We analyze Apple Inc. using the theoretical concepts of Clayton Christensen’s disruptive innovation theory and find it differs significantly from the predictions of the theory. We trace the theoretical origins back to the dichotomy in capitalism between Knightian uncertainty taking entrepreneurs, who fight in a Schumpeterian creative destruction sense against monopolistic bureaucracies. Apple has sought to organize itself to avoid excessive process bureaucracy while maintaining a high degree of centralization. We lay out Apple’s internal organization and analyze its ability to innovate on both sustaining and disruptive paths. We find that its interdependent architecture is a natural fit to its objective of controlling the entire user experience to the furthest extent possible. Apple wants to disintermediate other distribution networks of content, communication and software. It incorporates this value added in its own distribution channels. It creates moats around its interdependent architecture through its proprietary software lock-ins, its physical retail, marketing & public relations and by running an extremely efficient internal market with hundreds of suppliers. Apple’s cultural DNA has shown itself prepared for low-end disruptions by leveraging both the quality of its products and the network effects of its ecosystem as well as its efficient cost structure to close off potential low-end price umbrella strategies. It has also shown itself to disrupt its own products, cannibalizing immediate profit optimization for long-term monopoly volumes.
|Educations||MSc in Finance and Strategic Management, (Graduate Programme) Final Thesis|
|Number of pages||75|