Business Strategy and Strategic Management Implementation and Apple Computing

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Strategic Management: Why Implementation is the most challenging part of strategy (with reference to Apple Computers)

 

Introduction

 

The relevance of the title is shown with research.  It was argued that “less than 10% of strategies, that are effectively formulated, are effectively executed” (Miller 1998 cited in Claudiu et. al. 2008:113).  One of the challenges faced by implementation is its status within the planning process.  It has been seen as a mundane activity which is the responsibility of ‘middle management’ (Cocks 2010).  Arguably, it is a process which is not well understood and therefore it is unclear why strategies fail (Tan 2004). There are, consequently, problems with turning strategies into successful practice (Mintzberg Ahlstrand and Lampel 2008).

 

The essay will discuss the technology company Apple.  It will examine two main areas of its business, related to the design and the manufacture of the products.  It will be argued that Apple’s implementation has been more successful with the former than the latter.

 

Description of Strategy Implementation in the Organisation

 

Apple has implemented its strategy through a flatter and less hierarchical management structure.  It has executed its renowned creative and innovative approach through a collaborative and generally trusting culture.  Apple implements its strategy so that technological innovation is shared throughout the organisation.  It wants learning synergies to be diffused across the firm’s structure. 

 

It wants to launch multiple new projects, so that it can promote the company’s   operating system. It wants to enable programmers to build their applications around Apple products (Shaughnessy 2013).  Consequently, an important part of Apple’s implementation is the need to work with outside collaborators (see the discussion on the collaboration with IBM below).

 

Analysis and Critique of the Benefits and Limitations of Strategic Implementation in the Organisation

 

This section will examine how Apple has generally benefitted from its organisational structure, its people management and its creative culture.  It will then discuss the significant limitations of Apple’s implementation.  This is related to the criticism it has received from its poor working relationships with suppliers.

 

General Benefits:  Related to Structure, Staff, Creativity and Culture

 

Structure

 

Apple has implemented a relatively flat or non-hierarchical organisation.  It is argued that the business has been well designed to facilitate change and innovation (Kalianann and Ponnusamy 2014).  The advantage of a ‘flat organisational structure’ is that it allows organisational units to collaborate with each other (Hendrix and Dillhyon 2014).  Collaboration within Apple has allowed the conditions to be created for innovative products to be produced.  Apple’s organisational structure has encouraged employees to be trusted and to develop products with relatively little interference (Kalianann and Ponnusamy 2014).

 

However, Apple has had to contend with organisational problems that are common to many organisations; such as reluctance for employees to change their jobs within the organisation (Thompson and Martin 2005).  Nevertheless, Apple’s size as a technology company, suggests that its structure has generally been successful.  It has allowed its activities to be orientated around the needs of customers (Beer and Eisenstat 2000).

 

Staff (People Management)

 

Apple suggests that it has implemented a motivational strategy.  It argues that it is “an enduring company where motivated people make great products” (Isaacson 2012).  Apple has recognised that its American skilled technologists and designers are employees who are important ‘intangible assets’ who can deliver success.  Therefore, arguably, its success has been partly based on its ability to implement staff motivation and the recognition of employees’ abilities.

 

Also the trust generated at Apple suggests that the company has not become overly controlling (Kalianann and Ponnusamy 2014).  The industry commentators discuss a company which appears to encourage initiative amongst its highly skilled internal employees.  Apple appears to have achieved organisational consensus, with good communication based on trust (Rappert, Velliquette and Garretson 2002).  It has been argued that “communication is what implementation is about” and that a two-way communication process is needed (Raps 2005:142).  This is one which seeks strategic questioning from the workforce, such as questioning about the firm’s mission (Raps 2005). It is also the case that answers need to be provided to employees.

 

Creativity and Culture

 

Apple has developed creativity through the implementation of face-to-face meetings as, Steve Jobs argued that, “creativity comes from spontaneous meetings” (Isaacson 2012).  This has allowed the company to achieve the implementation benefits of “experimenting and learning” (De Wit and Meyer 2010:99).   Apple is an example of an organisation that has learnt about its strategies as they have implemented them (Lynch 2009).  This learning appears to have contributed to the creativity of the products made.  Sheehan (2006) suggests that Apple has successfully implemented a creative and flexible culture.  This gave the business an advantage, over more ‘rigid’ companies, such as Sony, in the early 2000’s.

 

Apple “empowered employees by encouraging them to take part in decisions that could ultimately affect the company’s success” (Kalianann and Ponnusamy 2014:26).  Workers are empowered to be creatively involved with the company.  This suggests that Apple’s ability to create new technologies is based on an exceptional culture.

 

Steve Jobs’ mission was based on constructing an enduring company, where people are motivated to make great products. Consequently, “Apple’s competitive strategy was to make great products (and) its Human Resource strategy flowed directly ... from that” (Boudreau and Cascio 2014).  It has offered its staff the opportunity to work for a company whose mission exceeds that of a single organisation.  Rather, Apple’s culture is helping to create industry-wide new technology (Buschgens, Bausch and Balkin 2013:764). 

 

The previous discussion has outlined the benefits of Apple’s implementation.  However, this is based on positive accounts in published sources.  It is possible that there are also negative accounts which remain unpublished.  There have been, though, many published accounts of the poor implementation of labour standards at Apple’s manufacturers.  Apple has chosen to operate its computer production through outside contractors, rather than through its own manufacturing plants. 

 

Limitations

 

Criticisms of Apple’s Working Relationships with Manufacturers

 

The concept of bounded or constrained rationality means that senior managers cannot consider all the available options for strategic implementation (Lynch 2009).   Apple took the decision to simplify its organisational structure by contracting out the manufacture of its products; for example to Foxconn (Lee 2102).  Arguably, this was not an optimal choice, based on bounded rationality.  This will be discussed next. 

 

Apple has achieved strategic success through contracting-out many of the manufacturing operations it requires.  These could have been undertaken by the company (Lynch 2009).  Apple has saved money, in terms of reduced labour costs, and these cost savings have been passed onto consumers.  However, it has relied upon contractors’ to uphold labour standards.  This has led to serious criticism of Apple for poor oversight of inadequate employee standards amongst its contractors (Hejuan, Fang, Weidi and Jiapeng 2010).

 

Analysis of Why Implementation Might be the Most Difficult Part of the Strategic Management Process in the Organisation

 

This section will examine some of the corporate implementation challenges before a study of some of the difficulties associated with Human Resource Management at Apple.

  

Apple’s History

 

To examine why implementation might be the most difficult part of strategy, then it is useful to examine Apple’s history.  It has had to make complicated trade-offs over whether to invest in a high-quality product or a more basic but industry leading computer.  Apple’s strategy has been to be creative and develop “truly great” products (Cusumano 2008:24).  However, its innovations have not achieved industry wide recognition until recently.  Microsoft accomplished industry-wide dominance with its Windows software. In contrast, Apple previously “preferred not to follow an open market strategy” (Cusumano 2008:24). In the past, it lost out to companies, such as Microsoft, which have produced industry-wide products which were not the best but were of a sufficient mass-market standard.  This shows that strategy and vision may not be sufficient characteristics to achieve success in the consumer computer market.  Implementation is also relevant and difficult.  There are challenges to make a computer product accepted across the world in diverse situations.  This was an implementation issue which Microsoft was better able to achieve.  There are areas of strategy which a computer company, such as Apple, may have relatively little control over; such as how the product is accepted in a variety of market places.

 

However, in recent years the company has benefitted from investment in an “industry wide platform” with a large network of supporting application developers contributing to Apple’s business model; such as iTunes (Cusumano 2010:22).  Nevertheless, Apple still has to implement difficult negotiations with companies, such as IBM, to improve the software support for its computer products (Hill 2014).  There are complicated concerns over how teams across Apple and IBM will be managed, who will control the patents and how expenditure and profitability will be allocated.

 

Apple and Its Competitors

 

One of the difficulties with implementation is that there are areas of competition, which the company has relatively little control over.  Apple has to quickly consider how it will respond to competitor’s strategies. For example, there has been competitive conflict with Google with its rival operating system Android; as to which system would be the dominant operating system across the mobile computer industry (Cusumano 2010).  The problem with Google’s Android is that has the potential to be an industry wide operating system, similar to Microsoft Windows.  Apple’s response to Google Android is dependent upon how Google continues to execute its own strategy which Apple has no control over.  There have also been difficulties in implementing Apple’s pricing policy with the need to reduce prices to compete with rivals such as Samsung (Cusumano 2010).  In this case, Apple could reduce prices but this will reduce Apple’s profit margins and potentially erode the status of Apple’s products. 

 

The actions of competitors, such as Google, could ruin Apple’s well-thought strategies.  Therefore management writers, such as Minzberg et. al. (2008), have suggested that strategy needs to be allowed to ‘emerge’ rather than be formally planned in advance.  This allowance, for the emergence of strategy, is an indication of the difficulty of implementation.

   

Apple’s Design

 

In terms of design, the benefits of investment in design have been easier for Apple to achieve.  This is because the company has full control over its product designs.  It has full control over its “minimalist stylish design” which has made the company’s products highly recognisable (Noble and Kuma 2010:646).

 

Human Resource Management and Implementation

 

One of the difficulties that Apple has had to face is complexities over succession planning with the death of its Chief Executive Steve Jobs.  This is a particularly difficult situation to confront because there is not a strategy-textbook prescription of how a company, such as Apple, should deal with succession planning.  There are challenges over what changes may now be needed to the strategy of the company (Gamble and Mourinho 2011).

 

Apple, though, could succeed for many years; with its management implementing “the vision and the product portfolio that Steve Jobs left behind” (Cusamano 2011).  There is concern over “what happens when the ideas are exhausted” (Cusamano 2011).  Nevertheless, this argument offers an alternative argument, to that presented in the question, that implementation is not the most difficult part of strategy.  The strategic vision, which the late Steve Jobs was renowned for, could be more difficult to deliver than the actual implementation.

 

It should be acknowledged that succession planning does present a challenge for the implementation of strategy.  One potential difficulty is if supporters of a strategic decision left the organisation during the implementation phase (Al-Ghamandi 1998).  A conflict between those who want a new strategy and those who want the current strategy could emerge and this could lead to conflict. 

 

In recent years corporate head offices have reduced in size as organisations pursued more decentralised organisational structures (Johnson, Whittington, Scholes, Angwin, and Regner 2014).  This could lead to cost-cutting as fewer people are employed.  With employees being made redundant then there is likely to be a fall in morale.  Apple may problems with implementing a strategy in the face of lower morale.  However, such a difficulty is one that can be solved; see the Lexmark example below.

 

Another problem with implementation is that there can be difficulties in predicting the time it will take for the operation to be achieved.  For example, Apple will have to make complicated forecasts over the time that will be required for a computer product to become successful (Thompson and Martin 2005).

 

An important part of Apple’s implementation is the decision over how much money it should devote to the launch of a new computer product.  It faces management decisions over the allocation of resources within its organisation (Tan 2004).  Debates over resources need to be rational and constructive.  This leads on to some recommendations for the company.

Recommendations on How Strategic Implementation could be Enhanced

 

Learning from Lexmark

 

Apple could learn from the restructuring of the IBM owned printer manufacturer Lexmark.  The company had to focus on producing a printer which would lower its cost structure.  Lexmark had developed a tall centralised structure and strategy was made by top managers.  This slowed decision making and made it difficult to communicate across functions. Therefore, it needed to cut the number of levels in its hierarchy.  It also decentralised authority to the managers of four product lines and told them to develop their own new products.

 

The company believed that it was important to develop cross-functional teams which comprised employees from all managerial functions. This helped to re-organise the business and reduce costs to make the business more competitive (Hill and Jones 2007).

 

Good Consultation

 

Apple appears to be strong on collaboration.  However, it needs to make sure that employees are involved with the formal development of the strategy.

 

It needs a strategy, which is open for discussion, so that it can still offer motivation for all employees throughout the organisation (Lynch 2009).  Senior managers, in Apple, need to make sure there is employee involvement through an honest discussion.  Senior executives need to put honest discussions, about organisational performance, into company newspapers and senior management speeches. Platitudes need to be avoided (Knapp 2001).  This is the case with the improvements that are needed to Apple’s working relationships with its manufacturers.

 

Continue to Empower Staff

 

Apple will want to continue to utilise its designer’s creativity, such as the ability to design a new use for a technological product.  This could lead to a new business opportunity such as a new tablet device (Mintzberg 1994).  Therefore, it is crucial that Apple’s designers continue to be empowered so that they can contribute to the future strategy.  Apple needs to continue to exploit new ideas from their designers and computer developers.  This could be achieved through executives working alongside technological designers to learn what computer innovations were achievable.

 

Work on the Culture

 

Apple needs to offer a culture which provides the opportunity for new dramatic discoveries.  This is because it is insufficient to “consider change in a linear way (Kalianann and Ponnusamy 2014:26).  Technology companies’ employees are required to dedicate their time towards the most profitable computer designs.  However, an employee may want to devote their time to a more creative and less profitable computer design.  A balance needs to be struck between the need for work on profitable designs and the need for work on new designs; which offer a possible breakthrough.  This was achieved through the iPad.

 

Reduce the Implementation Gap

 

The gap between strategies developed by senior management and those who execute the strategies, at lower levels in the organisational hierarchy, has been described as the ‘implementation gap’.  The published information about Apple suggests that there is not an ‘implementation gap’.  However, Apple does need to continue to allow collaboration within its business to “turn ideas into results” (Leader Article 2004).  It needs to make sure that employees lower down the hierarchy fully understand the strategy and are fully able to contribute towards it.  All employees require sufficient access to information so that they can be committed to the strategy (Tan 2004). 

 

Continue to Maintain Communication

 

Apple’s executives need proper communication systems so that there are proper feedback reports being given to them.  The executive leadership needs to maintain its awareness of performance within the business (Thompson and Martin 2005).  One recommendation would be to treat employees as ‘internal customers’ (Dandira 2011).  The advantage of involving people lower down the organisation is that subordinate employees can be alert to the business’ operations and can suggest new ideas to senior management (Ahearne 2013).  There is an advantage of implementing such a “bottom up strategy” (Coulson-Thomas 2013).  It provides a proper link between implementation and strategic formulation. 

 

Consider Features of a Successful Strategy

 

In response to the death of Steve Jobs, Apple will need to continue to clarify who is responsible for strategy.   A clear responsibility is needed over who is accountable for the outcome of the strategy (Thompson and Martin 2005).  This is because it is difficult to monitor progress, at a later stage if no one is fully responsible for the strategic decision (Lynch 2009).  Also, the number of strategies should be limited; so in Apple’s case they need to make sure they are not launching too many products which they are unable to manage (Thompson and Martin 2005).  This argument contradicts the actual approach, which Apple is taking, with the launch of multiple products.

 

Relationships with Manufactures

 

There has been criticism over the working relationships with manufactures especially in China. This could lead to possible consumer boycotts or government legislation.  Therefore Apple needs to improve its business relationships with the manufactures of its products.  The company needs to make sure that manufacturers are paid more money for creating Apple’s technological goods. 

 

Conclusion

 

The essay has demonstrated that there are many complexities associated with implementation.  Formal strategic planning can be less complicated because it can be undertaken by a small executive team.  In contrast, implementation generally requires the support of the whole organisation including contractors. This relies on proper organisational behaviour and human resource management.  In other words, the culture and the people in the organisation have to be working towards meeting the strategy.  This is a more complicated process than simply deciding upon a theoretical strategy.

 

The difficulty for implementation is that strategic management tools, such as Porter’s Five Forces Model, enable an analysis of the computer industry to be undertaken.  However, such strategic models are less helpful in guiding the implementation of Apple’s strategy.  This is particularly the case when there is a crisis and a need for succession planning.


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