Apple (1)

1 Contents Design Thinking and Innovation: Case study of Apple Inc Introduction a Background Apple is one of the world's leading organizations in terms of products and brands From a small tech company with a stock worth just $5 in 1997 and an uncertain future, Apple has grown into an international corporation with $274 billion in revenue in 2020 and a market capitalization at one point reached trillion dollars Those achievements all started from the return of Steve Jobs after being fired as well as the change strategy he applied to Apple during this period Innovative Design Thinking This report, therefore, aims to analyze the internal and external factors of Apple during the period 1997-2012 through the Harvard case study - 'Design thinking and innovation at Apple' - by Stefan and Barbara (2009) In addition, a hypothesis has been put forward to confirm whether the application design thinking by Steve Jobs was an integral part of making Apple's innovation process world-class b Definition of key terms Design Thinking (DT) - DT refers to the cognitive, strategic, and practical process by which design concepts for various domains (such as consumer, financial, or technology) are developed c Objective and Methodology The research purpose of this paper is to discuss how Apple effectively uses design thinking to create innovative products/technologies Secondary research was used to collect data on the leadership style of extreme CEO Steve Jobs, Apple's culture, innovation, and the role design thinking played in it Secondary academic sources in conjunction with information provided by Apple will be used in this research paper d Case Study Analysis The Harvard case study: "Design thinking and innovation at Apple" - by Stefan and Barbara (2009) describes Apple's approach to innovative design thinking and management style This case assessed how design thinking was applied when Steve Jobs returned to Apple in 1997 and the product innovation process with its 'simplicity' layout It also conveys how Jobs formed a major cultural influence on the company through his legacies Jobs' leadership style has greatly influenced the structure and operations of Apple today It helped the organization build a culture of progress and continued to grow even after Steve Jobs was gone Situation Analysis A pple's early days were characterized by the first personal computer commercialized with Apple OS During the 60s, Apple dominated the personal computer market because there were very few manufacturers in this field After all, computers were mostly used by the government or large corporations at that time However, Steve Jobs was forced to resign and leave Apple because of management conflicts This marked the beginning of a tumultuous era in shaping Apple's product strategy and plans The period 1985-1997 marked Apple's struggle to achieve success in the computer market, especially after Jobs left as well as competition from other technology giants such as IBM or Microsoft After Jobs returned and took over at Apple from 1997-2012, the company transformed dramatically and shaped a CEO-centric design structure Therefore, this section analyzes and evaluates the situation facing Apple with each stage using SWOT and PESTEL analysis a Discover stage To analyze Apple's design thinking, the Double Diamond (DD) model is applied DD was launched in 2004 by Design Council UK and it has become famous with millions of references This model conveys the design process to designers and non-designers alike According to figure 1, the two diamonds represent the process of discovering a problem (divergent thinking), then taking focused action to solve the problem (convergent thinking) The main feature of this model is the emphasis on divergent and convergent thinking where idea generation initiates the innovation process It occurs twice in the model, first to define the problem and the next time to make recommendations Figure 1: Design Thinking – Double Diamond Model Source: UK Design Council (2004) The discovery phase is the first stage of the Dual Diamond model to explore critical issues faced by Apple in study design In the mid-1980s, the computer market was only used by governments or large organizations with limited processing capacity In a situation where it was still hard to imagine an individual owning a personal computer, Steve Jobs set out to design the first personal computer to support personal work (Stefan and Barbara, 2009) After assessing the huge potential of this market, Apple began to produce and commercialize personal computers However, the level of complexity in the design needs to be further streamlined because computers of this era still carried a bulky chassis with many attached devices By identifying the problem for Apple computers as well as focusing on the smallest detail, Steve Jobs approached the context of "Simplicity" in design and use This is explained by the advent of personal computers and the technology is still quite new to consumers at this time, so the design needs to be as simple and easy to use as possible Simplicity was not only reflected in the manufacturing process of the product but also in the design characteristics and became one of Apple's later visions When looking back at Apple's growth, it can be seen that the company has been challenged by creating new technology/products, protecting the brand, and leading the market As a result, Apple kicked off a platform strategy that benefits the organization, its customers, and its partners b SWOT Analysis of Apple 1997 - - Strengths Mergers and acquisitions capacity Launch of the Mac product line Reputation for manufacturing personal computers Opportunities Developing an ecosystem associated with users Technology trend Huge and potential market - - Weaknesses Lack of stability due to operator change Vision is not clear The product failed and lacked originality Threats Competition by technology corporations Consumer confusion and uncertainty Under the leadership of John Sculley, Apple's CEO from 1985-1997, Apple was famous for its mergers and acquisitions (M&A) activities More specifically, in just one year from 1988 to 1989, the company made five acquisitions including small but important software companies such as Network Innovation, Styleware, or Coral Software This shows Apple's strength in capital potential and willingness to buy businesses that have the potential to complement its main product, the personal computer M&A is an important business and represents the size of organizations like Apple Besides, Apple has developed the Mac into a separate product line and achieved impressive sales What's more, Apple has a reputation as one of the first manufacturers of personal computers Consumers are more familiar with the Apple brand than many other fledgling competitors In addition to the strengths, this period also saw Apple possessing weaknesses such as instability in executive positions Until Steve Jobs returned in 1997, Apple was subject to much skepticism from consumers and investors without a long-term executive with a strategic vision Apple's vision at this stage is described as lacking clarity and does not show the difference compared to competitors Besides, the company also encountered failures in some product lines such as Macintosh Portable or Newton PDA However, Apple in 1997 also approached with great opportunities from the development of computers and the era of the internet of things First, the technology trend at that time was gradually becoming popular and consumers could own their computers at a more reasonable cost than before Besides, the growth potential of the computer market and related fields is endless Therefore, Apple can leverage its strengths to become a leading computer manufacturer in the early 21st century Moreover, with the introduction of products such as the Mac or Powerbook line, Apple has referred to the first technology ecosystem in history where a company can flexibly produce multiple lines of interconnected products Finally, Apple at this stage also faced threats from rivals such as IBM or Microsoft's Windows These companies soon perfected their strategy and long-term vision for the computer/technology field and gradually took market share from Apple (Chang, Kim and Joo, 2013) In addition, consumer skepticism and uncertainty about products have led to reduced sales and increased inventories Apple's marketing during this period made customers feel that the cost of Apple computers was higher than other competitors even though the production costs were cheaper 2012 - Strengths Products offered by Apple Inc is unique Decentralized production - Weaknesses Product price is high Lack of hardware and software options Short product life cycle - Loyal customer segment Opportunities Personalization/Technology Trends New overseas market Cooperation with leading international corporations - Threats Lack of competition Unstable international environment business The period 1997 - 2012 marked the return of Steve Jobs as the most successful CEO in Apple history During this period, Apple pursued the new design thinking strategy that Jobs proposed Think Different! As a result, Apple has gradually become closer to customers through products designed to be personalized and decentralized Apple's strong point in the 2012 period was its proprietary products such as iPhone, iPad, iPod, etc Apple has mastered the technology for manufacturing chips, screens, and accompanying components as well as transferring it to partners like Foxconn The result is a decentralized production process with unique products that can only be purchased through the Apple Store system and genuine authorized resellers Besides, Apple has also built a loyal fan community that supports its products Apple also possesses a strong market position compared to companies in the same segment However, during this period, Apple also revealed weaknesses such as high product prices compared to most consumers; Lack of innovative hardware and software options compared to guest operating systems like Android, Windows, etc What's more, Apple also shortens its product life cycle through updates and makes it faster for consumers to buy new products Besides, the company is also facing new opportunities such as personalization and personalization and the proliferation of technology New markets outside the US are also being explored and gradually become as important as China and Asia Moreover, the trend of globalization also makes Apple more 'international' and has the potential to cooperate with large corporations such as Samsung Electronics or Intel Finally, the threats of this period include lack of competitiveness and an unstable business environment (such as economic crisis, trade war, supply shortage, etc.) These threats have been affecting Apple's revenue and require leaders to develop more effective strategies during this period c PESTLE Analysis of Apple One of the popular macro analyses commonly used in business analysis is Political, Economic, Social, Technological, Legal, and Environmental (PESTLE) analysis The following section describes the macro factors facing Apple in 2012 after the departure of Steve Jobs and the introduction of Tim Cook as the new CEO Political Factor Apple's operations in the United States are largely unaffected by political factors, and the US government is quite open to the technological advancements Apple brings Besides, the company itself has also tried to separate from politics and focus only on its core business and creating value for stakeholders However, Apple is also dependent on manufacturing and low costs in other countries, so political instability in the country that serves as a source of raw materials will present Apple with a challenge Rising labor costs in China, Apple's main market and component maker, could take away the cost advantage in some of its products Besides, the appreciation of the dollar could also make Apple's business in other regions more expensive Social Economic Ethical concerns about Apple's employment in other countries may limit the appeal of its products Apple also faces a new population that doesn't have a strong emotional attachment to its products and is willing to spend money on other products with better prices Tech players like Google and Samsung have demonstrated a strong ability to catch up with Apple's products and services, making them no longer 'unique' It took less than a year for Google to launch its Android Pay payment application or Samsung's Samsung Pay with similar functions to Apple Pay In addition, the increase in the use of smartphones and tablets will reduce the demand for Apple's personal computers such as iMac, MacBook Air/Pro, etc Finally, concerns about proprietary operating systems, security, and cybercrime risks are also technological factors that need attention as Apple products are known for their high levels of security and privacy (Gallo, 2014) Technological Legal Apple recently entered the financial services space with the launch of Apple Pay This could expose Apple to increasing legal risks such as lawsuits, accusations, and government regulations In particular, Apple products are copied and counterfeited in extremely large quantities and affect the reputation of the company Apple also has to maintain high patent protection costs and disputes with other competitors/imposters The biggest environmental problem facing Apple is the disposal of used or defective electronic devices Disposal costs, especially for lithium battery components can be expensive and come with complex environmental regulations Furthermore, pollution and other environmental side effects at Apple's foreign manufacturing plants (such as China, India, and recently Vietnam) are of growing concern This can lead to increased management and higher production costs in the future Ultimately, climate change caused by greenhouse gases (GHGs) could disrupt Apple's energy and supply chains As a result, Apple is very vulnerable to energy and data infrastructure problems because it is a technology company Environmental Assumptions and Limitations W hen assessing Apple's mergers and acquisitions (M&A) activities, no direct information was provided in this case; an assumption, based on information gathered from secondary sources such as Apple's culture, strategy, and leadership, that it conducts M&A as its core business More specifically, legal analyst Grace (2019) pointed out that large technology corporations such as Google and Apple have focused on M&A activities with increasing frequency and scale According to Figure 2, Apple ranks 2nd in the list of companies with the most acquisitions in 2018 and 2019, less than Google and more than Intel The next positions clearly show the big difference in both size and M&A activities compared to the top enterprises Figure 2: M&A Activity of top Silicon Valley Firms Source: Bloomberg Law (2019) Like Google, Apple Inc.'s M&A during 2018-2019 overwhelmingly included executive takeovers of startups, accounting for 75% of the acquisitions announced by the company Companies Apple's tech startups span a wide range of fields, including software development, virtual reality, digital music, AI, autonomous vehicles, and health Previously, Apple was also famous for being discreet in its merger and acquisition activities, the media could only know information when the deal was completed In 2014, to the surprise of the technology world, Apple announced the acquisition of Beats (headphone maker) for $ billion, a record number at that time Apple's M&A style and culture are inherited from Steve Jobs when he was always looking for businesses that could improve the functionality of their products to integrate into the Apple ecosystem For example, the acquisition of Beats is to accelerate the production and supply of a new line of headphones with excellent quality M&A also saves Apple hundreds of millions of dollars and time on research and development (R&D) Apple simply buys/dominates control over small tech startups that have what they need In this way, in its history, Apple has merged more than 50 companies large and small into its huge technology ecosystem (Grace, 2019) 10 In terms of limitations leading to information shortages, one of the challenges when testing assumptions related to Apple's M&A activities is the inability to access relevant documents Due to the information security policy and professional working culture, Apple's projects are rarely leaked out and the public only knows about it when Apple makes the information public Another limitation is the verification of information sources Because information about Apple's M&A activities is mainly collected through secondary sources such as Bloomberg, Harvard Business Review, etc so it is difficult to verify the information Moreover, Apple is also often silent before rumors about its business activities and does not comment on any information due to very highsecurity culture Therefore, this paper is challenged to approach a better and more balanced insight into Steve Jobs' leadership style and Apple's M&A strategy Hypothesis Through the case study "Design Thinking and Innovation at Apple" by Stefan and Barbara (2009), it is essential to access Apple's display in terms of innovative design thinking, which makes the company so successful public In addition, the hypothesis is associated with the thesis that "design thinking is such an integral part of Apple and it makes the company's innovation processes approach world-class under an exclusive leadership style of Steve Jobs" Evidence a Innovation Strategy Fundamental innovation is defined as a new type of change that is disruptive and does not follow any existing technology (Jun and Sung Park, 2013) It combines with the core value that Apple is built on as a company that innovates and delivers products that are new and accepted by customers The iPhone is seen as a successful example of radical innovation In addition, there are iPods and iPads as examples that demonstrate how disruptive innovation changes the entire ecosystem of an organization In particular, the iPod was originally Apple's first consumer electronic product and has undergone many internal and external changes What's more, the iPhone revolution that started in 2008 has blown up the wireless device industry and unlocked a host of benefits for customers It is important that Apple has created an ecosystem through innovation and that it continues to spawn generations of technologies and products in the market 10 11 b Double Diamond (DD) Model The Discovery Stage During this period, ideas for innovation emerge frequently Steve Jobs built an Apple that always had to understand consumers and analyze their behavior (Gallo, 2014) For the iPhone, for example, Apple went on to explore the problems facing mobile devices of the time - complex and unconventional; not user-friendly and no centralized ecosystem Therefore, the iPhone model was introduced as the "thinnest" phone, groundbreaking with a touch screen and very easy to use The design of Apple during this period also expressed simplicity as a core value More specifically, compared to products of other competitors such as Nokia, Sony, etc., iPhone has a neat design and owns an almost full touch screen This was a breakthrough in mobile manufacturing at the time Compared to other phones with physical buttons, Apple has shortened and optimized them into buttons (x2 volume button, power off button, and home button) (Daniel, 2007) Besides, one of the best ways to uncover a user's problem is to empathize with them or put yourself in their shoes Apple has analyzed and solved a major design problem by trying to figure out how users want to experience the product instead of coming up with a complicated design pattern According to design thinking, a great designer will be people (customer) centered and understand the people they are designing for In addition, Apple also combines user interviews and regularly conducts surveys to receive suggestions from users Apple's data system also collects user-approved information early for market research (Shelley, 2015) The Define Stage In the second phase of Double Diamond, Apple narrowed down the insights it gathered to define the design challenge The company explores common fragmentation and connections between users and products and compares them to their expectations More specifically, Apple has revolutionized its designs over time through challenges such as providing an interconnected ecosystem of products/services, launching new product lines every year, etc The design and operation process was skillfully built and reinforced by Steve Jobs during the period after his return The important thing here is that DD is a non-linear, deterministic-stage process that is often discovery-based so that the problem statement can be determined 11 12 c The Palmer and Kaplan Model According to Figure 3, it can be seen that two main thinking styles fit the four stages of design thinking - Double Diamond - namely Convergent Thinking (CT) and Divergent Thinking (CT) Convergent and divergent thinking was first introduced in 1956 by a US psychologist named P Guilford He argues that these two cognitive approaches, when used effectively, can solve any problem faced by an individual/organization In the case of Apple, two approaches of thinking have been properly applied to create uniqueness and focus Figure 3: Palmer and Kaplan model Source: Innovation Point Divergent Mindset - Apple starts with divergent thinking and openness to innovative solutions Thinking differently allows a company to see products with materials and designs in different ways (Palmer and Kaplan, n.d.) That's why Apple launches unique products compared to the market with simple and recognizable designs with the apple logo missing on the back The design of the product is deeply imprinted in the minds of consumers and they assume that the design reminds them of the brand Convergent thinking - Unlike divergent thinking, convergent thinking requires different ideas to be brought together under a single and profound perspective It's not bad or stifles creativity, but it's necessary for the process of narrowing down ideas (Palmer and Kaplan, nd) Apple created 12 13 thousands of different prototypes before giving it the current opportunity realize a single model, like a MacBook computer Convergent thinking is necessary as it saves Apple time and resources and selects the most disruptive ideas Evaluation of evidence B ased on the evidence analyzed above, the hypothesis "design thinking is an integral part of Apple and it makes the company's innovation processes approach world-class under the leadership style the leadership of Steve Jobs" has been proven Not only that, but it also builds up a unique corporate structure/culture of Apple When Jobs returned to Apple, the company had a conventional structure with different departments and separate directors It is divided into business units and has its functions Believing that conventional management was stifling innovation, Jobs, upon his return, fired the general managers of all business units, placing the entire company under the CEO and combining separate functions into a functional organization (Gallo, 2014) Figure shows the structure of Apple from 1998 to 2019 There is almost no change in core parts, but only expansion/update based on product features such as hardware, software, operations., etc This preservation of structure has demonstrated the great influence of Steve Jobs to this day and proves that the above hypothesis is correct 13 14 Figure 4: Apple’s Functional Organization Source: Morten (2020) Recommendations For Apple The internal and external factors discussed in the SWOT analysis show that Apple possesses great strengths to address the weaknesses of the organization The company can also exploit opportunities such as expanding the consumer electronics market However, Apple also needs to pay attention to strong competitive threats from rivals Based on the strategic issues in the SWOT analysis, one recommendation is to continue to innovate vigorously and rapidly in the development of the company's products Furthermore, Apple should promote the automation of 14 15 processes to address the labor costs and social issues discussed in the PESTLE analysis Finally, Apple should establish partnerships with more distributors to improve the supply and market control of consumer electronic products Recent turbulent events have shown the fragility of the global supply base Apple, therefore, needs to be well prepared for threats and ready to innovate to exploit future opportunities For other companies Other companies should learn from Apple's design thinking and apply it appropriately to their businesses and customers Pursuing and imitating Apple's structure will not be an effective strategy because it depends heavily on other factors that only Apple possesses Therefore, other businesses should thoroughly study the theories and develop a design mindset of their own Conclusion To sum up all of the above ideas, Apple still holds the position of the most valuable enterprise in the world and increasingly asserts its world-class design process This achievement was developed by the unique design thinking conceived under the leadership of Steve Jobs Now, CEO Tim Cook has taken over and taken Apple to new heights However, the former CEO's influence on Apple's innovation culture and design structure remain immense This report analyzed and evaluated relevant hypotheses to demonstrate that design thinking is an irreplaceable part of a company's design process References Apple, 2021 Legal - Apple Privacy Policy - Apple [online] Apple Legal Available at: Chang, Y., Kim, J and Joo, J., 2013 An Exploratory Study on the Evolution of Design Thinking: Comparison of Apple and Samsung Design Management Journal, 8(1), pp.22-34 Daniel, T., 2007 The Secret of Apple Design Technology Review Gallo, C., 2014 The innovation secrets of Steve Jobs New York: McGraw-Hill 15 16 Grace, M., 2019 ANALYSIS: Google, Apple Focus M&A Activity on Tech Startup Takeovers [online] News.bloomberglaw.com Available at: Johnson, K and Hang, P., 2012 The Innovative Success that is Apple, Inc Marshall Digital Scholar, pp.15-28 Jun, S and Sung Park, S., 2013 Examining technological innovation of Apple using patent analysis Industrial management + data systems, Vol.113(6), pp.p.890-907 Morten, T., 2020 How Apple Is Organized for Innovation Harvard Business Review Palmer, D and Kaplan, S., n.d A Framework for Strategic Innovation Innovation-point.com Shelley, C., 2015 The nature of simplicity in Apple design The Design Journal, 18(3), pp.439456 Stefan, T and Barbara, F., 2009 Design Thinking and Innovation at Apple Hbsp.harvard.edu UK Design Council, 2004 What is the framework for innovation? Design Council's evolved Double Diamond [online] Design Council Available at: 16 ... irreplaceable part of a company's design process References Apple, 2021 Legal - Apple Privacy Policy - Apple [online] Apple Legal Available at: Chang, Y., Kim,... resign and leave Apple because of management conflicts This marked the beginning of a tumultuous era in shaping Apple' s product strategy and plans The period 1985-1997 marked Apple' s struggle... represents the size of organizations like Apple Besides, Apple has developed the Mac into a separate product line and achieved impressive sales What's more, Apple has a reputation as one of the first