Wednesday, November 7, 2012

Adjusting Ripeness of the Apple

In some ways, Apple is not having a good week.

Normally victorious in their legal challenges, Apple was slapped down by a District Court judge in Wisconsin in favor of Motorola Mobility, a unit of Google.  Furthermore, a jury asked Apple to pay $368 million to VirnetX Holding Corporation for infringement to four patents by Apple's Facetime application. Is this another chink in their armor?  They hope not, because Tim Cook, Apple CEO, is entering into a two-day mediation with Samsung's CEO concerning patent issues this week.  Brutal legal battles inevitably loom in both companies' futures.  If Samsung wins their patent case, it could mean hefty fines against Apple and an injunction against sales in the United States.  To add to their concerns, CEO of Doubleline Capital is predicting that Apple's stock is going to take a dive and their ability to continue innovation on the heels of the uninspired iPad mini is being called into question.

Perhaps it is time for Apple to do a capabilities audit (though likely they already have - or let's hope so).  For a capabilities audit, in "Capitalizing on Capabilities,"  Dave Ulrich and Norm Smallwood suggest that a company identify two or three capabilities most essential to carrying out their strategy.  Of particular interest to me, the authors pointed out that these capabilities do not have to be current strengths, but rather are the elements that are needed to get to the next level.  Among the possible strengths suggested by the authors, from an outside perspective, I would identify "Strategic unity" and "Innovation" as the capabilities that Apple needs to get to the next level.*

The authors define these capabilities in the following ways:
"Strategic unity: articulating and sharing a strategic viewpoint
Innovation: developing breakthrough products and processes"

Innovation has certainly been a strength of Apple in the past.  It is not immediately apparent whether strategic unity was previously a strength of Apple... there was at least strategic unity within Steve Jobs's mind... possibly under the guise of genius.  I picked these particular capabilities because Apple is known for innovation - it is the crucial piece of its brand that attracts customers that will camp outside its stores for new products and brings top talent to the company.  If Apple loses its reputation for innovation, its value will diminish rapidly because then it will not have an implicit excuse for its high prices and less than perfect user interfaces.  And to the same end, Apple desparately needs strategic unity.  Previously, trust in the company was imbedded in the person of Steve Jobs.  Now, it is essential that each person within the organization knows the strategic direction of the company and invests in it with their day-to-day activities. 

Now that we've hypothetically determined Apple's key capabilities, what steps would you take to strengthen them and what metrics would you monitor?

* Nota bene: In actuality, the authors instruct organizations to 1) decide which business unit to audit; 2) ID critical capabilities - a list; 3) use surveys to gather data on current and desired capability performance; 4) THEN ID two or three capabilities most required to deliver on strategic goals; and 5) develop an action plan.  For the purposes of this blog post, I skipped steps 1-3.

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