The way Apple runs its business is widely seen as the lodestar for good business management, and the people in charge of the company’s internal leadership college know more about it than most.
8 keys to Apple’s business leadership
Writing in the Harvard Business Review, Apple University Dean and Vice President Joel Podolny and faculty member Morten Hansen provide some glimpses into how Apple business management works.
Here are the keys to Apple’s business leadership.
1. Expertise matters
Apple doesn’t operate in conventional business siloes. Instead, it organizes itself in complementary teams. The hardware team may work with the software, marketing and machine learning teams to develop one set of product features.
Apple’s groups include: Design, hardware engineering, hardware technologies, software, services, machine learning & AI, marketing, marketing communications, operations, sales, retail, people, finance, legal, corporate communications, corporate development and environment, policy & social.
The idea is that the expert leaders in each of these teams work together in one functional group, rather than working in a multidivisional way. No single function is responsible for a product or a service on its own, which means “cross-functional collaboration is crucial.”
2. Change acceptance, not resistance
Change happens and businesses must evolve. While Apple has retained a relatively centralized functional approach to business management, it has also been willing to expand the number of groups that comprise the business — the machine learning & AI group, for example, is relatively new. The idea is that, by continuing to evolve as an organization, the company can remain agile to new opportunity and market change. A multi-division approach may actually inhibit such movement, Apple seems to believe.
3. Autonomy is good for business
The report looks at how the camera used in iPhones has evolved across the years. It notes that when launching the original iPhone in 2007, Apple spent just six seconds on the camera. Today, it’s arguably one of the most important features ushering in new and advanced imaging technologies.
The idea is that by investing in functional expertise, Apple ends up with internal leaders equipped with extensive knowledge regarding a specific domain: The camera team will know everything about those technologies, for example.
Because tech is such a fast-moving space, those experts must have both industry knowledge and a good intuition for which technologies and designs will succeed in future.
After all, much of the time with technology we have no idea which solutions will succee,d as they haven’t even been market tested yet. Giving decision rights to those experts makes sense in that context, as they are far more likely to understand that facet of the challenge than an overall general manager can be expected to.
In other words, recruiting world-class experts is part of the deal, but once you have them in position you need to trust them to take decisions.
4. Money isn’t everything
Every company has a mission. At Apple, that mission is to develop, design and manufacture the world’s best products. The money it generates follows its success in that mission. Yet in a highly competitive market a focus on short term gains and cost targets may blunt company achievement. That’s not to say you can go to the Moon and back on a regular basis but does give teams permission to focus on delivering the very best solution(s) they can within their domain. To reinforce this, Apple’s bonus system reflects general company performance, rather than specific product revenues. That’s a subtle point, but the intention is to mitigate focus on short-term gains.
5. Some walls are good
With this in mind, this point speaks for itself:
“The finance team is not involved in the product road map meetings of engineering teams, and engineering teams are not involved in pricing decisions,” the authors write.
At the same time, teams must have the courage of their convictions. As an illustration of this the report talks about the introduction of the dual lens camera in the iPhone 7 Plus, when the camera team really had to push for the feature as it would force consumers to pay more for the device. They prevailed in that argument, and consumers bought the device in droves.
6. The rule of three
Apple seeks three characteristics in its leaders:
- Deep expertise in their domain(s). “Leaders must know the details three levels down.”
- Immersion in the details of those functions.
- Willingness to collaborate and debate in discussions of other functions.
The idea is that leaders are highly qualified in their vertical sectors but can also manage to apply that knowledge in others. That’s why Apple’s camera team is one functional unit which contributes to the development of other products, such as the cameras in Macs and iPads, for example.
The need to sweat the details extends all the way through the organization. It seems to empower people at every level of the company to ‘own’ expertise in their field.
(That’s very much in line with Maslow’s Hierarchy of Needs, as the chance to develop such deep expertise in your topic also helps build self-respect, professional skill and generates feelings of ownership and autonomy.)
7. Collaboration is critical
Apple has hundreds of specialist teams across the company. I’d argue that for an idea of the extent of this you just need to look at any teardown of any Apple product:
You’ll find glass, chassis design, materials science, memory, SIM cards, USB connections, user interfaces, AI, software, hardware, power supplies and a slew of components — and Apple has expert teams for every single one of these (and probably a fair few more that we haven’t heard anything about yet).
Whenever Apple makes even a single component for a product it calls on all these experts — who themselves dig deep through the knowledge of their own teams — to work together to achieve the best possible.
The key is collaborative debate – and when a decision can’t be reached, higher-level managers are called in to break the deadlock. That’s not always particularly easy to achieve, given the complexity of the decisions being reached, and that’s why the capacity to collaborate effectively is seen as a key skill across the senior leadership of the company.
8. Teaching, delegating, learning, owning
Apple has 120,000 more employees than it had in 2006, and yet the number of vice presidents it has in place has expanded only from 50 to 96.
That’s a challenge for leadership as they must manage huge teams and understand more details for their particular sections. Once again, the solution is to empower experts within teams and to boost collaboration.
It also requires some honesty concerning what a VP knows. Apple has a grid-based approach to this, so a leader might define each section they work with as follows: are they learning a new domain or are they the primary decision maker for a section, such as parts of a product or an element of UI design (owning).
The grid also asks them to define their expertise level (high to low) and the extent to which they are involved in details. So, a teacher passing on a domain may be an expert in the topic (Keynote, for example), but no longer involved in the details concerning ongoing development of that.
This isn’t as complex as it sounds. At its simplest, it means if you’re the expert and you have responsibility for a particular topic, you’d better know everything you can about it if you want to maintain your responsibility for that task.
One more thing
I’ll leave the last words to the authors of the valuable piece, which you can read for yourself here:
“Why do companies so often cling to having general managers in charge of business units? One reason, we believe, is that making the change is difficult. It entails overcoming inertia, reallocating power among managers, changing an individual-oriented incentive system, and learning new ways of collaborating. That is daunting when a company already faces huge external challenges. An intermediate step may be to cultivate the experts-leading-experts model even within a business unit structure. For example, when filling the next senior management role, pick someone with deep expertise in that area as opposed to someone who might make the best general manager. But a full-fledged transformation requires that leaders also transition to a functional organization. Apple’s track record proves that the rewards may justify the risks. Its approach can produce extraordinary results.”
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