Steve Jobs' Visionary Overhaul: The Unseen Force Behind Apple's Enduring Success
1min read In 1997, Steve Jobs made a decisive return to Apple, quickly reshaping the internal landscape of the company to steer it back to profitability, and subsequently undertaking a significant overhaul of its organizational structure. Nearly three decades later, this transformative approach continues to be a driving force behind Apple’s (AAPL.O) exceptional stock growth, a factor not fully acknowledged by many.
Upon his return, Jobs encountered a conventionally structured corporation, organized around product departments like Mac, peripherals, and applications. Each department functioned with individual financial statements managed by their respective general managers, focusing primarily on financial results. Discontented with this structure, Jobs criticized it for hiring a layer of professional managers who, in his view, were unable to contribute effectively to the company’s core objectives.
Jobs rapidly dismantled the existing product-centric setup, which he found cumbersome and redundant, within a year. He eradicated the general manager roles, restructured the organization around functional groups, and consolidated financial accountability under one P&L statement. The major functional segments included hardware, software, and marketing, all of which reported directly to him, with incentives tied to the overall financial performance of Apple rather than individual departmental success.
The functional organizational model implemented by Jobs still thrives today, having evolved in line with Apple's expansion. The services division, which oversees applications like iCloud, Apple Music, and Apple TV+, now plays a prominent role. It is under the direction of Eddy Cue, while other segments such as hardware and AI also have dedicated leadership, reporting up to Tim Cook, Jobs’ successor. This structure nurtures collaboration across departments, ensuring that each product benefits from the diverse expertise within the organization.
The focus on enabling high-level experts to lead, a strategy emphatically endorsed by Jobs, has continued to foster innovation and competitive edge in Apple's offerings. Yet, this approach does come with potential downsides, as managing coordination without direct authority could lead to burnout or attrition. Despite these challenges, Apple has managed to maintain stability within its core teams, even amidst leadership changes in some sectors.
Apple's strategy starkly contrasts with Samsung's product-based departmental structure, which can breed internal cost conflicts, particularly as departments vie for optimal pricing on inputs like chips and displays. Each company operates under unique conditions; Samsung's broad portfolio and extensive subsidiary network differ markedly from Apple's more streamlined operations.
Ultimately, Apple's organization model, with its emphasis on functional leadership, has embedded a sustainable advantage that transcends individual product successes, underpinning its long-term triumphs. This strategic underpinning has facilitated innovations, including the inception of the iPhone, reflecting the enduring legacy of Jobs' visionary reforms.