A vast majority of different organizational theory perspectives has been developed through the process of economic evolution. Various scholars and businessmen advocate for different organizational management approaches and understandings of this concept. Although the applicability of these theories has been questioned many times, both scientific elite, represented by leading scholars, and business community in the persons of CEOs of transnational companies acknowledge the necessity to study the methods and principles in both theory and practice.
Apple Inc. does seem to be a perfect subject for such research, given that the company has operated in different centuries. Thus, corporate organizational structures and methods can be easily monitored.
This essay focuses on two most well-known approaches to organizational management. The first one is the classical perspective, outlined in the works of Professor Frederick Winslow Taylor on scientific management. It is often hastily viewed as the approach of the past, and is often associated with the Industrial Age and Revolution. The second perspective deals with a more contemporary contingency theory, which advocates for modern approaches that are currently popular among managers of transnational companies.
The goal of this essay is to study Apple Inc. in the context of these two theories. In my firm opinion it is impossible to define which approach is right or wrong, because both encompass a relatively even number of pros and cons. Thus, the primary goal of the essay is to collect as much information about Apple Inc. as possible with the help of multiple perspectives.
This essay section describes the basic features of the scientific management (implementation of the classical theory) and the contingency theories and provides a brief analysis of both. For the research convenience, it is chosen to put emphasis on the opinions of the leading scholars in the field of macro- and microeconomics and give a general assessment of the theories.
Scientific Management Perspective
The first scholar to introduce this theory was Frederick Winslow Taylor, who was enthusiastically seeking new methods and technologies to increase the efficacy of enterprises. His major argument was that the entire process of management can be presented in a form of science – with principles, methodology, scholars and research base. The goal of this science was to monitor and analyze workflow in order to detect the consistent practices and apply them to further practice. The efficacy of the manufacturing process is particularly emphasized in this theory. Furthermore, this perspective justifies almost any means, if the ultimate goal –increase in profits – is achieved. To illustrate, Taylor once noticed that, when the group of workers received the same wage, the productivity would gradually reach its lowest point – the level of performance of the slowest worker within the group. To boost productivity, Professor Taylor proposed to practice the carrot-and-stick approach, a well-known system of encouragements and punishments nowadays.
In overall, the theory of scientific management is based on the pillars of rationalization, defined principles, rules and expertise. Another important aspect of this theory is an emphasis on production efficiency and a clear distribution of responsibilities between the workers. This scientific approach permanently displaces the outdated principle of a ‘rule of thumb’. Another point is that employees have to be continuously educated and trained under the principles of contemporary management. In order to ensure the efficacy, the most qualified and skilled managers and instructors should be invited to participate. The next point of the classical approach is that employees and managers must constantly cooperate in order to reach mutual understanding. As a tool to minimize costs and encourage workers to perform well, it has been proposed to equalize the volume of work done by managers and their subordinates, i.e. make the blue-collar and white-collar work comparable. It is worth mentioning that Taylor and his followers introduced some innovative approaches to the entire system of business administration. In particular, Taylor was the one who suggested to incorporate the system of small breaks, enabling the workers to rest while the production was still underway. Paradoxically, this supposedly strange approach worked, letting the production rates increase.
The Theory of Contingency
The contemporary equivalent to the previously dominating classical perspective is the so-called theory of contingency. The basic postulates of this theory were developed in early 60th of the 20th century. According to the principles of this theory, there is no straight-forward approach that would let managers increase the company’s efficacy. Scholars of these theories allege that in order to optimize the company’s productivity and increase profits, managers should undertake an optimal course of actions. The course of these actions would directly depend on internal and external factors at the given point in time.
According to the theory of contingency, scientific management approach does not take into consideration so-called contingency factors, which are integral constituents of any business environment. These factors cannot be foreseen in advance. According to this assumption, there simply is no optimal and effective model of business control. The first to formulate the concepts and methodology of the contingency theory was famous scholar Joan Woodward. This scientific luminary argued that methods and technologies applied by the managers in the course of business determine rules and procedures of an ordinary business process. There were too many factors that a company had no control over, namely: technological development, nature of suppliers and distributors (Taylor did not focus on this point), shifting consumer demands and competition.
The goal of this management system is to ensure overall adaptation of business models to a constantly changing business environment. Leading scholars have repeatedly stated that the style of company management is in direct dependence with the tasks instructed by the owner of the enterprise. Another idea within the theory was expressed by one of the leading Austrian economist Fred Fiedler, who thought that special attention shall always be devoted to the issue of leadership. Many scholars including Paul Lawrence, Thomson James and Lorch Jay expressed their concerns that contingencies of various natures should always be taken into consideration.
Although there are some conflicting points between the adherents of both theories, I believe that both perspectives can effectively co-exist. Particularly, traditional methods of work discipline, system of encouragement and punishments shall be combined with the modern views with emphasis on uncontrollable internal and external issues of different nature. (Harrison, Lin, Carroll, & Carley 2007) As an illustration, to establish the wage of a single employee, one can take into account his average productivity and make him a certain offer, but it would make more sense to accompany such decision-making with external information, e.g. benchmark wages against the nearest competitor. Undoubtedly, both factors matter.
Applying the Perspectives and Theory to analyze Apple
To solve some strategically important problem, it is first needed to identify a problem, then analyze the reasons that caused that problem, determine the number of feasible solutions and develop a list of actions. This management approach is nowadays advocated in a significant number of enterprises. Surprisingly, none of these firms can brag about their outstanding performance, which may catch owners, shareholders and the entire business community off-balance. In other words, this tactics is applicable to ordinary business entities with average business indicators. However, when the company sets a goal to generate fantastic revenues and transform into a multinational company, different approaches to strategic development should be embraced. The internal and external problems of the organization should not be ignored completely. However, most energy of managers and other administrative staff should be channeled into generation of fresh new marketing approaches.
The classical theory
Despite the fact that technical characteristics of the product are very important for the management of Apple Inc., the company prefers to put stake on the image of the product. It is noticeable that consumers prefer Apple’s products to others on the market because of superb design features. Therefore, Apple’s products designs are primarily responsible for company’s mind-blowing profits. When buying Apple’s products, the customer is confident that he gets the most up-to-date, advanced and unique piece of technology. In contrast to its competitors, Apple’s products always combine both complex internal technical composition and a state-of-the-art external style.
However, designers are not the only people working on Apple’s product. Highly qualified internal specification specialists ensure the excellent device’s performance. The most important thing about Apple’s products is that each device combines the exquisite shell and a high quality interface.
The second feature responsible for Apple’s products’ success is a high quality of service available to device’ owners. This feature includes:
– any kind of online consultation or help;
– technical support;
– warranty repairs;
– various kinds of trainings and competitions conducted by Apple Corporation.
Moreover, iTunes, App Store and their ever-increasing range of helpful and indispensable software applications have a strong effect on the sense of emotional entanglement among potential Apple customers.
The Contingency Theory Approach
During each project implementation at Apple Inc., the corporation needs a project team and a supervising manager responsible for the project. The lion’s share of the corporation’s success depends on its leaders and management methods. What should a good project manager have to do during the day? The best answer sounds this way, “A good project manager should think creatively and should provide an effective communication and cooperation among the project team.”.
Beyond doubts, Steve Jobs and his staff are a striking example of excellent leadership and excellent team that attracted a lot of attention from other companies. Steve Jobs also attributed great importance to external policy of the corporation as well as to internal organization and motivation of his team to achieve the goals of the company.
Since Jobs’ return to Àððlå Inc., thå company’s corå càðàb³l³ties hàve åxðàndåd from ³nnovàt³vå ànd åàsy-to-uså comðutårs to à d³g³tàl l³fåstylå ðroducts dås³gnåd to fascinate consumårs. Às ³llustràtåd ³n F³gurå 1, th³s corå càðàb³l³ty ³s låvåràgåd through Àððlå’s vàluå chà³n to ³ncludå thå dåvåloðmånt ànd sàlås of hàrdwàrå and softwàrå for comðutårs, cållulàr ðhonås, ànd MÐ3 ðlàyårs. Jobs dåð³cts Àððlå’s corå càðàb³l³ty às à chà³r suððortåd by thråå lågs w³th a possibility of adding Àððlå TV to represent thå fourth låg at some point. Thå corå of Àððlå’s bus³nåss modål ³s à closåd technology syståm, since Jobs does not permit l³cånsing Àððlå’s oðåràt³ng syståm. The ³Tunås mus³c or v³dåo cannot bå ðlàyåd on any othår MÐ3 ðlàyårs, ànd so fàr Àððlå hàs chosen to ðàrtnår exclusively w³th ÀT to facilitate sàlås of ³Ðhonås.
Overall, it is visible that the contingency perspective is extensively applied in the Apple Inc. business scheme. Evidently, the company not only sticks to the traditional approaches, but also often turns to modern techniques. The managers of the firm always pay most of their attention to the inner and outer factors. In particular, nearest competitors like Samsung, Motorola, or Nokia are carefully observed, their progress is always taken into consideration. Along with incorporating traditional systems and methods of internal governance outlined by Professor Taylor, Apple Inc. constantly seeks strategies for improvement that would both increase productivity and encourage conquest of the new markets.
However, Jobs’ uså of stràtåg³c stor³ås wàs morå thàn a simple màrkåt³ng stunt. Thå stràtåg³c stor³ås cråàtåd by Jobs ³nformåd fans, åmðloyåås, and shareholdårs about Àððlå’s àct³vities and progress over a certain period of time through on-stage performance. He would share a lot of ³ns³ghtful dåtails about how Àððlå stands out among the competition in various technology sub-industries ànd råsðonds to ³ts màcro-ånv³ronmånt.
Jobs’ stràtåg³c vision dåf³nåd Àððlå’s stràtågy. Eàrly on ³n Àððlå’s h³story, Jobs decided to cråàtå à stràtåg³c vision thàt ðortràyåd thå f³rm às à comðàny comm³ttåd to br³ng usår-fr³åndly ànd àåsthåt³càlly-dås³gnåd comðutårs to ord³nàry ðåoðlå. He ðroðhås³zåd thàt a ðårsonàl comðutår would chàngå l³vås s³m³làr to àutomob³lå ànd tålåðhonå. Ovår t³må, Jobs’ stràtåg³c stor³ås åvolvåd to ³ncludå à dràmàt³c tåns³on båtwåån Àððlå ànd ³ts comðåt³tors so thàt shareholdårs would ràlly àround ³ts ðroducts. For ³nstàncå, ³n 1984, IBM was a v³llà³n. To mot³vàtå Àððlå’s sàlås people, Jobs màdå a stàtåmånt, “²BM wànts ³t àll. Àððlå w³ll bå thå only comðàny to stànd ³n ³ts wày.” S³m³làrly, ‘letter from the CEO’ section from Apple’s ànnuàl råðort of 1984 ðortràyåd à Dàv³d-vårsus-Gol³àth bàttlå båtwåån Àððlå ànd ²BM to åncouràgå Macintosh usårs to råbål àgà³nst ²BM. Thå goàl wàs to segment a usår-fr³åndly Màc comðutår far apart from a blàndly funct³onàl ²BM ÐC, and win the war.
When Jobs returned as a Chief Executive Officer of Apple Inc. in 2000, the market value of the company was reported to be approximately $ 15 billion. Nowadays it costs about $ 175 billion. Besides, it is worth noting that Apple’s success is not measured purely on financial basis. Specifically, Apple dominates on the MP3 player and smartphone markets, while it possesses only 9% of the global computer market.
Jobs and his team were among the pioneers of the industry who realized the necessity to combine two management approaches. Among the Jobs’ management methods, we could distinguish the following:
– motivation reward;
– bonuses for the results;
– job security;
– status acquisition;
– professional development, acquisition of project experience;
– satisfaction with the outcome;
– personal time for creative work of the staff members.
The main objective of the Job’s motivation process is to utilize the company’s human resources in their maximum potential, which greatly improves the overall project performance and profitability of the company. Therefore, the motivation of participants has a direct effect on the project’s success.
After all, the Apple’s team is composed of individuals with superb educational backgrounds, high sense of self-worth and great potential. Simple administration is not effective in such case. Therefore, one of Jobs’ main tasks was to provide a proper motivational environment within the project team in order to maximize synergy, efficacy of the overall work, which leads to successful completion of the project.
Being an excellent leader, Steve Jobs exceled at aligning Aððle’s culture w³th ³ts strategó. Jobs has created a corðorat³on that ³s dr³ven bó a v³s³on to make great ðroducts. ²nnovat³ng ³s a key element of Aððle’s success. Emðloóees are rewarded for exðer³mentation, r³sk-tak³ng, and creat³v³tó, which is a perfect environment for innovation.