How Apple Is Organized for Innovation: The Functional Organization

When Steve Jobs arrived back at Apple in 1997, he laid off general managers of all business units and combined disparate functional departments into one functional organization. (Part 1 of 3)

This is part 1 of 3
Part 2--The Leadership Model: https://youtu.be/d5enAGG51PQ
Part 3--Leadership at Scale: https://youtu.be/hczW4Bqf3Qk

The adoption of a functional structure may have been unsurprising for a company of Apple’s size at the time. What is surprising—in fact, remarkable—is that Apple retains it today, even though the company is nearly 40 times as large in terms of revenue and far more complex than it was in 1998. Senior vice presidents are in charge of functions, not products. As was the case with Jobs before him, CEO Tim Cook occupies the only position on the organizational chart where the design, engineering, operations, marketing, and retail of any of Apple’s main products meet. In effect, besides the CEO, the company operates with no conventional general managers: people who control an entire process from product development through sales and are judged according to a P&L statement.
Based on the HBR article, “How Apple Is Organized for Innovation" by Joel M. Podolny and Morten T. Hansen: https://hbr.org/2020/11/how-apple-is-organized-for-innovation

What is Apple best known for? Easy answer. For its innovation in hardware, software, and services. For a wide range of products such as computers, iPhones, and iPads.

Now, here's what's less known and equally significant about the company: its organizational design and the associated leadership model that have played a crucial role in driving its innovation success.

It all began after Steve Jobs returned to Apple as CEO in 1997. One of his first acts on his return: laying off the general managers of all the business units in a single day. Not a move that inspires a welcome party, but there was a method to Jobs' madness.

Apple at the time had a conventional structure for a company of its size and scope. It was divided into business units, each with its own profit and loss responsibilities. Jobs believed this conventional management stifled innovation. He put the entire company under one P&L and combined the different functional departments of the business units into one functional organization.

Simply put, a functional structure divides an organization into departments based on their function. These departments are headed by functional managers who are experts in the roles they supervise. The functional structure, which Apple retains to this day, ensures that those with the most expertise and experience in a particular domain have the decision rights for that domain.

Senior vice presidents at Apple, then, are in charge of functions, not products. As was the case with Jobs before him, current CEO Tim Cook occupies the only position on the organizational chart where the design, engineering, operations, marketing, and retail of any of Apple's main products meet. In effect, besides the CEO, the company operates with no conventional general managers.

Apple's structure is based on two views. First, the organization competes in a market with a high rate of technological change and disruption. It has to rely on the judgment and intuition of technical experts who can predict which technologies and designs are likely to succeed. General managers are unlikely to be able to do that.

Second, Apple's commitment to offer the best possible products would not be achieved if cost and price targets were the fixed parameters within which to make design and engineering choices. Instead, R&D leaders are expected to weigh the benefits to users against cost considerations.

A case in point is the decision to introduce the dual-lens camera with portrait mode in the iPhone 7 Plus in 2016. Paul Hubel, a senior leader who played a central role in the portrait mode effort, and his team were taking a big risk. If users were unwilling to pay a premium for a phone with a more costly and better camera, the team would have less credibility the next time it proposed an expensive upgrade or feature. The camera turned out to be a defining feature for the iPhone 7 Plus.

Under a traditional structure, Hubel would not have been empowered to take such a risk, and the feature would likely not have been made because traditional cost and price analysis lacks a deep understanding of users' needs.

It's easier to get the balance right between attention to costs and the value added to the user experience when the leaders making decisions are those with deep expertise in their areas. This explains Jobs' decision to change the way Apple works. The combination of its organizational structure and its leadership model not only saved the company from bankruptcy but also transformed it into one of the most influential tech companies in the world.

苹果最出名的是什么？答案很简单。因其在硬件、软件和服务方面的创新。因其拥有电脑、iPhone 和 iPad 等广泛的产品线。

现在，我们来谈谈一个鲜为人知但对公司同样重要的方面：它的组织设计及相关的领导力模式，这在其创新成功的道路上扮演了至关重要的角色。

这一切始于史蒂夫·乔布斯在1997年回归苹果担任首席执行官之后。他回归后的首批举措之一是：在一天之内解雇了所有业务部门的总经理。此举并不会赢得欢迎派对，但乔布斯的疯狂背后自有其道理。

当时，对于苹果这样的规模和范围的公司来说，它采用的是一种传统的结构。公司被划分为多个业务部门，每个部门都有自己的盈亏责任。乔布斯认为这种传统的管理方式扼杀了创新。他将整个公司置于一个统一的损益表之下，并将不同业务部门的各个职能部门整合为一个职能型组织。

简而言之，职能型结构是根据职能将组织划分为不同部门。这些部门由职能经理领导，他们是自己所监管领域的专家。苹果至今仍保留着这种职能型结构，它确保了在特定领域拥有最丰富专业知识和经验的人拥有该领域的决策权。

因此，苹果的高级副总裁负责的是职能，而非产品。与之前的乔布斯一样，现任首席执行官蒂姆·库克在组织结构图上占据了唯一一个汇集了苹果任何主要产品线的设计、工程、运营、营销和零售的职位。实际上，除了首席执行官，公司在运营中没有传统的总经理。

苹果的结构基于两种观点。首先，该组织在一个技术变革和颠覆率很高的市场中竞争。它必须依赖技术专家的判断和直觉，他们能够预测哪些技术和设计可能会成功。而总经理们不太可能做到这一点。

其次，如果成本和价格目标是固定的参数，设计和工程决策都必须在此框架内进行，那么苹果致力于提供最佳产品的承诺就无法实现。相反，研发领导者需要权衡为用户带来的好处与成本考量。

一个典型的例子是在2016年决定为 iPhone 7 Plus 引入带有人像模式的双镜头相机。高级领导者保罗·休贝尔（Paul Hubel）在人像模式项目中扮演了核心角色，他和他的团队冒了很大的风险。如果用户不愿意为一部配备了更昂贵、更优质相机的手机支付溢价，那么下次团队再提出昂贵的升级或功能时，其信誉就会降低。事实证明，这款相机成为了 iPhone 7 Plus 的一个决定性特征。

在传统结构下，休贝尔不会被授权去冒这样的风险，这个功能很可能也不会被推出，因为传统的成本和价格分析缺乏对用户需求的深刻理解。

当决策者是各自领域的资深专家时，就更容易在关注成本和为用户体验增加价值之间找到正确的平衡点。这解释了乔布斯决定改变苹果工作方式的原因。其组织结构和领导力模式的结合不仅将公司从破产边缘拯救回来，还将其转变为世界上最具影响力的科技公司之一。