THE COMPLEXITY OF MANAGEMENT
The Complexity of Management
Introduction
Modern-day organisations face a unique set of challenges that create complexities to managers and employees alike. Since the time the concept of the organisation was invented, managers and organisational leaders have faced challenges that are considered to have prevailed for centuries. Nonetheless, it is agreed that inasmuch as “the content of leadership has not changed [significantly over the years], the context has … changed dramatically” (Kouzes & Posner, 2006 p.xviii). Supporting this observation, Sims (2002, p.3) states that there are many changes taking place within an organisation’s internal and external environment, thus posing complex challenges to managers. What this means is that managerial effectiveness in today’s organisations is measured depending on how well leaders respond the frequent changes that take place. In order to understand the key factors behind the complexity of management in modern organisations, this paper uses the case study of Apple Inc.
Pic 1: Depicting the General Complexity of Management
Management Challenges Facing Apple
For a long time, Apple has been a big name in the telecommunications equipment business (Hill, Schilling & Jones, 2016 p.45; Boutellier & Heinzen, 2014 p.64). Since the time the late Steve Jobs became CEO of Apple, the company has recorded exemplary performance through its innovative strategies. As Daft and Samson (2014, p.257) observe, the company has been extremely successful during the past decade, as reflected in its retail stores’ performance that has surpassed expectations by a big margin. It is remarkable that the company has been so successful that it has attracted close to 14,000 people each week (Daft & Samson, 2014, p.257).
Unfortunately, amid this and other noteworthy achievements, Apple has recently faced a number of challenges that threaten its position in the industry. One of the challenges is stiff competition within the industry. According to Daft and Samson (2014, p.257), the introduction of the Galaxy smartphones by Samsung has greatly affected Apple’s dominance in the mobile phone market. In the past, Apple easily managed to trash the innovative efforts of rivals such as Hewlett-Packard and Nokia. In recent years, however, its iPhone, iPad and tablet products have received a huge threat from Google’s Android phones as well as Amazon.com’s Kindle reader (Mourdoukoutas, 2011 para.6).
Other than competition, Apple’s management team has to grapple with the pressure and uncertainties caused by the recent economic crisis. Mourdoukoutas (2011, para 7) states that despite the fact that the company’s brand name is very strong among consumers, which means that it enjoys an inelastic demand for products, its sales are not stable. This is particularly the case during times of economic down turn. The external environment also poses a huge challenge to Apple in terms of advancements in technology. The company is very famous due to its innovative products (Kosaka & Shirahada, 2013 p.278; Komives, Lucas & McMahon, 2013 p. 473; Sadagopan, 2006 p.199), but when its iPhone 4 is taken into consideration, its radical innovation appears to be “running out of steam” (Mourdoukoutas, 2011 para.4). Concerns have been raised about the quality of the new phone, with critics arguing that the improvements made to the iPhone 4 are marginal especially when compared to the technological capabilities as well as physical attributes of its predecessor (Mourdoukoutas, 2011 para.4).
The other major challenge facing Apple relates to leadership. According to Mourdoukoutas (2011, para.5), the passing on of Steve Jobs has put the company in a transition process “that casts a cloud of uncertainty over its future”. Although Tim Cook has already been appointed to take the position of Jobs, the truth is that it will take time for him to steer the company into the thriving organisation it was during Jobs’ tenure. The leadership challenge in Apple stems from the fact that Steve Jobs was a very visionary man who understood how to combine the art, technology, and the market to make huge profits for his charisma. On top of this, Jobs was an extraordinary leader with the charisma needed to influence the company’s followers strongly, thereby creating effective as well as efficient marketing campaigns (Mourdoukoutas, 2011 para.5).
Based on the above discussion, it is evident that the management issues currently confronting Apple emanate from its internal as well as external environment. Even so, external forces clearly pose the greatest threat to the company. To begin with, it has been identified that the company is already facing stiff competition from other innovative companies such as Samsung, Google, and Amazon.com (Morrison, 2015 p.53). This is to say that one of the most significant factors behind the complexity that the company currently faces is competition. So formidable is the competition that the company has reportedly expanded the range of its products, both in terms of price points and product size, as a strategy of dealing with the competition. At the same time, Apple has been forced to review its supply chain in order to accommodate the complexities posed by competitors (Crandall, Crandall & Chen, 2014 p.542).
The competition challenge faced by Apple presents a number of complexities to the company’s management team. Having established that Apple’s latest products, specifically the iPhone and the iPad, seem to be easily substitutable by products from rival companies, the company has been forced to look for new markets. One such market is India, which is thought to offer an attractive market for Apple products given that its sales in the Chinese market are slowing. To evaluate the attractiveness of India, Tim Cook is reported to have a week-long trip last year. Sadly, this trip revealed to Cook that there were many daunting challenges awaiting the company should it decide to venture into India (Reuters, 2016 para.1). Even though India is regarded as the third biggest smartphone market in the world, Apple’s success prospects in this market cannot be predicted accurately due to the fact that its rivals have already made their presence there. As such, by venturing into India, Apple will only be trying to catch up with its rivals.
The presence of rivals is not the only challenge that Apple has to deal with if it decides to introduce its products in the Indian market. According to Reuters (2016, para 5-6), the model of selling that Apple traditionally uses is not relevant in India. Conventionally, the company’s phones are sold to local carriers at a full price. The carriers then discount these products to users. In India, this model does not work; phones are sold by retailers, meaning that the role of carriers in the distribution channel is virtually non-existent. The deduction that can be drawn from this report is that as it seeks different ways of countering the stiff competition in the market, Apple is faced by the challenge of reviewing and aligning its modes of operations to the demands and practices prevailing in the new markets into which it desires to venture.
The second major cause of management complexities at Apple is change of leadership. It has already been mentioned that the transition from Jobs’ leadership to Cook’s leadership has caused significant perception differences among stakeholders, the general view being that it will take a long time to have someone who is capable of perpetuating the legacy set by Jobs. This is not to say that Cook is not doing his job well; he has been ranked as one among the greatest leaders in the world (Colvin, 2016 para.1). Such a rank is an indicator of Cook’s ability to steer Apple to great heights.
Nonetheless, financial analysts are concerned that Cook’s leadership may not be sustainable, and more so in regard to the financial performance standards set by the CEO. According to Colvin (2016, para.3), it seems that Cook has inflated the value of Apple Company. In addition, investors are worried that the iPhone is the only product that the company is relying on for its revenue. This poses a huge danger to the company’s long-term growth, especially in an era where conventional strategies of growth such as extension of product lines and market penetration only produce minimal results. The conclusion that can be drawn from this discussion is that whilst acknowledging Tim Cook’s knowledge, experience, and skill, he seems to lack ideas concerning the correct strategic approach that will increase Apple’s value.
There is also the issue of the economy and its impact on prices and demand of Apple products. Reporting for the USA Today, Swartz (2016, para.20) writes that the price of Apple’s products and shares has been affected by economic crises. The impact of unfavourable economic cycles on Apple has been more pronounced in China, where leading technology companies as well as investors have reportedly become edgy due to the 7% decline in national economic growth. Because of this, Apple is faced with a dilemma of how much to spend in innovative products. On a different note, it becomes worthwhile for the company to critically consider whether or not it should continue with its premium pricing policy in the wake of economic slowdown. This is a valid concern when it is taken into account that Apple is competing with Google’s Android products, which are relatively cheaper. When this and the aspect of economic instability are taken into consideration, it becomes necessary for Apple to reconsider its premium pricing policy, and to provide products that can be afforded by different consumers.
Critical Analysis
The foregoing discussion shows that the complexity that is currently facing Apple is caused by a variety of factors, most of which arise from the external environment. For a better understanding of how this takes place, several theories are applicable. With specific respect to the finding that one of the challenges facing the company is related to leadership, it is necessary to explore several theories of leadership. It has been mentioned that even though Tim Cook has been recognised as one among the greatest leaders the world has ever known, his leadership style does not match that of his predecessor. This observation may be well explained using the style theory of leadership, whose central tenet is that “subordinates will respond better to some styles than others” (Martin, 2005 p.350). In other words, some leaders will still influence their followers positively even if they use the directing, autocratic style; others will be more successful when they embrace a democratic style in which subordinates are actively engaged in planning. Applying this truth to the Apple case study, it emerges that the complexity that Cook faces in managing the company is not caused by his autocracy; in fact, when compared to his predecessor, Cook is more democratic. That notwithstanding, the leadership challenge he and his team are facing is largely because he does not possess the expertise that Jobs possessed in the areas of product development, product design, and marketing (Hitt, Ireland & Hoskisson, 2017 p.383).
It has also been learnt that although Apple is a highly innovative company, the business environment is changing very fast, thus presenting new challenges. Precisely, it has been established that Apple’s products are being threatened by cheaper products from rival companies. This kind of competition has been caused by advances in technology, with Amazon.com delivering Kindle versions of Apple’s tablet. This shift can be explained using the complexity theory, which is based on the fact that organisations doing business in the 21st century must do so in a “competitive landscape driven largely by globalization and the technological revolution” (Uhl-Bien, Marion & McKelvey, 2007 p.299). Because of this, it is critical for organisations to embrace innovation in order to generate knowledge rapidly. One of the key premises of the complexity theory is that leadership effectiveness is exhibited “in the face of adaptive challenges [or those problems] that require new learning, innovation, and new patterns of behaviour” (Uhl-Bien et al., 2007 p.300). Adaptive challenges differ from technical challenges in that they cannot be solved using existing procedures as well as knowledge, but call for new discoveries, adjustments, and exploration. In the words of Uhl-Bien et al. (2007, p.300), adaptive challenges are solved through leadership development, while technical challenges are dealt with via management development.
Basing on the management development versus leadership development concept, it may be said that the complexities currently being experienced at Apple Company are largely because the company follows the management development approach. There is available evidence to support this assertion; according to Crandall et al. (2014, p.541), there is a big difference between Cook’s approach to supply chain management and the approach used by the late Steve Jobs. For instance, Cook believes that one must first seek to understand, and to learn from his/her mistakes. In contrast, Jobs believed in prioritization of actions on the basis of their importance, and in making radical changes as and when necessary. He also believed that between cost cutting and excellent customer service, the latter is more important. Unlike Cook’s slogan of seeking understanding before embarking on a task, Jobs’ philosophy was to set and pursue impossible targets and to view the organisation from a process perspective. These differences in philosophies clearly indicate that Apple’s leadership challenges are partly entrenched in Cook’s management development approach, which adheres to the school of thought that it is more prudent to apply tested and tried solutions to problems instead of devising innovative solutions whose effectiveness cannot be predicted (Uhl-Bien et al., 2007 p.300).
Still on the topic of complexity, the Apple case study has indeed shown that regardless of the industry or company size, organisations operate in unpredictable environments that are characterised by unexpected epidemics, economic crises, and other sudden catastrophic shifts. The occurrence of these changes is not linear, as postulated by the complexity theory (Rotmans & Loorbach, 2009 p.3). On the contrary, agents that make up complex adaptive systems engage in self-organisation activities, reason being that they are not influenced or controlled by a central force (Duit & Galaz, 2008 p.313). This self-organisation is informed by the manner in which nearby agents behave. As a result of the self-organisation, unstable outcomes take place, limiting the ability of an organisation to predict with precision how the future will be.
The presence of complex adaptive systems in Apple is illustrated in the report that advancements in technology have created intense competition in the telecommunications equipment industry. As a result, buyers are free to choose from whom to purchase among various providers. This freedom of choice is viewed as an illustration of the self-organisation that takes place in complex adaptive systems. On a different note, the presence of many actors in the market has rendered it difficult for Apple to predict how its sales will be, especially in new markets.
Conclusion
As globalization opens up business organisations to new opportunities, it presents a fair share of challenges that call for a different approach to management. The case study of Apple, a company that has enjoyed a strong competitive position in the technology industry for a long time, illustrates that 21st century organisations call for a proactive, objective management approach when compared to organisations existing in the past. With the numerous threats being posed by turbulences in the external environment, it becomes essential for organisational leaders to adopt an appropriate management approach that helps to respond best to the changes that take place. With reference to Apple, it has been found that the main causes of management complexities are technological advancements (which encourage heavy competition), economic instability, and changes in leadership.
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