As per the latest annual ranking of Boston Consulting Group, Apple has retained the title of the most innovative company globally for the second consecutive year. The organizational structure of the company is such that it has earned accolades for contributing to its innovation and success.
The organizational structure is such that the whole company is under Apple under P&L, which forms a functional organization. When the structure is such, the senior vice president monitors the functions. However, he does not oversee the products. Additionally, he aligns domain knowledge with expertise and decision-making ability.
How does Apple Prioritize Functional Expertise to Help Innovation?
This allowed Apple to participate actively and successfully in the technology market. It would not be wrong to say that the technology market is full of dynamic changes and disruptions. Also, the scenario requires that the market player make decisions about the trends irrespective of the market predictions.
Most importantly, the more knowledgeable and experienced the functional units, the easier it becomes for Apple to make the right decisions about the products.
The prevailing organizational structure was introduced by Steve Jobs when he returned in 1997. Before the move, Apple’s business units had a lot of infighting. And the bone of contention used to be transfer prices. Once the functional structure was implemented, the problems and conflicts related to the transfer prices were also solved. However, the situation did give rise to silos.
Secrecy and Silos
They had the functional brainchild onboard and the groups that have masters of their domain has played an instrumental role in giving rise to innovative products. Moreover, the company had to tackle the situation of having hundreds of experts and specialists in the company, fostering secrecy and silos. However, such a scenario was familiar to Apple.
What Factors Have Prevented Open Discussions on the Premises?
This scenario gave rise to innumerable Project-Specific NDAs. Employees were not allowed to access other buildings physically. Product documents, such as codes and trace prototypes, and stringent norms were responsible for not having an open discussion.
How did Things Turn out Hereafter?
It was also realized that if this organizational structure and incidents continued, it could hinder Apple’s future innovation success. Eventually, it gave rise to so-called “fiefdoms” at the company. In this, each functional unit started being considered an individual company.
Apple realized that if silos continued to be created, it would prove to be a threat to the company and, most importantly, innovation.
Under the tutelage of the company’s HR, Chris Deaver, Apple initiated changes and laid down instructions on how the functional units must function, how they would communicate, and how to collaborate. As such, the company began to conduct cross-team sessions every week. The agenda for these sessions was to focus and facilitate an open approach in which teams would share their challenges. Once the teams started sharing their difficulties and how they enjoyed an edge, things began to look up at Apple. The secrecy culture that rules the offices of the stalwart began to give way to what was being called “Different Together.”
When teams started sharing their secrets, fostered collaborations, and shared their best practices, innovation skyrocketed like never before.