apple innovation case study pdf

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How Apple Is Organized for Innovation

• Joel M. Podolny
• Morten T. Hansen

When Steve Jobs returned to Apple, in 1997, 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. Believing that conventional management had stifled innovation, Jobs 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 organization. Although such a structure is common for small entrepreneurial firms, Apple—remarkably—retains it today, even though the company is nearly 40 times as large in terms of revenue and far more complex than it was in 1997. In this article the authors discuss the innovation benefits and leadership challenges of Apple’s distinctive and ever-evolving organizational model in the belief that it may be useful for other companies competing in rapidly changing environments.

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Idea in Brief

The challenge.

Major companies competing in many industries struggle to stay abreast of rapidly changing technologies.

One Major Cause

They are typically organized into business units, each with its own set of functions. Thus the key decision makers—the unit leaders—lack a deep understanding of all the domains that answer to them.

The Apple Model

The company is organized around functions, and expertise aligns with decision rights. Leaders are cross-functionally collaborative and deeply knowledgeable about details.

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

• Joel M. Podolny is the dean and vice president of Apple University in Cupertino, California. The former dean of the Yale School of Management, Podolny was a professor at Harvard Business School and the Stanford Graduate School of Business.
• MH Morten T. Hansen is a professor at the University of California, Berkeley, and a faculty member at Apple University, Apple. He is the author of Great at Work and Collaboration and coauthor of Great by Choice . He was named one of the top management thinkers in the world by the Thinkers50 in 2019. MortentHansen

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Apple innovation; a case study

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How Apple Is Organized for Innovation

By: Joel M. Podolny, Morten T. Hansen

When Steve Jobs returned to Apple, in 1997, 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. Believing…

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• Publication Date: Nov 1, 2020
• Discipline: Organizational Behavior
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Closed Against Open Innovation: A Comparison Between Apple and Xiaomi

• Conference paper
• First Online: 18 May 2020
• Cite this conference paper

• João Lajoso 20 ,
• André Sousa 21 ,
• João Albuquerque 21 ,
• Ricardo Mineiro 22 &
• Manuel Au-Yong-Oliveira 20 , 23  

Part of the book series: Advances in Intelligent Systems and Computing ((AISC,volume 1159))

Included in the following conference series:

• World Conference on Information Systems and Technologies

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One of the biggest, most competitive and quicker shifting markets is the smartphone industry. Evaluating significant opportunities and being sustainable in the market is entirely up to a firm’s innovation strategy. In this article, we perform an in-depth analysis by available means to study trends and tendencies relative to Apple and Xiaomi, two completely different companies with completely different approaches. We tested the clients’ needs and perceptions, in an attempt to see if they are part of the enterprises’ strategy (in a survey, with 193 responses). Indeed, customers are interested in powerful cameras, good storage capacity and a good duration of the battery of their smartphones. The market is evaluated above 1.5 billion units sold per year and demonstrates high demand for every new model to be different, more powerful, more capable of fulfilling our lifestyle. Apple uses an incremental innovation sales strategy, based on the billions of euros used in secret research and development. On the other hand, Xiaomi performs open innovation, taking customers’ needs and ideas to the world. What is the best approach? Will it be enough to stay on top? An analysis using Google Trends shows how Nokia has faded away over time, how Apple had a spike of interest concerning its latest iPhone 11 launch; while Xiaomi is ever more popular, especially in Portugal.

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Department of Economics, Management, Industrial Engineering and Tourism, University of Aveiro, 3810-193, Aveiro, Portugal

João Lajoso & Manuel Au-Yong-Oliveira

Department of Electronics, Telecommunications and Informatics, University of Aveiro, 3810-193, Aveiro, Portugal

André Sousa & João Albuquerque

Department of Ceramics and Materials Engineering, University of Aveiro, 3810-193, Aveiro, Portugal

Ricardo Mineiro

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Manuel Au-Yong-Oliveira

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Correspondence to Manuel Au-Yong-Oliveira .

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Álvaro Rocha

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Hojjat Adeli

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Luís Paulo Reis

DIMES, Università della Calabria, Arcavacata, Italy

Sandra Costanzo

Faculty of Electrical Engineering, University of Montenegro, Podgorica, Montenegro

Irena Orovic

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Lajoso, J., Sousa, A., Albuquerque, J., Mineiro, R., Au-Yong-Oliveira, M. (2020). Closed Against Open Innovation: A Comparison Between Apple and Xiaomi. In: Rocha, Á., Adeli, H., Reis, L., Costanzo, S., Orovic, I., Moreira, F. (eds) Trends and Innovations in Information Systems and Technologies. WorldCIST 2020. Advances in Intelligent Systems and Computing, vol 1159. Springer, Cham. https://doi.org/10.1007/978-3-030-45688-7_45

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