Apple: Innovation, Product Development and Execution

Being among the leading companies in the field of innovation, Apple is still the best in computer software and hardware designing and integration since its establishment in 1976. Three decades later, the company had modeled its telephone, mobile, music, and retail functions through its business models, innovative stores, and its sleek products. In the retail section, the Apple stores registered some of the highest revenues, and in just nine months after its launch, its applications store attained one billion downloads. The report provides a case analysis on Apple Company based on innovation and design thinking focusing on the period between the year 1997 and 2012 and applying the Palmer & Kaplan and the double diamond process model.

The company’s success did not just come as a result of skillful strategic plans or innate ideas in market timing. It rose from a high level of dedication to comprehend how people utilized computing devices and the zeal to develop high-quality products. The love for music within the firm and the product's ability to meet the customers’ needs, dreams and expectations made iPod rise and gained fame over their competitors (Gardere, Sharir, and Maman, 2018 p. 105).

Apple faced an ever-increasing completion as it ventured into new businesses making the foundation of its success confusing to many industry experts and technology pundits. Notably, Apple did not fear to experiment outside its core markets and often rejected current business (Amit and Zott, 2010 p.11). While their competitors were concentrating and heading towards distribution models and direct sales, they built their retail stores and focused on the ‘Apple way’ of doing things which involved profound dedication to quality products and services (Gardere, Sharir, and Maman, 2018 p. 107). The guiding principles of the Apple way include design thinking, ability to conduct bold business experiments, its CEO as the chief innovator and a clear development strategy and execution (Kolko 2015, p. 48).

Design Thinking

In simple terms, design thinking is a process that is solution-oriented and is used to obtain innovation while putting customers’ needs into consideration at all stages of development (Brenner and Uebernickel, p. 20). When Apple started designing computers they were basically housed in a distinct location within the company’s premises where it could be controlled and guarded government specialists. The idea that computers could be used for individual work could not be imagined. However, Apple’s developers spent very much money in order to do so. Apple addressed individual users from the beginning and for their products to be useful to their customers; the company resorted to reducing the level of their device complexity (Kodama 2017, p. 66).

Apple’s design focused on what they thought their customers needed and wanted, and how they would relate to the computers. After envisioning that, they went and enacted it technically through their set targets and creativity (Heracleous, 2013 p. 95). The initial steps indicate that the “Discover” and “Define” phases were very crucial to Apple in the design thinking process. Paying attention to the smallest details concerning their products, including the packaging has helped it realize design sensibility, making people like these products even more. For example, an iPod is so simple-minded, apart from letting a person navigate their music, it does not require much since its simplification was well thought through while taking into account the design sense which entirely is on creating a simple and easy-to-implement solution (Barrett 2015, p. 144).

Apart from the design’s simplicity, Apple also goes beyond fashion. They do not only concentrate on the devices’ fashion and surface appearance, but its coolness, for instance, the iMac was not all about making beautiful colored computers, but it was all about making cool and quiet computers which do not require a fan but wake up in 15 seconds and is having a perfect sound system. The end products such as the Macintosh, PowerBook, iMac, and iPhone prove that there was a strategic focus on the “Developing and Delivery” stages. These products demonstrate that Steve Job sought perfection whilst working on the designs.

Innovation, Product Development, and Execution

The company’s history has been entwined with innovation, product development, and execution. For example, Mac was not only planned to be a computing device but rather it also showed a way how customers could work with computer devices (Sniukas et al. 2016, p. 56).

Analysis of Apple using Palmer & Kaplan

Organizational readiness

Merging software and hardware to create products

New structure for the management

Consumer insight

The products are easy to use and very interesting

Focus on customer satisfaction

Industry Foresight

A focus on the entertainment industry

There was provision of music and games to the market

Strategic alignment

Steve Job as the leader pursued perfection

There was an environment of open-minded people focusing on design and creativity

Core technologies & Competencies

There was the ownership of CPU company

Focus on new technology

Disciplined implementation

Setting up distribution channels

A focus on advertisement

Managed innovation process

Steve Jobs was focused on the holistic perspective taken by Apple in design thinking and innovation of its products

Situation Analysis

Apple has been one of the leading companies with reference to innovation especially under the leadership of Steve Jobs. However, this couldn’t have been the case without the Apple Company adopting the aspect of ‘Design Thinking’. According to Kodama (2017, p. 64), design thinking is regarded as a solution-oriented strategy that is adopted by an organization to achieve innovation with consumer demand at heart. Design thinking is, in turn, human-focused approach as designers' integrates employee demands.

Fig 1. Represents the relationship between design thinking & innovation (source: Google)

SWOT Analysis of Apple Inc. 1997

SWOT Analysis reviews the most important issues around an enterprise environment and its deliberate capability that might likely affect then development plan (Khan et al. 2016, p. 958).

Strengths

As an established company, Apple has developed a strong brand name and equity. The company has managed to create a strong brand image due to its aggressive nature of foundation towards creativity and effective innovation process witnessed in designing the Macintosh, LaserWriter and the PowerBook. Being one of the oldest hardware manufacturers, Apple has transformed their company by manufacturing products that are so customer friendly (Heracleous, 2013 p. 96).

Further, the sleek design and a high-quality product of the company is another selling point as their customers always get attracted to them such as the Power Macintosh and the Newton Message Pad.

The company rich, innovative culture had also seen it increase investments as well as elevating its sales (Khan et al. 2016, p. 960). The ease of use and the simplicity of the products was also a plus point to Apple.

Weaknesses

In as much as the company was thriving, it faced several setbacks. One of the major weaknesses of the company was limited locations for direct sales. The company only had thirteen countries having direct sales locations; this made it still lag behind despite its strong promotion strategy for direct sales promotion.

Apple’s products are also highly priced as compared to their competitors who have cheaper products, making some customers deviate from apple and resort to their competitors’ products (Sathappan 2017, p. 77). Another weakness is that Apple’s distribution network is low and inadequate to the high-end market.

Opportunities

Apple Company has several opportunities to improve their products and services. The company is having a chance to expand their distribution network so as to reach a high-end market and hence tap in their competitors’ market share. Through this, they will also be able to reach a huge number of consumers worldwide thereby increasing their sales.

Threats

Technology and development is advancing at a very high rate which possess the problem of products becoming obsolete much faster, thus having a low shelf-life. The company’s pricing is also a threat; the products are so expensive compared to their competitors’ affordable prices.

SWOT analysis of Apple, Inc. in the year 2012

Strengths

Strengths refer to factors which affect an organization internally which can be used to come up with a strategy which may include factors such as access to good technology or having a good sales network. iTunes emerged as a major source of income for Apple, the product was available in the iPod which belonged to the company. Apple also matched its unique software with hardware making it self-reliant. Apple designed its products in an attractive manner which was simple to use, thus attracting many customers.

The company had merged with Intel as from the year 2006. The merger increased its market dominance. The research & Development unit was well organized and continued to come up with new designs. Therefore, the company has been able to achieve a massive customer base that comes with high customer loyalty. For example, customers who purchased iPhones got compelled to acquire iPad and MacBook so as to prevent them from missing out the connection no matter which platform they are using. The Market growth has also been intensive.

Weaknesses

These refer to negative aspects which the business can eliminate internally. These include poor marketing, limited distribution channels and so forth. The first challenge is the negative relationship between Apple and Microsoft Company which is the main competitor. Apple also produces highly priced products. The firm has a lower market share when compared to Microsoft. Another shortcoming is that technological products become obsolete after a short while which means that design and development ought to be continuous.

The company’s high dependency on iPods and iPhones due to their dominant contribution in the overall sales is also a weakness because it prevents it from products diversification. In addition, the company’s hardware products have some restrictions as it is only supported by iOS, thereby making it less compatible with non-Apple products (Sathappan 2017, p. 77).

Opportunities

Computers are being attacked by viruses which require the production of anti-virus software. Online sales are high due to increased internet use. Establishment of partnerships with other firms, an example is the merger with Intel which has had positive results. Apple, therefore, has an opportunity to get into the market of application development, where they can create their own apps for their products helping them cut into their high prices.

Further, the accessory market is also an ever-thriving field; creating accessories for their own products will allow them to gain more profits. There is also an opportunity for the company to retain their skilled and talented workforce from their competitors in return to maintain the company’s creativity and innovation (Khan et al. 2016, p. 958).

Threats

In the Laptop market, Apple Inc. has to compete with many strong competitors including Dell and HP. There is the aspect of piracy where customers using iPod can download music for free instead of making purchases from the iTunes. The economic recession might affect the profitability of Apple Company. The main threat to the Apple Company is the strong competition from Android and Samsung companies.

Apple’s operating system is under threat from Android system which is free for all smartphones unlike Apple’s whose compatibility with non-Apple products are restricted (Norman and Verganti 2014, p. 87). Notably, the innovation and creativity in Apple have slowed down since the death of Steve Job and hence many customers have been worried about the product quality thereby switching to the competitors’ products (Oke, Munshi and Walumbwa, 2009 p.66).

PESTEL Analysis for Apple Inc. 2012

PESTEL compares aspects in the macro-environment which affects how a company is managed. The analysis helps determine the current condition of Apple Company in the year 2012. The company’s success has been due to different strategies which have been created and focused towards exploitation of opportunities as well as protects the entire business from threats.

Political Analysis

In the year 2001, China became a member of the WTO which was a good and bad thing to Apple at the same time. The firm had the opportunity to utilize cheap labor and also had a larger market. The challenge is that the competitors would also take advantage of these available opportunities. Therefore Apple moved its plant to China which gave it an advantage over its competitors. The move led to increased international sales covering between 54 and 58 percent as reported in the year 2010. Apple Company major sales revenue of the company is from outside the US therefore poor international relations, conflict or terrorism may affect the company negatively.

Additionally, some of the key external factors with reference to politics entail an improvement of free trade policies which in turn presents the company with opportunities. On the other hand, the existence of stable politics in a developing country presents the company with a positive business environment and opportunities in expanding its innovation and overall performance.

Economic analysis

The global economic recession had a major negative impact on Apple. The reason is that the rate of inflation has increased significantly, which is coupled with high unemployment rates, therefore, the customers are left with a minimal consumable income. In 2012, the global economy was so slow and this made Apple face severe crises, for example, high rates of unemployment in developing countries were some of the reasons that led Apple into tough economic situations (Shtal et al. 2018, p. 37).

The high cost of raw materials and slow rate of national growth are some of the major economic features that can impact on the company activities. The factors can also help identify sales gaps and demands of Apple products in the global electronics industry. Nevertheless, with a stabilizing economy of developing nations, the company is utilizing the positive economic aspects to increase its overall influence in the industry (Shtal et al. 2018, p. 40).

Social Analysis

Apple has made tremendous changes in their products to fulfill and satisfy their customers’ expectations. The necessity of Apple’s customer base is always changing, their product’s use for entertainment has risen hence bringing the need for the company to create phones and PC’s with an improved processing power and graphics sound. Nowadays, people are fascinated by small and light laptops and tablets, this has made the company be more creative and innovate in order to meet their customers’ expectation (Shtal et al. 2018, p. 37). Social factors have had a positive impact on as people consider it as the king of technology because of its sleek designs, high quality, and proper functionality (Oke, Munshi and Walumbwa, 2009 p.66).

Increased access to the internet in terms of access to mobile phones and also the increasing use of social media represents major developments which are increasing presenting opportunities to the company. This change in trend is presenting the organization with an increasing demand for phones, hence presenting an opportunity to innovate and serve more of the growing number of clients (Dedrick, Jason, Kenneth and Greg, 2010 p.90).

Technological Analysis

Improvement of internet access globally has a huge impact on Apple products, and as the world in electronic consumer, business translator, Apple also has to ensure they deliver quality products to their customers. The massive growth in the technological sector annually has led to strong competition in the electronic industries. Regardless of the stiff competition, Apple still tops the market due to its sleek and innovative products (Gardere et al. 2018, p. 103).

On the other key technology-related development entail adoption of cloud computing, integration of technology, and increasing development and use of apps are some of the additional technological related advances which increase opportunities for Apple Company.

Environmental/ Ecological Factor Analysis

In the past years, Apple has shown their dedication to environmental protection. For instance, the company has eliminated harmful toxins like BFR, PVC, lead, and mercury from their products. Additionally, Apple is among the few companies that file exhaustive reports on their greenhouse gas emissions. They also ensure their computers are energy efficient and are within the government’s standards.

Legal Analysis

Laws and regulations like customer protection and employment laws can adversely affect companies during the launch of their new products. For instance, legal restrictions and regulations by the government on the new products such as iPhones have influenced Apple’s production mechanism and the way it sells these products (Gardere et al. 2018, p. 104). Increasing regulations in regards to privacy issues as well as increasing telecommunication issues have been threats to the Apple Company.

Governments are realizing the privacy concern related to privacy issues in the digital field. This, in turn, has resulted in the imposition of more privacy regulations on corporations like Apple. The imposition is not only posing a threat to the Apple and like-minded organizations but also offering opportunities whereby the Apple Company is focused on innovations to ensure the products they give to their customers are secure and of a perfect standard.

Assumption

In examining Apple’s success, there is little information on what is making the company register outstanding performance despite the tight completion; an assumption, based on socio-cultural analysis suggests that with the society’s progression, customers prefer designs of products that they could carry wherever they go, making the company customize their products offer consumer-focused services. Additionally, the underlying assumption with reference to the Apple Company is that successful innovation demands control. With reference to this, the company has adopted the closed innovation model whereby they develop, generate and commercialize their ideas. The model is more aligned with the aspect of being self-reliant.

Limitation

One of the limitations during the report was that a majority of the sources mainly focus on Apple in the 2000’s with only a few sources covering events during the 1990’s. Another challenge is that various researchers have focused on aspects of design thinking and innovation on the account of Steve Jobs; I believe it would have been better to also factor in aspects of the teamwork and the importance that this played as opposed to too much emphasis on an individual. Other challenges were analyzing Apple’s case study using the Kaplan model and the double diamond process.

Hypothesis

The first assumption is that during the Steve Jobs era Apple design thinking and innovation process when coming up with its products was targeting the middle and upper classes in the community. The reasoning would explain why it only offers its products at such a high price. Therefore, despite the fact that its competitors such as Dell, Hewlett Packard, IBM, and Amazon offer products at a cheaper price, many consumers still prefer Apple’s products.

The second assumption is evidenced by the design thinking and innovation during the leadership of Steve Jobs is that Apple only provides products which are not available in the market making it rather difficult for their competitors to keep up and thus consolidating the market.

Evidence

Apple is still unable to work on their price minimization; they are not yet willing to develop cost-effective models as a means of maintaining their extravagance brand image. Moreover, this has made the products’ market sector higher, medium and upper-class economy, hence hindering low-income customers from purchasing them (Barrett 2015, p. 142).

Evidently, the company’s design focused on what they thought their customers needed and wanted, and how they would relate to the computers. The company’s zeal towards customer satisfaction made them rethink their products into a high quality and sleek design which saw the company achieve a great selling point as their customers always got attracted to their products.

Apple has been extremely reserved about both its strategy and how it carries out its operations increasing anticipations among its customers for new products. Therefore, its simplified range of products and broad product families’ reuse within the company suggests that it is having a clarified platform strategy. For example, iPhone uses its own operating system different from the android phones made by its competitors (Barrett 2015, p. 144).

PROs and CONs

The PROs of Apple can be analyzed on the basis of “Develop” in design thinking double diamond process. The reasoning is that the organization has focused on developing unique and high-quality products which make it stand out from its competitors. One of the benefits of Apple’s design thinking and innovation is that it gained the pioneering technology and sophisticated history of the computing industry (Boudreau and Lakhani, 2009 p.69).

Moreover, Apple continued with its creativity and innovation leading to a number of new products. The tremendous output performance made is brand reputation has been growing strong the qualified products also remained high repute (Norman and Verganti 2014, p. 89). The approach is a remedy to the company’s strong corporate control; this is due to the fact that, Apple's organizational structure is a strong supporter of management control. This means the top leaders are in control and the business functions are product based (Brenner and Uebernickel, 2016 p. 20). This, in turn, facilitates strategic management implementation, hence helping towards the establishment of coherence within the organization.

The “Deliver” phase can be used when analyzing the Cons witnessed by Apple. The design strategy of customer focus brought in the technology gap. In that, its software, including the operating system and applications are still having low compatibility with non-Apple products, therefore, limiting Apple’s software sales by the number of hardware sales. More so, the company is faced with limited flexibility.

Therefore, its “Deliver” phase relates to the low flexibility, the company structure basically prevents the organization's response to current business trends and needs as well as the market demands. For example, the organizational top leaders have to give directives to proceed in change implementations. The process hinders the organizations from adopting rapid changes.

Recommendations to Apple Company

With reference to the Apple Company, the organization should work on minimizing their product prices by 10% within their next quarter which falls under the “Develop Phase”. Due to Apple’s high price products, their major customers are unable to purchase their products and hence are resorting to the competitors’ relatively cheap products, it is, therefore. Developing a Blue Ocean strategy would favor the company as it bears the same goal of profit maximization (Brenner and Uebernickel, 2016 p. 20). In order to reduce future threats price increment, it should also venture in the field of investments to supplement profit margins.

Apple should use the “Define Phase” so that they may address the problem relating to discovering new markets which are a converging alternative. The main approach should be probably to widen their products to more social classes in the economy. The company should also raise their brand equity by diversifying their distribution networks to the lower end and cheaper goods annually.

By proper synthesis, Apple would evaluate ways in which it can extend into the new market which would make the company increase their bandwidth and hence enables it to tap into the new customer sector. Defining ensures that Apple can focus on a specific problem and come up with workable solutions (Kolko, 2015 p. 48). In so doing, the company would be opening doors to new customers section with the potentiality of becoming loyal consumers. Consequently, Apple should as well form a global partnership and alliances with other companies to fight hackers and software piracy and expand its brand (Kolko, 2015 p. 47).

The last recommendation is covered under the “Deliver Phase” which is a converge strategy within the design thinking double diamond process. The company should enhance its products’ software and hardware compatibility with other products within the next 2 years. The idea would help reduce the high threat of competition of the products in the global market and properly settle the loss of customers to their competitors and as well fill in the gaps.

Recommendations to Other Companies

Other companies should not only use existing competencies to compete in the consumer electronics market but also constructed new competencies to battle the predominance, advancing the self-enhancement every season. For instance, they could design new edges for the market, apart from their regular series products. They should combine both the “Discover” and “Define” phases when coming with new products. The major concern is that if they carefully insight into problems being faced by customers, then they can effectively focus on them and offer much-needed solutions (Boudreau and Lakhani, 2009 p.69).

They should always keep their marketing and Products in the market Simple. Therefore, the “Deliver Phase” is rather crucial because customers will identify companies by their brands. The end product should be reflective of the ideals, vision, and commitment that an organization has to its customers. Just as Apple, other companies should understand that technology consumers usually get overwhelmed, which can create confusion in the marketing mix. Apple, on the other hand, utilizes the implementation stage rather effectively in design thinking, which helps reduce their customer confusion. They completely reduce high tech terms and replace them with easy and relatable terms.

Drawing from the analysis, Apple's key development and success are defined by the ability of the organization to combine hardware and software as well as its retail strategy, to perfectly meet the customer demands which falls under the “Develop Phase” (Sniukas, Lee and Morasky 2016, p. 45). While there remain other factors behind Apple's success, the ability to combine successfully hardware and software to the customer’s preference has been on the forefront in delivering success (Sniukas, Lee and Morasky 2016, p. 45). Innovation has been the foundation of its success and competitors ought to focus wisely when picking the strategies.

Conclusion

Apple Company analysis proves that the company is an early adopter. Therefore, the firm focuses on developing innovative products when compared to its competitors such as Dell and HP. One example is that the company established the music downloading business through the use of iPod and iTunes using the internet. The move is quite risky but also rewarding when it’s properly carried out. Apple is also building a very strong market supported by brand loyalty due to its friendly products. The case analysis also shows the significance of the design thinking double diamond process, which has been effectively applied when analyzing how Apple identifies market niches, design new products and solve existing problems in the market. Therefore, each of the four phases in the model is equally important and they determine how profitable a company is in the long-run.

References

Amit, R. and Zott, C., 2010. Business model innovation: Creating value in times of change.

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Boudreau, K. and Lakhani, K., 2009. How to manage outside innovation. MIT Sloan management review, 50(4), p.69.

Brenner, W. and Uebernickel, F., 2016. Design Thinking for Innovation. Research and Practice, pp.20.

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Kolko, J., 2015. Design thinking comes of age. pp. 45-50.

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Sathappan, S., 2017. Strategic Management Analysis–Apple Watch. Pp. 77.

Shtal, T.V., Buriak, M.M., Amirbekuly, Y., Ukubassova, G.S., Kaskin, T.T. and Toiboldinova, Z.G., 2018. Methods of analysis of the external environment of business activities. Revista ESPACIOS, 39(12), pp. 34-40.

Sniukas, M., Lee, P. and Morasky, M., 2016. The Art of Opportunity: How to build growth and ventures through strategic innovation and visual thinking. John Wiley & Sons. pp. 42-61.