Apple is well known for its innovations in hardware, software and services. Thanks to them, it has grown from some 8,000 employees and $7 billion in revenue in 1997, the year Steve Jobs returned, to 137,000 employees and $260 billion in revenue in 2019. Much less known is the organizational design and associated leadership model. who have played a crucial role in the company’s innovation success.
When Jobs returned to Apple, he had a conventional structure for a company of its size and scope. It was divided into business units, each with its own P&L responsibilities. The general managers led the Macintosh product group, the information appliances division and the server products division, among others. As is often the case in decentralized business units, managers were prone to fight among themselves, especially on transfer prices. Believing that conventional management had stifled innovation, Jobs, in his first year back as CEO, fired the general managers of all business units (in a single day), placed the entire company under a same P&L and combined the disparate functional departments of the business units into a single functional organization.