Apple Inc: Design Thinking and Innovation

Apple Inc. is one of the globally recognizable smartphone brands famous for its exquisite design and ostentatious feeling evoked among its numerous users globally. The American company was brought together by Steve Jobs, Steve Wozniak and Ron Wayne. As a multinational company with a global outreach, Apple Inc specializes in the design and development of consumer electronics, software and online services. The most common hardware product of the company is the iPhone smartphone and the iPad tablets that have thrust the company in the limelight in the recent decades for their cutting-edge innovation and creativity in design which dictates the applications used and the prominent smartphones features that its competitors are yet to have in the Tech industry (Elsbach and Stigliani, 2018, p.2276). Apple’s intensity in innovation has made it the best producer of both hardware and software components since its establishment. What sets Apple apart from the rest of its competitors is the use of design thinking which was initially advanced by Steve Jobs.

Apple’s desire was to improve the quality of a customer’s experience and provide an alternative that would guarantee efficiency on an unprecedented scale compared to the existing information and communication innovations already in place. One thing however that sets Apple apart from its peers is dedicated approach to product design and customer-oriented philosophy that ensures that things are done the Apple way. The profound dedication to their products’ quality make Apple the leading innovator with a concise development strategy embedded on the principles of design thinking that typically entails creating design concepts for new products and encompasses cognitive and practical actions. Ultimately, the primary objective of design thinking aims to advance problem identification, decision-making, conceptualization, sketching, prototyping and eventually evaluating the efficacy of the intended product design (Sharma and Grant 2011, p.4).

Situational Analysis

The cumulative success that Apple Inc has enjoyed over the years could have never been possible with the company’s bold step to often experiment with new designs for futuristic products. Most Apple consumers have developed an emotional relationship with the Apple brand. Inherently, Apple often differs from those of other competitors solely due to extreme innovative thinking riding on the company’s culture of design thinking which was ultimately ingrained into the company’s business mantra. The philosophy of “doing things the Apple way” has made Apple overcome challenges during its developmental period between 1985 and 1997 when Steve Jobs returned to the company which was at the time performing averagely, In 1997, the company’s share was fixed at $5 while also facing a lot of future uncertainties. However, the reemergence of the company could be witnessed with the return of Steve Jobs that ensured stellar profitability primarily due to his strong work ethics design thinking. As of 2015, Apple Inc. had each share at $108 with an estimated $233.7 billion in total revenues while the company’s net income was at $53.39 billion (Kodama, Yasuda and Hirasawa 2017, p.54). Furthermore, the adoption of a consumer-oriented strategy which gelled with Apple’s vision to put the consumer first when conceptualizing new products.

Design Thinking and Innovation

Design thinking is a detailed approach that is characterized by establishing appropriate solutions to the problems identified. Design thinking inculcates innovative ideas about the consumer at every stage of the development process. Norman and Verganti (2014, p.78) posit that design thinking is a human-centered strategy that provides innovation from the designers in such a way that all the consumer needs are effectively integrated with the resulting possibilities of technology as augmented with the need for business success. According to Elsbach and Stigliani (2018, p. 2274) design thinking mostly integrates three critical approaches to technology, business and human values to develop innovative products.

The user desirability component informs what kind of designs needs to be conceptualized and to address which specific user demands since the final product must satisfy the consumer needs in solving existing problems from a user-centered perspective (Purkayastha and Sharma 2016, p.147). Therefore, the chosen innovative technology must incorporate the user aesthetics in the designing process by adopting tools that will ensure efficiency in communication and social interaction. Design thinking invariably incorporates the market viability of the newly developed product. Hence, it dictates whether the designed product can satisfy the intended market target which is further promoted by branding to establish a loyal consumer base (Sharma and Grant 2011, p. 8). The market viability can also be assessed by strategic analytical tools such as the SWOT analysis that will guide on the ability of a product to succeed in the tech industry (Norman and Verganti 2014, p.79). Lastly, the technology possibility component assesses the innovativeness of a product to meet its intended market goals. The possibility of the technology succeeding which Apple currently pursues entail the adoption of every developmental process from prototyping to the visual presentation where the product transitions from a concept to a reality. The figure 1 below provides a visual presentation highlighting the relationship between design thinking and innovation.

Fig 1: The relationship between Design Thinking and Innovation (Source: www.designorate.com)

Analysis of Apple using SWOT Strategic Planning Technique

Strengths

The strength component of the SWOT strategy plan provides an analytical framework for Apple to identify its strengths that will enable it to overcome weaknesses, maximize on the opportunities and withstand the inherent threats within the Tech industry. Mostly, the strengths are internal organizational factors that thrive upon specific conditions within the company’s business model. As such, Apple’s most notable strengths include;

The unique ability to design its own hardware and software applications without outsourcing the services needed to design a product. Apple employs highly skilled workforce who must be driven the desire to achieve success. The ability to run the design development processes makes Apple better placed to be more innovative in creating adaptable products that guarantee solutions to their customers (André Cavalcante 2013, p.285). Inherently, the uniqueness associated with Apple products makes it convenient for consumers to easily integrate into the Apple ecosystem that has made the company to enjoy a competitive advantage unmatchable by any other Tech firm as consumers are more accustomed to the prestige related to the brand.

The Apple brand remains one of the strongest and valuable company brands that most consumers would wish to associate with in the long run. The fact that the company enjoys massive following in most global markets makes it able to introduce a new product that is almost guaranteed to perform well due to the brand image.

The company employs a marketing strategy that charges premium prices for most of Apple’s products. The company adopts the marketing mix strategy which enables it to employ premium pricing that ensures the resulting high-profit margins. The internal strategic influence forms a fundamental basis upon which profits are maximized even in circumstances where sales volumes are limited (Leonidou, Christodoulides, Kyrgidou and Palihawadana 2017, p.585).

The company’s competitive strategy incorporates rapid innovation that ensures the company is ahead of the rest when it comes to the latest technologies which further ensures its competitive advantage (Khan, Alam, and Alam 2015, p. 955).

The ability to attract and retain highly skilled and proficient IT experts with different specializations makes the company focus on product development. The business environment is conducive even to the employees hence there is low staff turnover. The fact that Apple retains its best innovative talents ensures its dominance in the Tech sector.

Most importantly, Apple has been able to maximize on direct sales in almost all of its branches located at high traffic locations contributing towards the company’s revenues. Its supply chain is well controlled coupled with publishing the supplier code of ethics that enhance its brand recognition. Apple’s trade name is associated with a high level of trustworthiness which makes customers so loyal and always anticipating to get the next version of their favorite products (André Cavalcante 2013, p.287). Apple’s easy to use the approach in dealing with its products endears it to many customers because of their user-friendly nature.

Weakness

The weaknesses aspect of the SWOT analysis places elaborate emphasis on the company’s inadequacies and outlines them for appropriate interventions. Weaknesses are Apple’s internal factors that impede business growth and include a limited distribution network, exorbitant prices charged on Apple products and high dependency on sales in the high-end market segments. Apple Inc mostly has much of its volumes sales done online hence a limited global distribution network. It also means that customers hoping to own any apply are likely to preorder online. The SWOT analysis framework, therefore, considers exclusivity as an internal business weakness because:

The limited access to the products implies that only those within the high-income bracket are able to afford Apple products while those with lower purchasing ability are unable to acquire the products.

Apple has the propensity to depend highly on sales targeting the high-end market segment. Though high prices continue to attract customers from the high-income bracket, most of the low-income earners are unable to purchase Apple products.

Internal analysis of the company reveals that as strong strategy exists to promote direct sales but it is unfortunate that the company still lags behind its perennial competitors like Samsung since Apple only has 13 countries around the world where direct sales are sanctioned.

The overreliance of Apple on its iPhone and iPod brands which contribute to overall sales dominance can turn catastrophe in the event that they face a decline in cumulative sales. The other fact that apple exclusively relying on iOS makes it difficult to integrate other operating systems while other competitors are experimenting with the several existing OS to enhance product diversity.

Opportunities

Opportunities reveal the avenues of corporate advancement and potential investment interests for Apple Inc. where the company gets to explore what works best and invest in the identified for further business growth. As such, Apple can greatly optimize its global market reach by expanding its distribution networks and points of direct sales across the globe to be able to effectively compete in the Tech industry with other established multinational competitors. The projected profitability of Apple in the subsequent financial years implies that the company will endeavor to maximize its sales volumes based on the rising demands of Apple products. Apple should also consider diversifying its productions by venturing in new product lines that are cost effective to match the demands of most Tech markets. New product lines based on innovativeness to solve daily communication problems will eventually eliminate dependency on the iPhone and MacBook series of products (Khan, Alam, and Alam 2015, p. 956). The development of new product lines will also guarantee business growth despite the threat of aggressive competition.

Threats

Threats are deemed as the unfavorable factors that impeded Apple’s quest for sustained profitability amidst stiff competition. Threats are experienced from a myriad of sources and are external stimuli that the company have no direct control over. Apple, therefore, faces the following; aggressive competition from existing and new market entrants, imitation of their trademarked products leading to prolonged court battles, and the rising cost of labor which differs from one country to another. Most companies are now investing more in budget smartphones that can be used even by the low-income earners. The result has been rampant competition from Samsung, Huawei and Sony. Within the context of SWOT analysis, stiff competition has a limiting effect on the company since aggressive market tendencies derail financial gains coupled with the ever-present threat of product imitation (Taghavifard et al. 2018, p.46). Consequently, product imitation done in large proportions can lead to dwindling financial returns since the market is saturated with counterfeits as opposed to genuine Apple products. In furtherance, the ever-increasing labor costs involving contract manufacturers, suppliers and retailers tend to reduce profit margins thus pushing the price of the commodity further beyond the reach of most consumers.

PESTEL Analysis of Apple

Political Analysis

Local and international politics play a critical role in determining how Apple products perform in global markets. As a result of exposure to several political situations, business activities can be greatly affected based on the industry regulations that control the activities of manufacturers, suppliers and retailers (Lockamy III 2017, p. 177). Sales contribution for Apple, for instance, occurs outside the US hence any political insurgency can have catastrophic consequences to the company and its employees. Politically motivated problems witnessed in the recent past was the political pressure put on Apple due to several instances of suicides with its biggest supplier Foxconn which was accused as having poor working conditions pay and longer working hours. In 2010, employees working in Apple’s assembly plant died hazardous environments that led to the death of two employees while sixteen more were seriously injured when an explosion occurred. Imperatively Apple continues to face political risk associated with numerous litigations facing it domestically. Also, it has emerged that the US had imposed a ban on the importation of manufacturing parts deemed as not meeting international standards of safety and quality. Compounded by America’s strict labor and environmental laws, it has become very difficult for Apple to freely compete in a competitive environment (Rau, Zbiek, and Jonas 2017, p.48).

Economic Analysis

Economic factors play a significant role in creating opportunities for the company to invest in for sustainable profitability. The PESTEL aspect of this analysis indicates the prevailing market conditions that directly impact Apple’s ability to compete, break new financial frontiers and thrive in highly competitive environments (Srdjevic, Bajcetic, and Srdjevic 2012, p.3381). Economic factors have the ability to influence the rapid growth of the company especially setting operational bases in foreign countries while enjoying all the benefits that come stable economies as exemplified by the European Union which has provided Apple with a conducive environment to thrive economically. The rapid economic growth rate of some developing countries, especially in Asia and Africa, provides Apple with the best opportunity to consolidate its market share.

Social/Sociocultural Factors

Several sociocultural factors tend to influence consumer behaviors and dictate how Apple eventually fare in competitive markets. The sociocultural aspect of the PESTEL analysis primarily points at external factors affecting consumerism within the firm’s micro and macro-environment. The rising use of mobile users encouraged by population growth and rampant economic growth provides Apple with the opportunity to exploit the popularity of mobile devices (Rau, Zbiek, and Jonas 2017, p.49). The introduction of Apple’s popular products such as iPhone, iPad and Apple Watch in middle-income economies have increased demand for more innovative digital products.

Technological Factors

Technological external factors continuously provide opportunities for the Apple Company to aggressively invest in innovative and creative products by exploiting its design thinking blueprint. There are several business factors that influence technological adaptability for new products and related opportunities. Technology has provided Apple with the ability to exploit novelties such as cloud computing, technological integration (products that can seamlessly connect to one another) and the growing apps market.

Ecological/Environmental Factors

Apple Inc. is addressing opportunities through sustainable business models that are sensitive to the market needs which have been characterized by the demand for new products that can improve efficiency, durable and able to positively impact the business environment. As such, Apple has identified business sustainability trends, energy conservation and labor rights trends as potential avenues that will continuously guarantee Apple more revenues. The company is keen to innovate long-lasting batteries that are eco-friendly and use energy efficiently and promoting healthy environmental practices (Cortimiglia, Ghezzi, and Frank 2016, p.417).

Legal Factors that Limit Apple

Apple has endured several legal tussles with its competitors especially Samsung over copyright infringement allegations with the resulting litigation costs threatening the sales volumes of Apples recognizable brands. The PESTEL analysis model, therefore, indicates that regulatory measures put in place must be conformed to by Apple to win the confidence of its consumers (Srdjevic, Bajcetic, and Srdjevic 2012, p.3382). The US government have become increasingly conscious of privacy concerns. Apple can, therefore, view privacy regulations as both opportunity and threats since it improves the company image to be complaint and a threat because of the inherent challenges encountered in creating tamperproof transmissions to protect the privacy of its users. Furthermore, the government initiatives to increase telecommunications would imply that the usability of Apple products could be reduced leading to reduced sales volumes and profits.

Assumptions, limitations

Assumptions

The success of Apple continues to astound industry veterans because most of its products rarely need aggressive marketing. Apple has thrived on the customer reviews of its related products such that advertising for newly launched products is done on a limited scale (Harviainen, Ojasalo, and Kumar 2018, p.191). The philosophy at Apple is that they produce the best quality products and their consumers are already aware of this information. The performance of iPhone, iPad and iPod has greatly revolutionized the market niches for related products from competitors. It is therefore assumed that Apple’s marketing mix coupled with design thinking will continue to establish loyal clientele over the coming years hence ensuring its market dominance in technological innovation and design thinking.

Limitations

In as much as Apple is widely recognized as a global technological powerhouse with an almost guaranteed customer base, it still not currently feasible to realize market price normalization for Apple products. First, the normalization of the prices will inherently reduce the ostentatious prestige associated with Apple products thus driving away the middle and high-class users. There is also no logical framework in place for Apple to standardize its pricing which continues to be charged at exorbitant rates.

Hypothesis

H1 = Apple Inc. has achieved its current technological success based on design thinking and innovation when coming up with a new product thus making it dominate its specific market niches. Otherwise, what best explains Apple’s sustained success even when charging the highest prices within the Tech industry? Therefore, Apple’s approach to design thinking and marketing mix will ensure its sustainable growth as it continues to target the high-end market which remains faithful to the brand.

Evidence of Proof of Hypothesis

Though there are several Android phones that are arguably better than the iPhone in terms of internal memory and camera specifications, the elite will still buy the iPhone regardless of its features and cost. The iPhone has developed a cultic following coupled with expert marketing skills that portrays it as the best version of phones to be seen with as exemplified by the fact that most users are either prominent celebrities, business moguls or the elites. Steve Jobs managed to create the massive public appeal often associated with iPhone and Apple products (Sharma and Grant 2011, p.18). The iPhone is therefore not seen merely as a communication tool but a statement of means. The Apple culture has promoted the belief that any other alternatives in the market must be inferior to the iPhone and related products. Based on the adduced reasons, Apple continues to charge exorbitantly for their products while sure that their little damage can be done to their consolidated market portfolio. As such price standardization to accommodate even the low-income earners is therefore deemed an impossible move by the firm.

Evaluation of Evidence: Pros and Cons

Pros

Apple Inc. has a marketing strategy that targets the high-end market which makes it invest enormously in design thinking and innovation. Most of the Apple products are not made for the general market consumption or to gain quick profits but rather for a specific market niche through a calculated marketing mix strategy. The fact that products are made with the end users’ needs in mind make the designers be extensively thorough in incorporating specific consumer needs to enhance their usability. The high customization of the Apple products to addresses consumer problems through innovative ideas, therefore, justifies the high pricing and quality of the product. Ultimately the effort put in design thinking and creative innovativeness ensure that the company’s prestigious status is upheld together with its reputation.

Cons

High costs associated with Apple products have greatly reduced its penetrative ability in low-income economies which clearly overlooks the potential of growth that such markets hold. The resulting consequence is that these markets are ignored which reduce the reach of the company to explore the potentials that they hold. Imperatively, neglecting low-income niches limits Apple’s financial growth due to limited market reach targeting high-end clientele.

Recommendations and Actions

Apple Inc.’s design thinking and innovative actions must be integrated to enable the company to exploit its core competencies, strengthen its competitive advantage and maximize its market portfolio. The proposed recommendations and actions include;

Research and Development: Apple will have to continually invest in research, development and incubation of creative and innovative ideas to make it retain its dominant position in the market and beat the external threat of existing and new market entrants. Leading a radical product and technological advancements will ensure that the philosophy of design thinking is preserved for future endeavors (Rau, Zbiek, and Jonas 2017, p.49).

Diversity in Product Line: Apple Inc. must realize that enhancing both its hardware and software, peripheral devices, consumer electronics, mobile communication devices and internet services will ultimately maximize the value and life of its products while discovering and conquering new markets in developing economies.

Defining Target Markets: The Company will need to define its market niches and come up with more innovative means that will reach the market more broadly. Invariably, establishing and expanding the company’s distribution networks even in countries that it has not been doing well should become a top priority.

Global Positioning and Development: Though Apple has begun to penetrate new markets that have been dormant for long, it still needs to aggressively market itself as a dominant worldwide player. The company should, therefore, should endeavor to study the specific market preferences to inform design thinking which will match customer needs to an innovative problem-solving product (Zhang 2017, p.39).

Sustainable Management Teams: It is imperative for Apple to reduce leadership depended on one individual as was the case with Steve Job when considering advancing the interests of the company. A hierarchical leadership system will ensure continuity even if one leader opts out.

Recommendations for Other Companies Based On Best Practices of Apple

Many companies within the tech industry have several things to learn from Apple Inc and could boost their sales volumes and profitability if they incorporate some of Apple’s best practices which include:

Design Thinking and Innovation: If companies in the Tech industry adopts design thinking, innovation will automatically become a point of interest because they will be striving to build technologies that meets customers’ specifications to solve problems. Thus, the companies will endeavor to put the customer first before profits to win their trust and consolidate their market portfolio (Zhang 2017, p.39).

Appropriate Marketing Strategy: One of the fundamental lessons that other companies need to learn from Apple is their aggressive and highly successful market mix marketing strategy which has endeared Apple to most of its market niches. Thus, companies must choose if they are pro-customers or pro-profits and adopt relevant strategies to propel their growth

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