At Apple, there isn’t a person responsible for the iPhone, the iPad, or any other product or service whose job depends on the success or failure of that specific product or service. The company is organized “functionally,” where each person’s success depends on the success of everyone else, a letter exchange between Apple and the SEC reveals, as spotted by VentureBeat.
That structure is a legacy of Steve Jobs, Apple says.
When Apple announced changes to the way it reports earnings in 2014, it triggered a routine inquiry from the SEC, which wanted Apple to clarify some things. What makes this exchange of letters particularly interesting is that it revealed how the company is organized.
After reading through the letters, VentureBeat’s Chris O’Brien found that the SEC wanted a list of all the “Chief Operating Decision Makers,” or CODMs. Apple said there is only one CODM, Tim Cook, and detailed the organic structure of the company.
“The Company’s functional, rather than divisional, organization is one of its most distinctive aspects, especially given its size,” Apple writes. “Ordinarily, organizations of the Company’s size (whether measured in revenue, number of employees, global scope, or market capitalization) operate through separate business units, each with its own profit and loss responsibility.”
Instead of separating into products or divisions, Apple defines people’s responsibilities or management areas “functionally,” as they are part of something larger. Whatever they are building, the goal is to benefit the company’s entire suite of products and services as a whole, O’Brien writes.
That’s how the CEO (now Tim Cook) makes decisions. He is the one who will green-light a project if he finds that the project “will contribute to the company’s consolidated business strategy of expanding the Apple ecosystem through the development of integrated and interoperable products.”
“Functional leaders, including those overseeing hardware engineering, operating system and applications development, operations, sales and marketing and general and administrative functions, are compensated based on the net sales and operating margin results of the entire Company,” Apple wrote. “No group or individual within the Company is measured or compensated on product profitability, and the Company does not produce financial statements by product.”
The whole VentureBeat investigation is well worth your time. You can read it by following this link.