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Redesigning Apple From Inside Out


Company's greatest competition comes from within.


The most courageous choice that a leader will ever make -- even one as brazen as Steve Jobs -- is the decision to transform the business when it's on top of the heap. Time and again, we see legendary firms -- Starbucks (SBUX), Ford (F), Dell (DELL) -- fail to invest the largess of their corporate coffers in reinventing their business models… Until it's too late. At which point, Nelson Peltz, Carl Icahn or George Soros swoops in to force change upon the hobbled firm.

I believe that Apple (AAPL) has arrived at that pivotal moment in its historic rebirth where the expanding pool of potential -- made possible by the pace of technological advance and Apple's formidable success -- far outstrips the collective abilities that currently reside in its headquarters in Cupertino. California. How else can you explain approaching Apple TV as merely a "hobby?"

The fundamental challenge facing the leadership team at Apple is not about strategy, but rather capacity. The question that stands in the way of its heroic future is: How do we redesign the organization of our business to deliver on the following interconnected fronts?

  • Doubling the number of Apple stores to facilitate broader adoption.

  • Building iTunes into a media storehouse accessible across all screens (phone, TV, PC, etc.).

  • Catapulting the iPhone into a 3G global platform that spans networks and geographies.

  • Turning the TV into a 21st century device that can manage our media-intensive homes (more on this in a future article).

  • Bringing the price point of Macs down further to make switching costs negligible.

  • Taking the iBook off the shelf and rebooting it as the breakthrough that the Newton promised (and failed) to be.

  • Engineering OSX into a corporate-ready operating system that steals share from the Windows hegemony.

  • And, oh yes, evolving the iPod to be an indispensable part of people's lives for years to come.

Contrary to conventional wisdom, Apple isn't going toe to toe with Research In Motion (RIMM) or Hewlett-Packard (HPQ) or even Sony (SNE). Apple's greatest competition comes from within. The disruptive threat is growth itself. Organizationally, the natural consequence of such a meteoric rise is bureaucracy. Right about now, the "enemy" is anything and everything that stymies the free flow of imaginative ideas that has forever shaken the world of computing from its previous slumber.

Bizarre as it may sound, with a market cap of $162 billion and a price-to-earnings ratio of 38, Apple is only scratching the surface of the untapped value available to a business and a brand with its creative track record. Steve Jobs, Jonathon Ives and the rest of the leadership team must be just as zealous about breaking down internal barriers as they are about building museum-like stores. As brave in how they rethink the structure of the organization as they've been in refashioning the landscape of music.

This is the kind of radical behavior -- within the organization and in the marketplace -- that represents the future of leadership.

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