Apple Inc: Keeping the 'i' tAgWa2 Taken from 'The Managment of Strategy: Apple Inc.: Keeping the Concepts and Cases' by Ireland, Hoskisson & Hitt, “i” in “Innovation” 2013, 10th Edition, Cengage Learning, pp16-36.
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Ryan McVay
Robin Chapman, Robert E. Hoskisson, Gail Christian Arizona State University
As one of the most well-known and respected companies in the world, Apple Inc. was one of the few companies to emerge from the recession stronger than ever. By spring 2011, Apple had an array of impressive products including the iPad, iPhone, iPod shuffle, iPod nano, iPod touch, iPod classic, Apple TV, MacBook, MacBook Pro, MacBook Air, Mac mini, iMac, and MacPro.1 Apple was also the only company to maintain its status as No. 1 for innovativeness on Fortune’s list of the World’s Most Admired Companies in both pre-recession 2007 and post-recession 2011. In addition, Apple was named the World’s Most Admired Company overall in 2011 by Fortune, a position it has held since 2008.2 In March 2011, Fast Company also named Apple its Most Innovative Company. According to editor Robert Safian, “In putting together this month’s special package on the 2011 Most Innovative Companies, we really had no choice: Apple had to be No. 1.”3 With net sales (in millions) of $37,491, $42,905, and $65,225 in 2008, 2009, and 2010, respectively, Apple’s stream of innovative products supported Steve Jobs’ philosophy that if you make something “really great, then everybody will want to use it”4 (see Exhibit 1). Although Apple started in 1976 as a computer business, much of Apple’s success has been attributed to its music- and video-related products and the iPhone. According to Steve Jobs, Apple’s charismatic former CEO and co-founder, “This will go down in history as a turning point for the music industry. This is landmark stuff. I can’t overestimate it!”5 Jobs was referring to the April 2003 debut of Apple’s iTunes Online Music Store, the first legal online music service to have agreements with the five major record labels at that time. Although initially available only to Macintosh users, iTunes sold more than 1 million songs by the end of its first week in operation. Not only did iTunes change the nature of the music industry, it also added greatly to Apple’s revenues by way of promoting the purchase of the iPod—a portable digital music device that could store downloaded iTunes
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songs. As Apple quickly became known as a company that made innovative consumer electronics products instead of just a company that made computers, it changed its name in 2007 from “Apple Computer” to “Apple Inc.” Jobs said, “The Mac, iPod, Apple TV and iPhone. Only one of those is a computer. So we’re changing the name.”6 Apple’s focus on innovation has helped it maintain a competitive advantage and marketing prowess over other industry players that have historically been much stronger than Apple.3 However, Apple must continue to beat the competition on a number of levels. iTunes faces stiff competition from new and existing online music and video download services. The iPod, iPad, Apple TV, and iPhone all face the threat of lower-priced rivals and possible substitutes. Then, on January 17, 2011, Apple was faced with an additional challenge when Steve Jobs handed control of the company to chief operating officer Timothy D. Cook, with the announcement of another medical leave.7 This would be his third medical leave in less than six years. For the time, Jobs retained the title of CEO, but Cook handled day-to-day operations at the company. Jobs did not share his reason for leaving the company or tell his employees when he might return.8 Diagnosed with a rare form of pancreatic cancer in 2004, Jobs took an undisclosed leave of absence that year for treatment. In 2009 he took a six-month leave to undergo a liver transplant at the Methodist University Hospital Transplant Institute in Memphis. Although these absences did not interrupt Apple’s run of successes, with Jobs’ August 24, 2011 announcement that he is retiring, the new question becomes, “What happens to a modern company whose innovations and inspirations are so closely tied to the vision of one leader when that leader’s influence is in decline?”9 To understand how Apple became a leader in innovation and how closely Steve Jobs is associated with Apple and its many achievements, it is necessary to first examine Apple’s history.