Is There Anything Apple Can’t Do? That’s Now a Problem

| Editorial

Once upon a time, Apple was famous for saying “no” to harebrained or even some legitimate product ideas. That was an essential strategy for Apple to emerge from its troubles in the 1990s. Now, however, a much larger company is increasing its surface area to the customer. That, combined with Apple’s organizational structure, is creating some problems we’re seeing today.

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I want to explore some notions that have been on my mind lately. It all started when I read Ben Thompson’s brilliant essay “Apple’s Organizational Crossroads,” back in April.

Author Thompson explains how Apple’s unitary organizational form for its business organization works. (Stay with me here for a minute.)

Briefly, there is no VP of iPhone, VP of Macintosh, VP of Apple Watch, etc. Instead, the structure is organized around expertise and business functions such as marketing, engineering, finance, etc. Apple’s organization looks like this.

 

Apple's org structure

Image credit: Ben Thompson

Author Thompson goes on to explain how this structure is well suited to specific products, but not so well suited to services. And there we left it in April.

The Big Three Apple Stressors

What triggered my renewed reflection was the result of thinking about that chart in light of:

  1. Apple’s many modern endeavors.
  2. The focus on design.
  3. The customer reaction to any one endeavor. Is Apple still cool?

Apple’s Surface Area

Apple is engaging in many traditional and new products and services. Mac, iPad, iPhone, Apple Watch, Apple TV, music, movie and TV sales and streaming, TV subscription service (aborted), reality TV, home automation, retail store watering holes, fitness and health, augmented reality (AR), social media, artificial intelligence and (probably) an autonomous electric car. Not to mention the marketplaces of China and India.

I call this Apple’s increased Surface Area. Think of it like colored dots painted on a balloon. As the business grows and the dots expand with the stretched plastic, Apple’s surface area expands in the customer space.

One of the byproducts of this increased surface area is that Apple is competing with many more companies than it did in the past. That’s good in one respect. Apple and the Mac are no longer Microsoft’s whipping boy. Apple no longer has to climb an uphill battle in the enterprise.

On the other hand, it’s bad in the sense that whenever Apple becomes conscious of a serious competitive threat in one of those areas, it’s a frenzied all hands on deck to meet the challenge. Going back to Apple organizational structure chart above, that means that no one product manager has the power to meet the new challenge.

When other companies have met this problem, they have spun out whole divisions to meet the threat. IBM did this way back in 1980 when it looked like the Apple II was going to own the entire PC market. IBM put a stop to that.

I’m not saying that Apple’s organizational structure is not performing. But as author Thompson points out, that structure has some problems with services. And I’m proposing that it also has trouble meeting a vast array of competitive threats on an ever increasing customer surface area.

Case in point, Apple’s Bob Mansfield, by all accounts a brilliant engineer, has been pulled onto the Titan car project. Whatever Mr. Mansfield was working on before, that group no longer has his attention and skills.

Next page:  The bad part of obsession with design and being cool.

7 Comments Add a comment

  1. Dead on as usual. If you look at The Functional Organization chart above I can see a tendancy for each VP to focus on the top layer, A, and B products and overlook the ones below. I suspect the Macintosh, my particular area of concern is about level F. It’s below iPhone, AppleWatch, iPad, Services, and New Products like Cars. It’s not surprising to me they’ve been left to languish. There’s a truism in business, or any organization: If no one is made responsible, then nobody is responsible. If there is no VP for Macintosh and Macintosh is at the D level or lower, then nobody is taking responsibility of seeing that they are updated. Nobody is stepping forward and saying “Dammit, we need to put some effort into these things.” Then we are left with a laughably inadequate Mac Pro (a Jony Ive design never vetted by professionals), a MacMini that is painfully out of date, no MacServer or even OS-X server edition, and iMacs and MacBook Pro’s that are far too long in the tooth. Even the new MacBook is a form over function Jony Ive system that, while nice, is overpriced for what you get.

    This is a symptom of a management style that isn’t working well any more. When Apple was a one horse stage line, they could get away with sharing the load across Marketing, Engineering, Finance and such. Now that they have so may irons in the fire they need a different structure that looks after product lines. Take a look at the Org Chart for General Electric:
    https://www.ge.com/pdf/company/ge_organization_chart.pdf
    It’s organized along product lines with things like finance relegated to Corporate Staff. This is what Apple needs to do.

  2. geoduck: I agree. As corporations grow and prosper, there often dramatic organizational changes. Is it time now for Apple? Can it wait? Would small tweaks work? Would a small executive team, accustomed to absolute power, warm up to the idea? More questions than answers.

  3. geoduck. What’s also bad is when product divisions compete with each other. The GE chart has vastly different disciplines, like Health Care and Aviation, that crossover only mildly. Remember when Steven Sinofsky and the Windows team squashed Allard’s Courier tablet? The last thing Apple needs is warring VPs.

  4. Very true. MS was badly harmed by the warring VPs that Balmer encouraged. This gave Apple a decade to establish itself as a leader.
    If you look at this org chart for Apple
    https://managementofapple.wordpress.com/role-of-managers/
    Look under Bob Mansfield, Sr VP, Hardware engineering. There are four units that answer to him. iPad, iPhone/iPod Engineering, iPhone/iPod Design, and Architecture. There is LITERALLY no one at this level paying any attention to the Mac. There is one person under Philip Schiller responsible for Mac Marketing but nobody at this level for design or engineering.

    It;’s things like this that make me so nervous about the future of the Mac.

  5. While the points made have merit; Apple is not GE, Samsung, Sony or even Microsoft, Google etc.. Where would the iPod VP be today? The same goes for the many other products that have been axed. All these VPs would have squeezed Apple of every research and development dollar they could get to keep their respective pets alive. The personal computer of the future is not going to be the Macintosh. If there was a VP in charge of the Mac today, he would be fighting for what you want now – keep the Mac development going. That would come at the expense of what you are going to need in the future. Whatever that is; Apple is likely working on it as a team relentlessly pushing forward.

  6. Where is the passion? Where is the innovation? Where is the “scuttlebutt leak” that keeps the fires burning? Where is the product after the iPod/Phone a ‘century’ ago? PR much? Wut brung you here to enjoy your friggin’ phones? My Macintosh did – where’s the love?
    talk is blah blah blah – you can’t even “blah” a coherent car/autonomous/VR/AR/WOT thing…..just Ooof. Next watch will match new ‘X’ brand – who the F cares…

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