Matt Yglesias on Apple’s Functional, Rather Than Divisional, Corporate Structure

Matt Yglesias, “Apple May Have Finally Gotten Too Big for Its Unusual Corporate Structure”:

Even Apple’s more popular laptop products show some signs of the same kind of neglect. The latest iteration of the MacBook Pro offers a number of impressive features, but it maxes out at a relatively low level of RAM, doesn’t offer many ports, and isn’t equipped with truly top-of-the-line internal chips. The computer is impressive in many ways — certainly the innovative new TouchBar looks cool — but, like most of Apple’s other products, it appears to be optimized for lightness and thinness rather than for true professional use.

But this all raises a more fundamental question. If GE can build jet engines, tidal energy farms, freight rail data systems, mining equipment, and medical devices, how is it that the world’s most valuable company can’t find the time to make a full line of personal computers and PC peripherals alongside its market-leading smartphones and tablets? The answer goes back to Apple’s corporate structure, which, though fairly common for a startup, is extremely unusual for an enormous company.

It’s an interesting read, especially for anyone who isn’t aware of just how atypical Apple’s functional, rather than divisional, structure is for a large corporation (let alone for the largest, by market cap).

I think it’s almost certainly true that if there were, say, a “Macintosh” division within Apple, that we’d see more frequent updates to all Mac hardware. That doesn’t mean Apple should change its structure, though — and in the long run, I don’t even think that would be good for the Macintosh. Apple’s functional structure is absolutely central to their success over the past 20 years.

I think what Yglesias shows is that Apple’s functional structure is not a panacea — but not that their structure should become more traditional. Like with almost everything else in the world, there are tradeoffs. The Mac going through a years-long period of sporadic (or non-existent) hardware updates is a downside of these tradeoffs. But if Apple had a standalone Macintosh division, there might never have been an iPhone or especially iPad, because the Mac division chief would have been motivated to protect the Mac. We would have had a MacPhone and MacPad instead, and they’d have been lesser products for it.

Also, this problem is not new at Apple. There are certainly growing pains with regard to Apple’s enormous size today. The iPhone’s extraordinary success creates a sort of gravity that has warped the company. But Apple ran into “can’t walk and chew gum” problems even when they were a much smaller company.

Monday, 28 November 2016