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.
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.
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:
- Apple’s many modern endeavors.
- The focus on design.
- 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.