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Apple: Leadership and Innovation Challenges.

This paper discusses the innovation challenges as well as leadership challenges facing Apple.
Apple is a tech giant based in the United States. It is an in-depth analysis of apple as an
innovation organization. The topic of the paper was formulated as Apple: Leadership and
Innovation Challenges and it attempts to analyze the challenges Apple is facing and gives
recommendations at the end that could help overturn these challenges. The knowledge gained
from this analysis of the challenges would help to understand the relation between leadership
challenges and innovation in an organization.
1. The business case for innovation.
Apple has been a trendsetter in the industry when it comes to innovations. Its greatness has
resulted from an ability to capture our imagination by doing away with old technologies and
ushering in new and advanced ones. They invent new groundbreaking technologies in addition to
refining existing technologies to satisfy more needs of consumers. They have come up with new
ways of buying and storing music all on one device and numerous other innovations. Their
innovations have become extremely popular with consumers prompting other industry players
and competitors to follow suit.
Apple has come up with a number of groundbreaking innovations that have changed the lives of
its consumers. The first innovation and the most famous up to date is the iPhone (Wahlen et al.,
2011). This is a phone that combined several features to outdo the blackberry which was most
popular by then. They included the multi- touch feature, an mp3 player, an interface and a cell to

come up with a revolutionary product. Other companies were forced to adapt these features in
their products in order to compete.
The second innovation is the iPod. This changed our entire music experience in that we no longer
had to burn CDs from multiple music sites in order to have a collection. The iPod enabled users
with the help of the iTunes software and the iTunes store to buy and make a collection from
single website and store it in an iPod. Another innovation the iTunes changed music consumption
by enabling digital purchase of whole albums or even single songs (Guberman, 2008). Other
influential innovations by apple include:

Graphical User Interface

Mac OS X
MacBook Air
Apple II

Organizational diagnosis help an organization determine existing disparities between its

performance at present and the performance it wants to achieve. It analyses the organization as a
whole, its constituent structures and its processes in a bid to identify the strengths and
weaknesses. These are then used to devise a plan that aims at improving the effectiveness of the
organization (McFillen et al., 2013).
Apples strengths lie in innovation and impressive financial reserves. It has always been ahead of
the pack when it comes to new technologies. Their products have revolutionized industries with
the examples of the iPhone in2007 and the iPad in2010 that changed how people access the
internet (Morley, 2011). They are expected to keep on churning out life transforming devices

even with the death of their long time CEO Steve Jobs. The influential boss left behind solid
structures and an organization culture of always striving to be the best and this is expected to
spur them on even with his absence. They already have lined up for launch a series of products
that will affirm their position in the industry. These products include: the iWatch, iPhone 6, an
iPad air 2, and a new MacBook. Apples huge cash reserves emanate from the huge success of the
first iPhone. The company have immense cash assets and long term marketable securities to
boast of (Frank, n.d.). Recently, they have also made some notable acquisitions among them
beats electronics in addition to an ambitious capital return program. The company has also been
investing in its own stock (Klaiber, 2013).
Apples weaknesses lie in a premium policy and the low sales of the iPad. The iPad though
initially successful has seen declined sales (Simon, 2015). This decline in sales has been
attributed to availability of cheaper devices that can access the internet and a soft tablet space.
The company is however trying to revive the sales by partnering with IBM to develop new apps
for both the iPhone and the iPad. The new apps will be business oriented and this is expected to
generate renewed interest in the iPad. On premium pricing, apple is known to set the prices of its
products high. This has resulted in moderate success of new products like the iPhone 5C
smartphone in overseas markets where the incomes are not the same as in their United States and
European markets (Jeannet, Hennessey and Jeannet, 2004).
Their opportunities lie in their new acquisition Beats Electronics and market share growth. There
is plenty of room for expanding its market share of the computing space. Based on current trends
where they are receiving good consumer response in new markets like china and the larger
Asia/pacific region is an indication that their market share will continue to grow from the current
20% stake. In addition, there are deals in the pipeline with wireless service providers in overseas

countries which are set to increase iPhone sales in markets other than their traditional markets in
the United State and Europe. Another opportunity lies in the acquisition of Beats electronics.
Beats electronics product which include high end earphones and music streaming services will
serve to complement apples iTunes radio service. The new acquisition will also be of help in
pushing the iwatch sales. The talented management in Beats Electronics will also be an asset
going into the future.
The threats lie in competition and gross margin pressures. Several factors like a shift in the sector
towards commoditization, a relentless product cycle and fickle consumers are threatening
technology companies. Apples case is particularly special because its premium pricing makes it
vulnerable to competitors using price discounts to compete. Its own production of too many
devices that can access the internet and a reduction in sales are also other threats. Gross margin
pressure are as a result of increased competition, a rise in the price of components and a short of
products. A slump in iPhone sales is also another threat because they are its most profitable
2. Leadership challenges.
One of the leadership challenges at apple for a CEO is developing managerial effectiveness. One
challenge any CEO in a big organization would have to face is that of mastering relevant skills
like thinking strategically, good decision making and adjusting to the job requirements. These
skills are vital if a manager is to have a positive impact in the organization. Apple being a giant
tech company that is very successful attracts a lot of unwarranted attention. Any individual at the
helm of apple thus has to have the ability to deal with external politics and the demands of
stakeholders at still be effective at their job. They need to gain support across the departments of

the organization as well as from the individuals in that organization (Ferris, Davidson and
Perrewe, 2005)
Apple now has a new CEO after the death of long serving Steve job. The new boss has the
challenge of leading a new team. This is especially challenging if the team is as huge and multidimensional as the one at apple (Zhang, Tsui and Wang, 2011). They have to manage a team that
had been used to the management of Steve jobs who was known for an unconventional
management style. They have to fulfill big expectations set by their predecessor and this can be
an uphill task. An additional challenge for the new leadership is guiding change through this
transitional period (Gentry et al., 2008). Transition is not always smooth and there maybe
resistance and some unforeseen consequences of change. This requires an ability to deal with the
varied employee reactions, an ability to mobilize and lead change as well as managing it.
The final challenge is that of recruiting and developing employees who will be effective in their
positions. This requires a leader who is able to offer mentorship and coaching to the junior staff.
The leader has to have certain attributes and qualities that inspires others. It includes making sure
your employees are satisfied as they perform everyday duties and also motivated to work

3. Innovation challenges.
The innovation changes that apples faces include a change from their usual approach to
innovation whereby they hand only a handful of projects on going at a time. The change in
leadership means that they will have to change strategy and pursue many projects because

their visionary leader is not there. Another factor that warrants this change in strategy is the
fact that they can no longer depend on one product to drive their profitability due to increased
competition from rivals. They therefore have to have to embrace collaborative innovation if
they are to survive this new leadership era.
4. A framework for innovation
Quality leadership can play a huge role in achieving innovative organizations without the need
for a lot of financial capital. Managers at all levels who want to foster organizational innovation
should pay attention not only to skill or characteristic of individuals but also to the environment
that create climate for potential innovation (Amabile et al., 1996). A leader has to be
transformative, motivating and promote an organization culture in order for an organization to be
A transformational leader has to clearly communicate their vision to employees, consumers and
other stakeholders in addition to inspiring their followers and also being role models in the
organization (Bass, 1985). They should be willing to push suppliers for new benchmarks that
will help them come up with the best possible products for their consumers. They must be
willing to do whatever it takes to achieve the goals of the organization as long as it is moral and
within the law (Schuh, Zhang and Tian, 2012). Transformational leaders continuously expect
innovation and creativity from their followers. Their own innovation and creativity must be
evident for them to demand the same from their followers (Woodman, Sawyer and Griffin,
1993). A genuine concern for followers is another attribute of transformational leaders. Personal
attention to the needs of your followers is a sure way of getting the best out of them in terms of
productivity and dedication (Shalley and Gilson, 2004). This however must not be confused with
being soft.

A leader also has to be a source of motivation to the organization members. Their dedication to
achieving the organizations goal must be so high that its a source of inspiration the other
employees. They should believe firmly in their vision and communicate it clearly to their
followers (Avolio et al. 2004).A positive attitude is also required for a motivational leader. This
including always exhibiting a confident nature in all activities because others acquire the same
confidence and become more productive in their performance. Followers will also be affected by
a leaders optimism so leaders should always have a positive outlook in all situations. They
should also not belittle their followers efforts and compliments should be given when deserved
as well as delegating duties to boost confidence (Aquino, Lewis and Bradfield, 1999). Taking
responsibility for their actions is yet another important attribute for a leader and should not only
do so when things are great but also if mistakes have been made. If mistakes have indeed been
made, lessons should be drawn from such situations: (Spector, 2010).
The final function of a leader is promotion of an organizational culture. This should be culture of
trust, freedom and hard work. An organization culture that encourages active participation in
decision making, learning and employee development helps an organization in its innovative
efforts. The two factors of support and reward of exceptional employees by top management are
vital in creating a supportive culture in an organization (Hurley and Hult, 1998).
5. Next steps and conclusion.
From the case study and discussion in previous chapters, it is evident that there is a connection
between the leadership in an organization, and innovation. It is also noticeable that in order to
continue its impressive track record of exemplary innovation, Apple has to not only invest
financial capital but also human capital in the form of leaders who are transformational,
motivational and who promote a positive organizational culture.

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