Part 4: Case Study Questions (40 marks in total) Instructions: Please read the following case and answer the questions accordingly. Please note that you need to answer all the questions. Creativity at Apple Apple has always been a trailblazing company whose innovative products are almost universally acknowledged as easier to use, more powerful, and more elegant than those of its rivals. In the last ten years, Apple has been granted 1,300 patents, half as many as Microsoft, a company 145 times the size of Apple. Dell Computer, by contrast, has been granted half as many patents as Apple. Apple has invented, moreover, more businesses than just the personal computer. In 1984, Apple created the first computer network with its Macintosh machines, whereas Windows-based PCs didnt network until the mid-1990s. A decade ago, Apple introduced the first handheld, pen-based computing device known as the Newton and followed that up with a wireless mouse, ambient-lit keyboards for working in the dark, and the fastest computer on the market in 2003. In 2003, Apple also introduced the first legal, digital music store for downloading songsiTunesalong with its compatible technology, iPods. In other words, Apple has been at the forefront of product and technological innovation for almost 30 years. Apple has been, hands down, the most innovative company in its industry and one of the most innovative companies on the planet. Heres the problem. Today, Apple commands just two percent of the $180 billion worldwide market for PCs. Apples rivals have followed its creative leads and snatched profits and market share from Apple with astonishing effectiveness. From its number one position two decades ago, Apple currently ranks as the ninth largest PC firmbehind name-brand firms such as Dell, Hewlett-Packard, and IBM, but embarrassingly, also behind no-name firms such as Acer and Legend. These clone-makers, from Taiwan and China respectively, have invented no new products. Moreover, whereas Apple was once among the most profitable companies in the PC industry, its operating profits have shrunk from 20 percent in 1981 to 0.4 percent in 2004, one-tenth the industry average. Its chief competitor in softwareMicrosoftsold $2.6 billion in software in the most recent quarter compared to $177 million for Apple. What could possibly be wrong? If one takes seriously the messages being declared loudly and prominently in the business press and in the broader global society today, innovation and creativity are the keys to success. Change or die. Innovate or get passed over. Be creative to be successful. A key tenet upon which progressive, market-based, capitalistic societies are based is the idea of creative destruction. That is, without creativity and innovation, individuals and organizations become casualties of the second law of thermodynamicsthey disintegrate, wither, disorganize, and die. New products are needed to keep consumers happy. Obsolescence is ubiquitous. Innovation and creativity, consequently, are touted as being at the very heart of success. For more evidence, just skim over the more than 49,000 book titles when you log onto Amazon and search using the key word innovation. On the other hand, consider some of the most innovative companies in recent American history. Xerox Corporations famed Palo Alto Research Center gave the world laser printing, the Ethernet, Windows-type software, graphical user interfacing, and the mouse, yet it is notorious for not having made any money at all. Polaroid introduced the idea of instant images, yet it filed for bankruptcy in 2001. The Internet boom in the late 1990s was an explosion of what is now considered to be worthless innovation. And, Enron may have been the most innovative financial company ever. On the other hand, Amazon, Southwest Airlines, eBay, Wal-Mart, and Dell are examples of incredibly successful companies, but did not invent any new products or technologies. They are acknowledged as innovative and creative companies, but they dont hold a candle to Apple. Instead of new products, they have invented new processes, new ways to deliver products, new distribution channels, new marketing approaches. It is well known that Henry Ford didnt invent the automobile. He simply invented a new way to assemble a car at a cost affordable to his own workers. The guy who invented the automobile hardly made a dime. The trouble is, creativity as applied to business processes-manufacturing methods, sales and marketing, employee incentive systems, or leadership development are usually seen as humdrum, nitty gritty, uncool, plodding, unimaginative, and boring. Creative people and creative companies that capture headlines are usually those that come up with great new product ideas or splashy features. But, look at the list of Fortune 500 companies and judge how many are product champions versus process champions. Decide for yourself which is the driver of economic growth: good innovation or good management.

Questions: 1. Consider the four approaches to creativity. What approach(es) has Apple relied upon? (10 marks)

2. What are the major obstacles and conceptual blocks that face Apple right now? What do employees need to watch out for? (10 marks)

3. Assume you were a consultant to the CEO at Apple. What advice would you give on how Apple could capitalize on its creativity? (20 marks)