Senior vice presidents are in charge of functions, not products. What is surprising-in fact, remarkable-is that Apple retains it today, even though the company is nearly 40 times as large in terms of revenue and far more complex than it was in 1998. The adoption of a functional structure may have been unsurprising for a company of Apple’s size at the time. Believing that conventional management had stifled innovation, Jobs, in his first year returning as CEO, laid off the general managers of all the business units (in a single day), put the entire company under one P&L, and combined the disparate functional departments of the business units into one functional organization. As is often the case with decentralized business units, managers were inclined to fight with one another, over transfer prices in particular. General managers ran the Macintosh products group, the information appliances division, and the server products division, among others. It was divided into business units, each with its own P&L responsibilities. When Jobs arrived back at Apple, it had a conventional structure for a company of its size and scope. Much less well known are the organizational design and the associated leadership model that have played a crucial role in the company’s innovation success. Thanks to them, it grew 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. Apple is well known for its innovations in hardware, software, and services.
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