Unleash the Mac and Media Groups
Apple is an odd company when you look at the way it’s structured. For a company that pulled in over $215 billion in revenue in fiscal 2016, this is a company that is still built like a small- to medium-sized corporation. It has one executive team that oversees every single project. It’s amazing that these guys can get anything done.
The reasons for clinging to this structure are admirable. They want to prevent the rise of internal tribalism and keep everyone rowing in the same direction. But there are drawbacks as well. Mainly, at some point the workload becomes too much for one management team.
I’ve been through a couple of spin-offs before, and both times it was wildly popular within the company. Why? Because each time the business that was spun off was in the shadow of a much larger product line. This meant that it was difficult to get resource allocations from corporate management. And I’m not just talking about money to invest in new capital; it was also difficult to get engineering resources to work on new projects and to get corporate executive management’s attention for strategic decisions that needed to be made.
I’ve even been involved with the worst-case scenario. I worked in a division that had steady to slowly declining sales but very high margins. And corporate management was using the cash being generated from our products to invest into other divisions that were high-growth but low margin. It was like getting pillaged by pirates. Situations like these cause pressure to build up within the ranks, who might eventually push for product-line reorganization.
Corporate reorganizations are often like earthquakes. The pressure and impetus is not up top but building deep down within the ranks. Sooner or later this pressure is going to blow in one way or another. If top-level executives ignore it, people will start to leave, or worse, stay but give up and do the minimum.
Nobody outside of Apple knows what’s really going on with their MacBook business. From the outside looking in though, I wonder if somehow separating the Mac business might do it some good. They could hire their own engineers, make their own design decisions, and keep their own profits. The connection between the MacBook group and their customers would be more direct and not filtered by the executive suite.
The murky problem here is the possibility of MacBooks and iPads somehow converging. If they do converge, you wouldn’t want to spin off the MacBook group on their own just to shut down the operation at some point in the future when they merge with iPads. But if they don’t converge, I would think that the people running the MacBook group specifically would love to get some autonomy.
You could make some similar arguments with the media groups of iTunes and Apple Music. It feels like on one hand Apple is wanting to explore new opportunities with media. But on the other hand it seems maybe there are forces in the corporate leadership holding them back.
Corporate investments are all about return on your money. Whether it’s advertising or creating your own content, it doesn’t matter. Apple is getting close to the point where gaining new customers is going to mean converting Android users. What will be more effective? Blitzing the airwaves with commercials or investing in original content? I don’t know.
If Apple spun off the media groups into their own division or a separate company, they’d be free to start actively creating something new. Not that they can’t today, but they could do so more rapidly. This doesn’t mean that they could go hog wild and throw caution to the wind. As a separate group they would be held accountable for their own results.
It is true that you never want infighting among your various divisions. For example, you wouldn’t want the iPad group trying to undermine the Mac group out of self-interest. But you also don’t want to cling to an old corporate structure so long that you’re not able to respond to changes in the industry or customer tastes, effectively missing the boat.
I’ve been through a couple of spin-offs before, and both times it was wildly popular within the company. Why? Because each time the business that was spun off was in the shadow of a much larger product line. This meant that it was difficult to get resource allocations from corporate management. And I’m not just talking about money to invest in new capital; it was also difficult to get engineering resources to work on new projects and to get corporate executive management’s attention for strategic decisions that needed to be made.
I’ve even been involved with the worst-case scenario. I worked in a division that had steady to slowly declining sales but very high margins. And corporate management was using the cash being generated from our products to invest into other divisions that were high-growth but low margin. It was like getting pillaged by pirates. Situations like these cause pressure to build up within the ranks, who might eventually push for product-line reorganization.
Corporate reorganizations are often like earthquakes. The pressure and impetus is not up top but building deep down within the ranks. Sooner or later this pressure is going to blow in one way or another. If top-level executives ignore it, people will start to leave, or worse, stay but give up and do the minimum.
Nobody outside of Apple knows what’s really going on with their MacBook business. From the outside looking in though, I wonder if somehow separating the Mac business might do it some good. They could hire their own engineers, make their own design decisions, and keep their own profits. The connection between the MacBook group and their customers would be more direct and not filtered by the executive suite.
The murky problem here is the possibility of MacBooks and iPads somehow converging. If they do converge, you wouldn’t want to spin off the MacBook group on their own just to shut down the operation at some point in the future when they merge with iPads. But if they don’t converge, I would think that the people running the MacBook group specifically would love to get some autonomy.
You could make some similar arguments with the media groups of iTunes and Apple Music. It feels like on one hand Apple is wanting to explore new opportunities with media. But on the other hand it seems maybe there are forces in the corporate leadership holding them back.
Corporate investments are all about return on your money. Whether it’s advertising or creating your own content, it doesn’t matter. Apple is getting close to the point where gaining new customers is going to mean converting Android users. What will be more effective? Blitzing the airwaves with commercials or investing in original content? I don’t know.
If Apple spun off the media groups into their own division or a separate company, they’d be free to start actively creating something new. Not that they can’t today, but they could do so more rapidly. This doesn’t mean that they could go hog wild and throw caution to the wind. As a separate group they would be held accountable for their own results.
It is true that you never want infighting among your various divisions. For example, you wouldn’t want the iPad group trying to undermine the Mac group out of self-interest. But you also don’t want to cling to an old corporate structure so long that you’re not able to respond to changes in the industry or customer tastes, effectively missing the boat.
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