Joel Podolny is the vice president and dean of Apple University, and he’s just published an in-depth look at Apple’s organizational structure.
Podolny published his in-depth look at the internal structure of Apple for the Harvard Business Review today, and it’s worth a read if you have some time to spare. “How Apple is Organized for Innovation” offers not only a look at Apple in its current state, but, most importantly, how the company has evolved over the last several years. Specifically, Podolny looks at the point where Steve Jobs, Apple’s co-founder, returned to the company in 1997 and now, as Apple’s current CEO, Tim Cook, leads the company forward.
Podolny says that when Jobs returned in 1997, he took it upon himself to fire the managers of each individual business unit and restructure how Apple worked from that point on. The goal? To make the company “one functional organization”, which is how Apple continues to operate to this day.
When Jobs arrived back at Apple, it had a conventional structure for a company of its size and scope. It was divided into business units, each with its own P&L responsibilities. General managers ran the Macintosh products group, the information appliances division, and the server products division, among others. As is often the case with decentralized business units, managers were inclined to fight with one another, over transfer prices in particular. Believing that conventional management had stifled innovation, Jobs, in his first year returning as CEO, laid off the general managers of all the business units (in a single day), put the entire company under one P&L, and combined the disparate functional departments of the business units into one functional organization.
After the shakeup, things changed quite a bit at Apple. In 1998, the CEO had to look over eight different departments: hardware, software, marketing, operations, services & support, sales, finance, and legal. Now? Apple has 17 different departments, with the additions of retail, people, environment policy & social, hardware technologies, and others.
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.
The way that Apple is laid out in its organizational structure means those in leading roles, from executive roles to managers, are all experts in the key areas they oversee. What’s more, they are expected to have complete immersion in the details within their department, essentially knowing everything that’s going on at any given moment as development is under way.
The full write up by Podolny is worth a read if you’re interested to know how Apple’s internal structure works. Yo can check it out at the Harvard Business Review right now.