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The Silent Crisis - Apple & The Death of Steve Jobs

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  • 1. THE SILENT CRISIS Apple & The Death of Steve Jobs Management of Media Organisations M.A. Media Management University of Tampere November 2013 Authors: Federica Ferrera Bruno Lofreta Tom Mallah Marian Zinn
  • 2. PRESENTATION OUTLINE 1. Company Overview 2. Crisis Investigation 3. Organizational Configurations 4. Impact on Levels of Management
  • 3. COMPANY OVERVIEW Apple Inc.
  • 4. COMPANY OVERVIEW Apple Inc. is an American company that designs, develops and markets computers and high tech portable devices. Apple has enjoyed unrivaled success in the last fifteen years following the return of its prodigal co founder, Steve Jobs. Apple products are beautifully designed and functional devices that have changed several markets forever. The company and employs a total of 76,100 people. Its headquarter are located in Cupertino, California. Sources: (MarketLine,2013; CBSonline, 2013; Bloomberg Businessweek, 2013; Google Finance, 2013)
  • 5. COMPANY HISTORY 1976 - Apple Computer is founded in Cupertino, California by Jobs and Wozniak. 1977 - Apple releases its first successful personal computer: Apple II 1983 - Jobs recruits John Sculley, then CEO of Pepsi-Cola to focus on the Machintosh . 1984 - MAC computer is released. 1985 - Jobs is fired following the commercial failure of the MAC 1996 - Apple has been losing money, for a decade. They buy NeXt – Jobs company founded in 1985, bringing him back to the Company. 1997 - Jobs becomes CEO. Sources: (MarketLine,2013; Bloomberg Businessweek, 2013)
  • 6. COMPANY HISTORY 2001 – The Ipod is launched expanding Apple’s portfolio. 2003 - Itunes is released. Apple becomes a major player in the online Music Industry. 2007 – Apple spearheads the smartphone market with it’s Iphone. 2010 - Apple relase both IPad and Apple Tv 2011 - Due to his illness, Jobs steps down as CEO of Apple, leaving the position to Tim Cook Sources: (MarketLine,2013; Bloomberg Businessweek, 2013)
  • 7. CRISIS INVESTIGATION Apple & The Death of Steve Jobs
  • 8. DEATH OF THE CEO: A CRISIS OF LEADERSHIP  Steve Jobs, the co-founder & CEO of Apple died in October 2011.  He fought a long battle with cancer since 2004.  Jobs remained the public face of Apple until August 2011.  He was replaced by Timothy Cook (previous COO). What role did Steve What role did Steve Jobs have in the Jobs have in the success of Apple? success of Apple? Sources: (Markoff, 2011) What has been the What has been the impact of Jobs’ death impact of Jobs’ death on Apple since 2011? on Apple since 2011?
  • 9. THE ROLE OF STEVE JOBS IN APPLE’S SUCCESS  Steve Jobs is considered among the greatest CEOs in history.  Steve Jobs is considered among the greatest CEOs in history.  His persona became synonymous with Apple.  His persona became synonymous with Apple.  Jobs guided Apple to market success twice!  Jobs guided Apple to market success twice! Jobs’ visionary leadership transformed Apple into… An Innovation-Driven Organisation A high-end Lifestyle Brand Differentiated based on: •brilliant product design •a seamless user experience •a highly integrated hardware, software & content ecosystem Sources: (Siltanen, 2011; Perenson, 2011; Petrie, 2012; Markoff, 2011)
  • 10. JOBS’ LEADERSHIP & MANAGEMENT STYLE JOBS HAS BEEN DESCRIBED AS A CHARISMATIC & AUTOCRATIC LEADER Leading from a passion for his company and his products Leading from a passion for his company and his products Encouraged a relentless quest for innovation Encouraged a relentless quest for innovation Created a strong Ideology (mission) for Apple Created a strong Ideology (mission) for Apple Captured imaginations & inspired audiences through his vision Captured imaginations & inspired audiences through his vision Attained extraordinary loyalty & commitment Attained extraordinary loyalty & commitment “He was the most passionate leader one could hope for, a motivating force without parallel.” (Steven Levy - senior writer for Wired) Sources: (Siltanen, 2011; Perenson, 2011; Friedman, 2011; Markoff, 2011)
  • 11. JOBS’ LEADERSHIP & MANAGEMENT STYLE JOBS’ LEADERSHIP STYLE CAN BE DESCRIBED AS ENTREPRENEURIAL  Focus on creating an innovation- and product driven company  Focus on creating an innovation- and product driven company  Direct Control & Deep Involvement in everything at Apple  Direct Control & Deep Involvement in everything at Apple  Motivation through Inspiration & Fear  Motivation through Inspiration & Fear  Steve Jobs  Product & Marketing Genius behind Apple’s success.  Steve Jobs  Product & Marketing Genius behind Apple’s success. “…the passion, intensity, and extreme emotionalism he brought to everyday life were things he also poured into the products he made.” (Walter Isaacson, 2012) Sources: (Siltanen, 2011; Perenson, 2011; Friedman, 2011; Markoff, 2011)
  • 12. THE ROLE OF STEVE JOBS IN APPLE’S SUCCESS Jobs’ Legacy at Apple was a powerful force Jobs’ Legacy at Apple was a powerful force Highly Centralized Power Structure with Jobs at the Top Strategy reflected the Leaders (Steve Jobs) Vision of the World Primary Mechanism of Coordination  Jobs’ Direct Supervision & Direction Jobs as the Creator of a Central Ideology within the Company Apple’s greatest strength, its visionary leader, was also its greatest liability. What will happen to Apple in the second era after Steve Jobs? Sources: (Mintzberg, 1989)
  • 13. LARRY ELLISON ON JOBS & APPLE’S FUTURE Larry Ellison, the founder & CEO of Oracle, longtime close friend of Steve Jobs, and former Apple Director, shared with CBS’s Charlie Rose in August 2013 what he believes post-Jobs Apple will look like. Video: http://www.youtube.com/watch?v=qnA5Hvo9So0 Video Sources: (CBS News, 2013)
  • 14. THE IMPACT OF STEVE JOBS’ DEATH Facts to consider when evaluating the crisis: The company had time to devise a succession plan New CEO Tim Cook was chosen by Steve Jobs as successor Apple still has solid leadership with a competent executive team Leadership was handed over during time of economic strength BUT most experts believe Steve Jobs cannot be replaced! Sources: (Helft and Miller, 2011; Gustin, 2012)
  • 15. THE IMPACT OF STEVE JOBS’ DEATH INDICATORS RAISING UNCERTAINTY ABOUT APPLE’S FUTURE 1 Slowdown in Product & Design Innovation 2 Declining Brand Image & Reputation 3 Growing Competition & Eroding Profit Margins 4 Leadership Turnover & Cultural Change Sources: (Kelly, 2012; Crow, 2012; Bosker, 2013; Creamer, 2013; Lashinsky, 2013)
  • 16. ORGANISATIONAL CONFIGURATIONS Apple Inc.
  • 17. MAPPING THE UNKNOWN - Steve Jobs’ untimely death a few years ago has left many observers wondering how it has affected the company’s organizational configuration. - The biggest problem faced in accomplishing this task is Apple’s near fanatical obsession with secrecy. “Little knowledge happens to be about all we have, as Apple’s organization is one of its most closely guarded secrets. Even employees at Apple have little idea of how the company is organized.” Source: (Dediu, 2013)
  • 18. APPLYING MINTZBERG TO APPLE Not surprisingly, Henry Mintzberg’s Entrepreneurial Configuration comes to mind. 1)“Strong Leadership, sometimes charismatic, autocratic” 2)“Activities revolving around the chief executive and often direct supervision” 3) “Visionary process and a sense of mission as a core strategy” CEO = Steve Jobs (1998 - 2011) Tim Cook (2011 - Present) -> Apple’s overall structural configuration has not significantly changed with the company’s activities still centered around the CEO and a few executive reshuffling. Sources: (Mintzberg, 1989; Dediu, 2013)
  • 19. APPLE IS VERTICALLY INTEGRATED = MACHINE STRUCTURE Supply Chain Control Design & Programing ------------------------------------------------------------------------------Operations & Marketing ---------------------------------------------------------------------------------------- Implementation & Distribution Sources: (Mintzberg, 1989; Marketline, 2013)
  • 20. APPLE IS HORIZONTALLY INTEGRATED = Innovative Structure High End E-Retailer Apple Stores Online Media Content Distribution Market iTunes High End E-Retailer Apple Stores Sources: (Mintzberg, 1989; Marketline, 2013)
  • 21. APPLE IS AN ORGANIZATIONAL LEGO - Mintzberg recognizes the shortcomings of boxing up organizations into single structural configurations, acknowledging that most firms have a plurality of forms. - The different structural branches at Apple assume specific configuration roles that move the company at times creatively (designing & innovating) efficiently (production & manufacturing) or simply, with purpose (ideology, control & brand image). - Apple’s organizational LEGO is driven by the following configuration forces each one influencing the giant entrepreneurial-like structure: 1) Ideological 2) Political 3) Innovative 4) Machine Sources: (Mintzberg, 1989)
  • 22. “APPLE’S CONFIGURATION FORCES” Sources: (Lashinsky, 2013; Grobart, 2013)
  • 23. LEVELS OF MANAGEMENT & MARKETS Crisis Impacts
  • 24. CORPORATE MANAGEMENT & THE POLITICAL MARKET Cook is addressing Apple’s Corporate management proactively: Charity: Dividend, Shareholders: Tim Cook has donated to universities and hospitals with donations. Apple started to reward his shareholders with a dividend. Cook went to Political Approach: In May 2012, Timrepresentative. Washington and met with US congress Environmental Issues: The hiring of Lisa Jackson, to overlook the company's environmentally friendly strategies, which recently received some criticism. Sources: (Lowe Gregory F. and Alm Ari, 2001; Kelly Heater, 2012; Linkous John, 2012; Palmer, 2012; Appleinsider, 2013; Worstall Tim, 2013)
  • 25. OPERATIONAL MANAGEMENT & THE PROFESSIONAL MARKET An increased number of employees has left Apple to other companies in the Silicon Valley For many officials and observers, Apple has lost its innovative spirit and startup characteristics Apple has expanded its in-house marketing department rather than outsourcing. Tim Cook is operationally efficient at matching supply and demand Sources: (Cheng, 2012; Diaz, 2013)
  • 26. STRATEGIC MANAGEMENT & THE OPEN MARKET Competitive Advantages Currently undermined by: Differentiation Product design, user experience. Imitation and cost drive a lot of buyers to forgo differentiation over time. (Samsung/Microsoft = big market share) Brand Loyalty Ability to link its products and content via Itunes/Icloud, Brand Image, Ease of use. Cheaper Iphone C model erodes brand image and possibly damages its high-end retail strategy. Innovation Iphone and Ipad were gamechanging No new groundbraking devices since 2010 (Ipad products upon release. release) “The crucial question in determining profitability is whether firms can capture the value they create for buyers or whether this value is competed away to others.” Sources: (Marketline, 2013; Porter, 2004)
  • 27. BUSINESS MANAGEMENT & THE POPULAR MARKET HOW HAS APPLE’S BUSINESS BEEN AFFECTED?  The company proceeded with its unprecedented growth internationally in the last two years  Annual updates of the existing product lines continued to produce high sales and record profits How much of this performance must still be attributed to Jobs' regime?  The company has… Very solid finances with cash reserves of $150 billion A highly valuable brand An existing product portfolio that continues to remain very successful Loyal followers around the globe  Under Cook, Apple managed to capitalize very well on the existing products developed under Jobs  Even without a new innovative product, Apple will remain a strong contender in its key markets for years to come Sources: (Pallotta, 2013; Lashinsky, 2013; Finnie, 2013)
  • 28. Business Management & THE POPULAR MARKET HOW HAS APPLE’S BUSINESS BEEN AFFECTED?  Growing uncertainty if Cook has a bigger vision for Apple & if he can retain its innovative drive  BUT Jobs thought about products well into the future! Likely that his new product vision still directs the plans of Apple for the next few years at least  Apple remains secretive about its future plans. Unknown what Apple has been working on the last three years since the launch of the iPad. Hints of new product categories in the development (wearable computers, a TV, software for automobiles, etc.) Sources: (Gustin, 2012; Pallotta, 2013; Finnie, 2013)
  • 29. BUSINESS MANAGEMENT & THE POPULAR MARKET WHAT IS THE FINANCIAL IMPACT?  Apple is continuously losing profit margins with its existing product portfolio  Company is dependent on one product more than the rest to maintain its financial results Apple's main income source is the iPhone -> 2/3 of Apple's revenues!  Q4 2013 Sales Performance iPhone sales grew by 26% to 33.8 million. iPad and Mac computer sales are flat at 14 million and 4.6 million year-over-year. iPod sales continue to decline.  In 2013 revenue increased from $156.5bn to $170.9bn (aggressive international sales)  Financial year ended with first profit decline in 11 years of 11% Sources: (Kelly, 2012; Fiergerman, 2012; BBC News, 2013; Velazco, 2013)
  • 30. Business Management & THE POPULAR MARKET HOW HAS APPLE’S BRAND BEEN AFFECTED? Apple’s brand prestige is one of its most valuable assets & a key differentiator creating competitive advantage. INDICATORS OF APPLE’S BRAND IN DEMISE 1 Inferior Product launches & Quality Control Issues 2 Weakening Media Relations & Advertising Message 3 Declining Perception of Exclusivity & Coolness Sources: (Siltanen, 2011; Crow, 2012; Lashinsk, 2013; Creamer, 2013; Faw, 2013)
  • 31. CONCLUSIONS It is still too soon to say how innovative Apple will remain without Jobs. Where is Apple going and how will it get there is anyone’s guess. Sales are still strong and the company has billions in reserve. One can hardly talk about a deep crisis. But the question remains: Can Apple come up with another breakthrough product or is it doomed to ride on Steve Jobs’ past successes and slowly decline?
  • 32. REFERENCES BBC News (2013), "Apple profits decline despite iPhone sales boost" (Online) Available at: http://www.bbc.co.uk/news/business-24719728 [Accessed 09 Novermber 2013] Bosker, B. (2013), "How Apple's Losing Its Monopoly On Magic", The Huffington Post (Online) Available at: http://www.huffingtonpost.com/2013/03/06/apple-futuremonopoly-on-magic_n_2814015.html [Accessed 2 November 2013] Creamer, M. (2013), "Apple's Critics Focus on Wrong Kind of 'Cool'", Advertising Age (Online) Available at: http://adage.com/article/digital/apple-s-critics-focus-wrong-kindcool/239566/ [Accessed 20 October 2013] Crow, D (2012), "We've passed peak Apple: it's all downhill from here", Havard Business Review (Online) Available at: http://www.theguardian.com/technology/2012/nov/07/peak-apple [Accessed 21 October 2013] Faw, L. (2013), "Is Apple's iPhone No Longer Cool To Teens?", Forbes (Online) Available at: http://www.forbes.com/sites/larissafaw/2013/01/09/is-apples-iphone-nolonger-cool-to-teens/[Accessed 8 November 2013] Fiergerman, S. (2012), " Wozniak: Apple May Decline, But Not Because It Lost Steve Jobs", Mashable (Online) Available at: http://mashable.com/2012/10/02/woz-applewithout-jobs/ [Accessed 03 November 2013] Finnie, S. (2013), “Is Apple OK?”, Computerworld, 47(14), p32. Friedman, L. (2011), "Apple turns to Tim Cook to replace Steve Jobs", PC World (Online) Available at: http://www.macworld.com/article/1161929/apple_turns_to_tim_cook_to_replace_steve_jobs.html [Accessed 21 October 2013] Gustin, S. (2012), "Is Apple Losing Its Shine After Steve Jobs?", Time (Online) Available at: http://business.time.com/2012/08/03/is-apple-losing-its-shine-after-stevejobs/#ixzz2iQzREygN [Accessed 21 October 2013] Helft, M. and Miller C. (2011), "A Deep Bench of Leadership at Apple", The New York Times (Online) Available at: http://www.nytimes.com/2011/01/18/technology/18cook.html?_r=1& [Accessed 21 October 2013] Kelly, K. (2012), "How Apple has changed under Tim Cook", CNN (Online) Available at: http://edition.cnn.com/2012/10/04/tech/innovation/apple-tim-cook/index.html [Accessed 2 November 2013] Lashinsky, A. (2013), “Apple: Game over or room to grow?”, Fortune, (Online) Available at: http://money.cnn.com/2013/07/08/technology/apple-bearsbulls.pr.fortune/index.html [Accessed 21 October 2013] Markoff, J. (2011), "Apple’s Visionary Redefined Digital Age", The New York Times (Online) Available at: http://www.nytimes.com/2011/10/06/business/steve-jobs-ofapple-dies-at-56.html?adxnnl=1&pagewanted=all&adxnnlx=1382120658-CaDXtmo4ISQYDBB8Qf8RRQ&_r=0 [Accessed 2 November 2013] Pallotta, D. (2013), "The Market Wants Apple to Unveil a Time Machine", Harvard Business Review (Online) Available at: http://www.bloomberg.com/news/2013-0116/the-market-wants-apple-to-unveil-a-time-machine.html [Accessed 2 November 2013] Perenson, M (2011), "Apple Without Steve Jobs: A Charisma Crisis", PC World (Online) Available at: http://www.pcworld.com/article/238771/apple_without_steve_jobs_a_charisma_crisis.html [Accessed 21 October 2013]
  • 33. REFERENCES Petrie, C. (2012), “Changing the World”, IEEE Internet Computing, 16(1), p87. Siltanen, R. (2011), "The Real Story Behind Apple's 'Think Different' Campaign", Forbes (Online) Available at: http://www.forbes.com/sites/onmarketing/2011/12/14/thereal-story-behind-apples-think-different-campaign/ [Accessed 20 October 2013] Velazco, C. (2013), " Apple Sold 33.8 Million iPhones, 14.1 Million iPads, And 4.6 Million Macs In Q4 2013", Tech Crunch (Online) Available at: http://techcrunch.com/2013/10/28/apple-q4-2013-iphone-ipad-mac-sales/ [Accessed 21 October 2013] Porter, Michael (2004) Competitive Advantage. New York: The Free Press. Pp. 9, 14. Mintzberg, Henry. (1989) “Mintzberg on Management: Inside Our Strange World of Organizations”. New York: The Free Press. MarketLine. (2013) “Apple Inc. – A Company Profile” MarketLine Report (Online) Available at: http://advantage.marketline.com.resources.asiaportal.info/Product/Download? pid=5B0A0C20-9BB6-4284 A575AC0F2261F45C&role=MainDeliverable&mimetype=application/pdf Cheng, Jecqui. (2012), "Is Apple Losing Its Shine After Steve Jobs?", Ars Techinica (Online) Available at: http://arstechnica.com/apple/2012/10/the-ghost-of-jobs-apples-challenge-todecide-what-would-steve-do/ [Accessed November, 2013] Diaz, A. (2013), "Apple to Hire Creatives in Major Marketing Department Expansion", Advertising Age (Online) Available at: http://adage.com/article/agency-news/apple-plans-majorexpansion-house-design-team/244033/ [Accessed November 2013]

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