivered (Kane, 2007). The market is becoming increasingly crowded with an increasing number of companies entering the market including internet heavy weight Google which owns YouTube and retail heavy weight WalMart (Ogg, 2010). Economies of scale make this an industry that favours natural monopolies or oligopolies. Multiple large scale players as well as a myriad of minor companies are jostling for critical mass.
As with most internet based businesses price and convenience are the driving factors. Apples assault on the internet movie sale and rental market leverages their success in music with i-Store, their strength in video capable devices, iPods, iTouch and iPads and established leadership in video processing computers. !# The software industry has many segments including proprietary operating systems, business applications, personal applications and entertainment applications. Most providers focus on selected sectors where they can establish market leadership.
Microsoft focuses on operating systems for PC (Windows) and business productivity tools that run on PCs. IBM focuses on large scale enterprise systems and predominantly business software and integration services. A plethora of other companies large and small compete for leadership in all the gaps in between. Economies of scale are particularly important as the variable production costs are very low. Apple has maintained its own proprietary operating systems for its computing devices to preserve product differentiation and unique usability features. However this has been at significant evelopment cost. Application development has been left to third parties who compete to provide market leading solutions. With the advent of the Apps Store, Apple has entered the software distribution business with a 30% gross margin, leveraging the enterprise of thousands of independent ” 2 software developers large and small. By tight integration with their systems the App Store provides a captive high margin marketplace for software. This is another niche segment that Apple has chosen to compete where there are synergies with the t existing businesses.
By providing a distribution system Apple has been able to encourage more developers to create applications for their computing devices. More applications extend th the functionality and desirability of their products, driving sales. This is a profitable symbiotic relationship. Despite being a relatively small player in the industry segments, Apple is an undisputed financial success. It is now the third largest company in the world, as measured by market capitalisation, d behind only Exxon Mobil and Petro-China. At the close of trade on the 12th of November the Apple Inc shares were valued at USD $308. 3 (Refer to Figure 1. ) each, valuing the entire comp company at over USD $ 282 billion. During the past year the company’s shares have increased in value by over 50% increased (Yahoo Finance, 2010).
The stock is trading on a Price to Earnings Multiple of 20. 42 times compared to an industry (Personal Computers) average of 15. 80 times (Stock Call, 2010). The company’s high valuation compared to its sales of 3. 5 times can be attributed to the high margin and high growth performance of the business. In the 3rd quarter of 2009 the company reported a net profit margin of 21. 8% compared to an industry average of 4. 53%. Total sales were 67% a year earlier (Stock Call, 2010). On these metrics the company share price does not seem excessive. . ” 3 ! ! ” Apple Inc. has been defined as being involved in the new technology industry. The products they deliver stretch across multiple industry boundaries; some products compete in established markets, others are market leaders in contemporary industries spanning product development and product delivery (Yoffie & Kim, 2010). This makes an analysis of Apple’s competitive strategy challenging and difficult.
Singular theories may fit individual product lines, but not reflect the true direction that this multi-faceted company is taking as a whole. Porter’s (1980) generic theories are an example of this; the three strategies of focus, differentiation and cost leadership provide information on specific products such as computers and software; but fail to examine products like the iPad and iTunes (Porter, 1998 see Part 1). An analysis of iTunes best illustrates the timeliness and limitations of the application of the out-dated theory of Porter to Apple Inc. Tunes adopts both a differentiation strategy (by providing the download of music at various download qualities, the ability to download movies and tv shows; and combining it all into an easy to use product) and a cost leadership strategy (this is achieved by providing a competitive priced service for the customer, and a cost effective way for Apple to update firmware of its products). Consideration was given to the theories of Hamel & Prahalad (1994), however the structuralist approach does not encompass the true nature of Apple’s efforts over the last ten years.
In contrast the reconstructive theories of Chan Kim and Mauborgne (2005) and their “Blue Ocean Strategy” in particular allow a greater analysis of the strategic positioning instigated by Apple. The Reconstructionist’s view helps accommodate advances made by Apple Inc. in redefining and creating new technology. Utilising Chan Kim and Mauborgne’s six principles helps in assessing Apple Inc. ’s value chain matrix; and their innovation in product development (Chan Kim & Mauborgne, 2005), (Chan Kim & Mauborgne, 2009).
To contrast explanations for Apple’s recent success and to provide analysis for their future; the theories of Ridderstrale and Nordstrom (2000) in their ground breaking book “Funky Business: Talent Makes Capital Dance” will contrast a different view of competitive strategy. The use of Funky Business as an ideology helps explain the rise of emotional buying and how important the utilisation of innovation is in the 21 century business environment. Furthermore, examples will be given to illustrate the synergies which exist between the Funky Business philosophies and the creation of Blue Oceans which ultimately coalesce into a strategic position. t ” 4 Swimming in a Blue Ocean A broad definition of Chan Kim and Mauborgne’s Blue Ocean strategy is the ability for a company to move from a red ocean (an industry where competitors offer similar products or services with the aim to become a cost/market leader); to a blue ocean (an undefined and new industry that may incorporate industries, or create a new industry based on differentiation and lower operating cost) (Chan Kim & Mauborgne, 2005). Apple Inc. is in some respects a contradictory company when it comes to its strategic analysis for its expansive product mix delivers in more than one “ocean”.
For the purpose of this strategic analysis (and recommendations for the future) specific example’s will be given where Apple Inc. has gained a competitive advantage by defining their own unique Blue Ocean. Chan Kim and Mauborgne (2005) provide a fundamental analytical tool to analyse Apple’s competitive strategies. This methodology comprises 5 formulation and execution principles to competitive advantage. They are as follows: • • • • • Reconstructing Market Boundaries Focus on the Big Picture, not the Numbers Reach Beyond Existing Demand Get the Strategic Sequence Right Overcome Key Organisational Hurdles
Reconstructing Market Boundaries Apple’s current resurgence has its beginnings in one of its original blue oceans; i. e. the creation of iTunes changed how people downloaded and listened to music. iTunes was originally used to compete with the illegal download music market, the now defunct ‘ Napster’ being an example. Apple’s aims were to provide a low cost option for customers, high quality downloads and a music player interface (Chan Kim & Mauborgne, 2005).
From an administrative point of view iTunes gave Apple control of digital rights and with five major record labels contributing to the service gave them a distinct competitive advantage (Yoffie & Kim, 2010). Blue Oceans however are not constant and as good ideas make money the competitive advantage for iTunes would have eroded if it did not diversify. To compete with growing technology demands, movies and TV shows were introduced to the iTunes store for purchase and rental. This differentiation created a new Blue Ocean for Apple Inc. / “
Currently iTunes is the market leader in visual media. Concurrently the iTunes store has the largest downloadable content on the internet . It provides a catalogue of eight million tracks, two thousand films (total downloads daily average are in excess of fifty thousand) and twenty thousand TV episodes (Anonymous, 2010c). Prime Facie analysis reveals that the popularity of iTunes cannot be solely attributed to the product delivery; but a concurrent innovation and integration with the portable products that Apple has created over the last decade.
It could be argued that the iTunes blue ocean was strengthened by the continual improvement in storage size and screen resolution quality of it iPod and iPhone range. Apple Inc. can now be seen entering its next stage in differentiation. To do this Apple Inc. has introduced the iPad (Feb 2010); revolutionising tablet computing. Building on its iPhone operating system, Apple is attempting to reconnect with business people. Unlike iTunes, iPad services will not be the low price of music downloads.
Apple will attempt to lure high profile media conglomerates to allow subscription through their iTunes service at a higher premium price (Yoffie & Kim, 2010). Even though news articles are sold at a premium price; the ability to distribute them via iTunes gives Apple Inc. a low internal cost. The most recent venture by Apple Inc. to create a unique user experience the creation of multiplayer online gaming on the iPhone; multiplayer gaming traditionally has been the domain of PC and console developers (Gametraders, 2010). With this venture Apple Inc. opes to refine how people play games with each other. iPhone customers will have the capability to game wherever they can take their iPhone (Apple Inc, 2010a). This strategic move can be seen as a blue ocean for Apple Inc. which will provide a service no other mobile phone provider offers with the quality of the gaming experience. In addition to this Apple Inc. are not actually investing in gaming; they are using their iPhone and OS4 operating system as a go between. With other companies vying to have their games on the popular iStore; Apple Inc. have created for them a low cost product. 1
Focus on the Big Picture, not the Numbers Apple’s current focus is on being a lifestyle company. It integrates its products and makes them easy for the end user to operate. Steve Jobs openly states that his products start with an idea and a need to alleviate customer demands (Ostdick, 2010). This strategic thinking helps formulate new Blue Oceans. It allows companies such as Apple to create products unrestricted by current industry 1 In February 2010, Apple announced that the iTunes store had recorded its 10 billionth song download (Johnny Cash’s “Guess Things Happen That Way”) (Ostdick, 2010). // standards and norms. Greg Joswiak the vice president builds on this philosophy stating they never let . vice-president technology go to waste. In an interview with Reena Jana from the Harvard Business Review blog he generalises on key points concerning the innovative strategies of Apple Inc. ‘Think of this strategy as s Think smart recycling of internal ideas and engineering, especially when cross-pollinated with other cross ollinated products’ (Jana, 2010). These comments were made in wake of the iPad release.
Jana (2010) . demonstrates how the iPad is a hybridisation of the iPhone and a laptop; and how the iPhone was just hybridisation an update of the iPod. Reach Beyond Existing Demand The fundamental tenet of this principle is, ‘Instead of concentrating on customers they (companies) need to focus on non-customers. And instead of focusing on tead customer differences, they need to build on powerful commonalities in what buyers value’ ( (Chan Kim & Mauborgne, 2005). Apple do this well. It is important to ). ote that there would be a minority of people that do not inority own at least one Apple product. However their competitive strategy in reaching beyond existing demand would be to sell products to existing customers in industries they would not normally consider using an Apple product. As stated in “Focusing on the big picture” tated (above), the ability to build upon and reuse technology in an innovative way is allowing apple to reach new markets and potentially new customers. ! ” # $% & ” ‘ ( ” / Get the Strategic Sequence Right Apple Inc. as excelled in their strategic sequencing when it comes to the redevelopment and innovation of their portable products. Chan Kim and Mauborgne (2005) stress the importance of price, cost and adoption. Figure 2 (Golijan, 2010) illustrates the chronology of the iPod and Apple Inc. ’s development of the product. The timeline highlights the quality of sales on the left hand side; over the ten year period models evolved and became more accessible at varying price points. The success of the products allowed Apple Inc. to diversify and continually improve the product.
Within this industry no other competitor has been able to hold consistent sales growth and product innovation as the iPod. Overcome Key Organisational Hurdles Yoffie (2010) clearly highlights the trouble’s Apple has encountered with several changes in management in the 1990’s. Since the second coming of Steven Job’s Apple has been a stable entity and has not experienced the organisational problems of the past. Recent economic performance would indicate there has been no leadership or structural change within Apple Inc. It is of interest to note that otentially when Steven Job’s rejoined Apple Computers as the CEO there was a tipping point and a push towards a new Apple Inc. He changed the name, the logo and the ethos of the company and personally pushed Apple Inc. into its current successful position (Jana, 2010). Let’s Get Funky As shown above Apple Inc. has exhibited clear Blue Ocean strategy elements during its history, and yet after the dramatic decline during the 90’s to the stellar success now being experienced, Apple Inc. has also displayed some new, contemporary strategic rudiments.
Examining the quirky and mildly eccentric philosophy’s of Jonas Ridderstrale and Kjell Nordstrom as extolled in their manifesto “Funky Business: Talent Makes Capital Dance” (2000) it is apparent that much of the success of the ‘second life’ of Apple Inc. (circa 2000 to the present) can be attributed to a metamorphosis in business thinking and to these ‘new’ strategic philosophy’s and ideas. As an example, central to the “Funky Business” strategic model are the three core elements of: Make Room for Grey Matter – in the ‘global village’, a company’s future depends on the intellect of its teams members.
Consumers want, demand a dream, emotion, not products and services; Only the Best Rake in the Pot – In order to succeed a company must be number one in its field or even better – Unique; and Permanent Innovation – Creativity leads to the redefining of the company and its markets and yet the constantly changing ” /0 environment of the market implies the constant search for innovation, with innovation being a state of the mind (Laville, 2000).
Jobs and his cohorts, since the near fatal demise of Apple Computers in the mid 1990’s have reposition and focused the Apple brand with the global ‘lifestyle’ village in mind (Yoffie ; Kim, 2010). Central to this theme is the enabling of consumers to engage in quasi-voyeurism, transporting their minds and bodies into ‘Mac/Apple World’, experience music, connecting to the internet and most importantly to each other in the Global community. Apple has been an industry leader in the enabling of the consumer to participate in the web world through a number of primary senses. Steve) Jobs’ ability to reinventing himself and redefine Apple (in its second incarnation) using ideologies akin to that of the Funky Business model resonant with the changing landscape brought about by the globalization phenomenon. Thus Jobs’ ability to connect with the community through technological change, institutional change and the evolution of values (Young ; Simon, 2005) allowed Apple to ride the crest of the wave through the first decade of the millennium harnessing the three underlying forces of excess: growth of markets (eg.
China, India, Russia, etc. ), Ongoing overabundance of supply (which has exceeded demand since the 90’s and knows no bounds! ) and technological progress (lowers the cost of information, lower barriers and the world becomes a smaller more accessible environment) (Laville, 2000), (Yoffie ; Kim, 2010). Apples’ Funky Business strategy is exemplified by its innate ability to understand the dynamics of the world of competition and how it has changed.
Accordingly, Apple is able to compete in this new environment by realize that the established and entrenched large scale structures of traditional companies don’t ‘hack it’ and that the single most important facet of this new age of business, is the intellectual capital to identify products and get them into production quickly (Musatov, 2001), examples include Apples industry benchmarking and leadership products: iMac (1998), iPod (2001), iTunes (2003), iPhone (2007) and the iPad (2010) (Yoffie ; Kim, 2010).
Thus, it is not the production facility that is the most important, per se, but the minds who operate it. In interviews with Jonas Ridderstrale and Kjell Nordstrom (Anonymous, 2010a) (Anonymous, 2010e), it is clear that one economic model for the 21 century that conceptualize a Funky Business strategy can be illustrated by the strategic direction of Apple over the last decade plus, understanding of st ” /1 market forces, individual choice (or knowledge of the individual), freedom to choose and the ability to re-invent or innovate regularly and expediently. ” Apple Inc. trategy for the iPad (launched in January 2010) echo with the core elements of creating a new Blue Ocean and Funky Business principles, as described above. These (as expressed by industry commentators) were Apple’ core strategic elements for the iPad launch: “consideration of s future applications of current products as they are developed” (innovate), “crowd-source hype and ideas around pricing” (sell the dream, the emotion, not so much the device) and of course the core Funky Business principle of, “Don’t focus on being first; focus on being the best” (Uniqueness) (Jana, 2010).
Coincidently, as this new ‘Tablet’ Blue Ocean gathers depth and breadth for Apple, the competition are not far behind with the announcement of Samsungs new ‘Galaxy Tab’ in November 2010 (Anonymous, 2010d), the time between launch, maturity and loss of competitive advantage shrinks with each new development and innovation. “The Age of Paradox” written by Charles Handy (1995) points out that the Sigmoid Growth Curve can be used to plot out, the life of any organism, life cycle of a product or the life of an organisation.
Every new life, organisation, project, or initiative, commences with some faltering at the start, grows, matures, declines and ultimately perishes. If this was the only underlying concept to this ideological graph it would not be of any use, but rather, the positive and encouraging use of this model is that a firm can proactively start its own new sigmoid curve in any new area it wants rather than watching the old curve maximise, then decline.
During any new development phase an organisation will experience what is known as a “dip” or a setback; this can be due to a lack of resources, loss of direction, ineffectiveness, poor productivity and/or loss of a competitive advantage. This is completely normal and team morale must remain high through this temporary stage known as ‘ dipping’ Every time there is a new growth curve (new idea, . change in goals, new product, etc. ), it intercepts with the old Sigmoid Curve, and either climbs or descends but ultimately the cycle of a major dip will commence associated with ccompanying anxiety and setbacks. ” / The dip can represent a significant challenge for any organisation, as it was for Apple Inc. with a loss of direction between 1985 until December 1997 with several changes of CEO’s at the helm (Scully, 1985 – 1993) and the (Spindler and Amelio years 1993 – 1997) (Yoffie & Kim, 2010). Apple management, you could say, went through a case of ‘ Paradigm Block’ ‘the inability or refusal to see ; beyond the current models of thinking’ (JCU, Competitive strategy course notes, session two slide 11). ” ” ” * & + ” , ” – ” & ” & * There are different eras of product interests and management change that Apple has gone experienced its inception in the 1980’s when they launched the Apple 1. Mapping the most recent period of Apples growth on a strategic canvas, from the launch of the iMac in 1998 through to the iPad launch (2010) we can visualize a series of interconnected sigmoidial curves gradually increasing with each new innovation and product launch, as shown in Figure 3.
In fact, the gradual treadline ” / ncreasing to the right in Figure 3 reflects a buoyant and productive company with clear growth from strategic product development, delivery and acceptance (depending on the market KPI used). Presently, given the rapid development by other competitors in the tablet market, Apple Inc. would need to accelerate innovation and product delivery within the next 6 – 12 months to avoid another dip and loss of competitive advantage. This may require a change or transition in new management and of course a new updated product e. g. pdated iphone from 4 to 5 with more capabilities and apps (See Figure 4 Strategy canvas). . * &/ ! &0 1 & Future strategy scenarios which Apple may need to engage in order to reinvent itself in the ensuing post 2010 era are many and varied. Given Apples’ history to date and without climbing the walls of the Apple head office and being a fly on the wall it is unwise to predict what Apple may come up with next. They will however need to improve their product range or innovate around their range of iPhone, iPod, iTunes and iPad etc. o maintain market capital. They need to be constantly innovative and invest in their R&D department to have any chance of keeping the current Blue Oceans, ‘Blue’, and require time (which is no luxury in the Funky Business world of the 21st century), to develop new Blue Oceans. Potentially Apple could develop a strategy to have a lifestyle package called Apple “iHome” that would be able to accommodate the current avant garde movement of the new ‘energy gurus’ that are environmentally friendly and the ‘tech heads’ that enjoy the Apple brand.
The iHome could be similar to the CBus system, Smart system or Building system as they are commonly known, they could ” /2 incorporate their existing range and facilitate new ideas such as an iPhone that has a de novo chip which instead of using an security access card or conventional key you just swipe your iPhone to unlock your car, house front door or office. The CBus system can work in conjunction with, home appliances such as air-conditioning, automated windows, lights, security video and irrigation, effectively generating a ‘smart home or “iHome”.
You can remotely set up your home with the use of your iPhone through the net, and be able to monitor your home when you are away. The innovative potential of the “iHome” package is endless but the pitfalls may include, acceptance by the market, technological maturity of the appliances in question and the competitive advantage or market acceptance of these new ‘out there’ products. In essences, it would be foolhardy to recommend a strategy for Apple post 2010, in that Jobs and his self-proclaimed “mobile-devices” company are still delivering, still leading industry segments they