The way Apple conducts its business is widely recognized as the guiding principle for good business, and those in charge of the company’s internal leadership college know more about it than most.
8 keys to running Apple
The Dean and Vice President of Apple University, Joel Podolny, and faculty member Morten Hansen provide an insight into how Apple Business Management works in the Harvard Business Review.
Here are the keys to running Apple.
1. Expertise is important
Apple doesn’t work in traditional business silos. Instead, it organizes itself in complementary teams. The hardware team can work with the software, marketing, and machine learning teams to develop a set of product features.
Apple groups include: Design, Hardware Engineering, Hardware Technologies, Software, Services, Machine Learning and AI, Marketing, Marketing Communications, Operations, Sales, Retail, Human Resources, Finance, Legal, Corporate Communications, Business Development and Environment, Politics and Social Affairs.
The idea is that the experts in each of these teams work together in a functional group rather than multidivisional. No single function is solely responsible for a product or service, which means that “cross-functional collaboration is critical”.
2. Change acceptance, not resistance
Changes are taking place and companies need to evolve. While Apple has maintained a relatively centralized functional approach to corporate governance, it has also been willing to increase the number of groups that make up the company – for example, the machine learning and AI group is relatively new. The idea is that the company can remain agile towards new opportunities and market changes through further development as an organization. A multi-division approach could actually stifle such a movement, Apple seems to believe.
3. Autonomy is good for business
The report looks at the evolution of the camera used in iPhones over the years. When Apple launched the original iPhone in 2007, it only spent six seconds with the camera. Today it is arguably one of the most important features that usher in new and advanced imaging technologies.
The idea is that by investing in functional know-how, Apple gets in-house executives who have extensive knowledge of a specific domain: the camera team, for example, knows everything about these technologies.
Because technology is such a fast-paced space, these experts need both industry knowledge and good intuition for which technologies and designs will succeed in the future.
After all, most of the time with technology we have no idea which solutions are going to be successful because they haven’t even been tested in the market. In this context, it makes sense to give these experts decision-making powers, as they are more likely to understand this facet of the challenge than can be expected from a general manager.
In other words, recruiting world-class experts is part of the business, but once you get them in position, you need to trust them to make decisions.
4. Money is not everything
Every company has a mission. At Apple, that mission is to develop, design and manufacture the world’s best products. The money it generates follows its success in this mission. However, in a highly competitive marketplace, focusing on short-term profits and cost targets can hurt business performance. That doesn’t mean you can go to the moon and back on a regular basis, but rather that it gives the teams permission to focus on delivering the best possible solutions within their domain. To reinforce this, Apple’s bonus system reflects overall company performance rather than specific product revenue. This is a subtle point, but the intent is to reduce the focus on short-term gains.
5. Some walls are good
In this sense, this point speaks for itself:
“The finance team is not involved in the engineering teams’ product roadmap meetings, and the engineering teams are not involved in pricing decisions,” the authors write.
At the same time, the teams must have the courage to share their convictions. To illustrate this, the report talks about the introduction of the dual lens camera in the iPhone 7 Plus when the camera team really had to push for the feature as it would force consumers to pay more for the device. They prevailed on this argument and consumers bought the device in droves.
6. The rule of three
Apple looks for three features in its guides:
- Deep expertise in their domains. “Managers need to know the details three levels deeper.”
- Immerse yourself in the details these functions.
- Willingness to work together and debate in discussions about other functions.
The idea is that leaders are highly skilled in their vertical sectors but can apply that knowledge in other areas as well. Because of this, Apple’s camera team is a functional unit that contributes to the development of other products, such as the cameras in Macs and iPads.
The need to work up a sweat on the details extends across the organization. It seems to enable people at all levels of the company to “have” expertise in their field.
(This is very much in line with Maslow’s hierarchy of needs, as being able to develop such deep expertise in your subject also helps build self-esteem and professional skills, and create a sense of ownership and autonomy.)
7. Collaboration is critical
Apple has hundreds of specialist teams across the company. I would argue that to get an idea of the scale, all you need to do is look at an outline of an Apple product:
You’ll find glass, case design, materials science, memory, SIM cards, USB ports, user interfaces, AI, software, hardware, power supplies, and a range of components here – and Apple has teams of experts on each and every one of those components (and probably a few more more that we haven’t heard of yet).
When Apple makes even a single component for a product, it urges all of these experts to work together to achieve the best possible result.
The key is shared debate – and when a decision cannot be made, higher-level managers are brought in to help overcome the impasse. This is not always particularly easy to achieve given the complexity of the decisions made. For this reason, the ability to work together effectively is seen as a key competence in the management level of the company.
8. Teach, delegate, learn, own
Apple has 120,000 more employees than in 2006, and yet the number of vice presidents has only increased from 50 to 96.
This is a challenge for leaders as they lead large teams and need to understand more details for their respective areas. The solution is again to empower experts in teams and encourage collaboration.
It also requires some honesty about what a TP knows. Apple takes a grid-based approach here so that a market leader can define each section they work with as follows: are they learning a new domain or are they the main decision maker for a section, e.g. B. Parts of a product or an element of UI design (owned).
The grid also asks them to define their level of knowledge (high to low) and the extent to which they are involved in details. A teacher who gives a domain away may be an expert on the subject (e.g. keynote) but is no longer involved in the details of how that domain is evolving.
It’s not as complex as it sounds. At its simplest, it means that if you are the expert and in charge of a particular subject, you should better know all that you can if you want to keep your responsibility for that job.
Just one thing
I leave the final words to the authors of the precious piece, which you can read for yourself here:
“Why do companies so often stick to the fact that managing directors run the business areas? One reason we believe is that the change is difficult to make. It is about overcoming inertia, redistributing power among managers, changing an individually tailored incentive system and learning new ways of working together. This is daunting when a company is already facing major external challenges. An intermediate step can be to maintain the expert-expert model within a business unit structure. For example, when you take on the next leadership role, you are choosing someone with extensive expertise in the field as opposed to someone who may make the best CEO. However, a full-fledged transformation requires that executives also transition to a functioning organization. Apple’s track record shows that the rewards can justify the risks. His approach can produce extraordinary results. “
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Copyright © 2020 IDG Communications, Inc.
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