How Apple Is Arranged for Innovation: Leadership at Scale

0:03Does leadership change when a company grows from 8 ,000 to 137 ,000 employees? It does, and Apple shows us how. Apple's way of organizing by function rather than traditional business units has led to innovation and success over the past two decades. But there have been challenges, especially with revenues and headcount having exploded since 2008. As the company has grown, its functional structure and leadership model have had to evolve. An example of the challenges posed by organizational growth is the pressure it imposes on the several hundred VPs and directors below the executive team. In 2006, a year before the iPhone's launch, the company had around 17 ,000 employees.

0:52By 2019, that number had grown more than eightfold to 137 ,000. Meanwhile, the number of VPs approximately doubled from 50 to 96. This means more details to oversee and new areas of responsibility that fall outside their core expertise. In response, many Apple managers have been evolving and adapting their leadership characteristics. Experts leading experts, immersion in the details, and collaborative debate. When Apple was smaller, it may have been reasonable to expect leaders to be experts on and immersed in the details of pretty much everything. However, they now need to decide which activities demand their full attention.

1:37Because those activities create the most value for Apple. Some of those will fall within their existing core expertise. They still need to own that. Activities that require less attention from them can be pushed down to others, and they can teach others to handle them. Here's how that works at Apple. As an expert who leads other experts, Roger Rosner, Apple's VP of applications, had to contend with three challenges arising from the company's tremendous growth. First, the size of his function had exploded over the past decade in terms of both headcount and the number of projects underway at any given time.

2:17Second, the scope of his portfolio had widened. Although apps are his core area of expertise, some aspects of these involve matters in which Rosner is not an expert. Finally, as Apple's product portfolio and number of projects have expanded, even more coordination with other functions was required. Rosner had been immersed in details, especially those concerning the top-level aspects of software applications. He also collaborated with managers across the company in projects that involved those areas. But with the expansion of his responsibilities, he has moved some things from his owning box into his teaching box.

2:59Now, he guides and gives feedback to other team members so that they can develop software applications according to Apple's norms. Being an instructor doesn't mean Rosner gives instruction on a whiteboard. Rather, he offers strong, often passionate critiques of his team's work. This flexibility in the leadership model is an imperative in any growing functional organization. Of course, Apple's example is rare, if not unique, among very large companies. They think different and challenge the prevailing theory that companies should be reorganized into business units as they become large. But its track record proves that the rewards may justify the risks.

3:43Under the right leadership and a functional structure, an organization can produce extraordinary results.

4:10Thank you.