There’s nothing more important than planning and preparing for the foreseeable future. Apple, which has come to recognize that it can no longer rely on iPhone sales to the degree that it has in the past, has been seriously engaged in the change enterprise during the past year by reordering priorities across its various divisions and shaking up existing leadership ranks.
And, in the words of the WSJ, Apple has “executed high-profile hirings, noteworthy departures, meaningful promotions, and consequential restructurings.” So, what does all that mean in plain terms – ? Since the days of Steve Jobs, Apple has been a very stable enterprise, with few comings-and-goings among its leadership and a reliance by CEO Tim Cook on rocking along with the iPhone as its signature product. Thus, the recent shake-ups have caused enough concern among the rank-and-file at Apple to prompt the company to put some projects on hold while the new managers get their bearings and set the new course. The organizational management changes during the past few months have included promoting artificial intelligence chief John Giannandrea to the executive leadership team (which provides a strong indication of one of the directions that the company is headed for the future); replacing retail chief Angela Ahrendts; and dismissing Siri voice assistant executive Bill Stasior. The company has also trimmed 200 staff from its autonomous-vehicle project and is redirecting much of the engineering resources to Hollywood programming. All signs that the company is endeavoring to look into the future and ensure that their current efforts are those that will put the company on the right path to a successful future. Remember – this is the kind of thing that successful companies do – making organizational management changes that are consistent both with their past as well as with their envisioned future. And, as we have discussed on numerous occasions, this is specifically what companies that fail do not do (ref recent post, Payless Shoes). In service to the change management effort, Apple spent $14.24 billion on research and development last year (a 23% increase). Even though it might seem that such an expenditure is coming along a little late, it is said that CEO Cook has been anticipating the decline of the iPhone since 2010 and has been aiming the company’s efforts toward Apple’s services business, including streaming-music subscriptions, app-store sales and mobile payments (see Friday’s post on Apple’s news services plans). To date, the iPhone sales still contribute about 2/3 of Apple’s income, but the services sector is expected to top $50 billion in sales by 2020 and contribute more than 60% of Apple’s revenue during the next 5 years. The services business also feeds into the goal of promoting and preserving iPhone loyalty, as the new news services and others rely on iPhone delivery. Organizational change management to ensure that ALL THE MOVING PARTS are working in harmony is always interesting to watch. Thus far, it appears that Apple might have intervened in a timely manner in order to change course just enough to ensure success for the future.