Apple Inc. (AAPL) is likely part of your life. Maybe you have an opinion on that. Or you might be curious how Apple became the first company valued at more than USD 2 Trillion. I was, so I made a Strategy Canvas for Apple.

If you are new to Strategy Canvas, check out our Introduction to Strategy Canvas.

The Layout

The layout of the canvas shows the functional structure of the strategy: At the top, a catchy tagline is a useful identifier when comparing alternative strategies, and helps the organisation keep the identified strategy in mind. Prominent below the headline, the core challenge sits atop the practical actions to achieve it. Policy is placed in the transition of the fact-based diagnosis to actions. The Strategy Canvas layout is designed for use in battle.

The logical structure of the canvas is different. It starts with the Challenge, which determines the scope of relevant facts in the Diagnosis. Insights from the Diagnosis are expressed as Policy, which determine Actions. Finally, the Tagline is an expression of the whole of all these elements. This is the order in which we’ll walk through the Apple Canvas.

Challenge

: a clearly defined goal, describing the challenge, not the solution.

‍Apple doesn’t have a mission statement, but does end many of its press releases with:

... Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.‍

This, however, won’t do as a Challenge, which should focus on the problem rather than the solution. Instead, we’ve chosen the following statement:

We will dominate in an aggressively competitive Consumer Technology market.

Diagnosis

: provides an overall approach to cope with or overcome the obstacles identified in the diagnosis, determining a set of Coherent Actions

These are the factors that will be critical to Apple achieving the challenge.

0A: Customer Trust

On the whole, Apple users are remarkably loyal, giving the company freedom to innovate where other companies, with less trusting customers, could not.

0B: Customers aren’t nerds

Apple recognises that the larger part of its market is less interested in the technology, than in what the technology enables them to consume and do.

0C: Design brings users

Good design expands the market for technology, by making it more accessible, approachable, and attractive.

0D: Trust buys time

In a competitive environment in which success depends upon regular introduction of new products, services and technologies to the marketplace, Apple’s status as a trusted brand enables it to delay these introductions until products are truly great. 

0E: Strength in diversity

Technology, Design, and Business requirements for success are interdependent; the best solutions come from focussed collaboration, across disciplines and backgrounds, towards a shared goal. Apple has a tradition of “connecting the dots”.

0F: Geopolitical threat

Politics, notably in China, threaten Apple's supply chain and customer privacy. For example, Apple was strong-armed by the Chinese government into pulling more than 47,000 apps from the Chinese App Store and to shut down the iBookstore and iTunes Movies in China.

0G: Privacy builds trust

Privacy and trust are two sides of the same coin. To earn and maintain the trust of its customers, Apple must respect and guard their privacy.

0H: Fast Competitors

Once introduced, new products, services, and technologies are quickly commoditized, eroding margins; to remain competitive, the company must continually renew its propositions.

0I: Ubiquitous Computing rising

“Ubiquitous” or “Ambient” computing refers to the trend to incorporate computing technologies into everyday objects, environments, and interactions, including the Internet of Things, voice technologies, wearables, etc.

0J: Artificial Reality promising

From the mouse to touch screens, to watches, Apple has a history of successfully bringing new user interaction paradigms to the mass consumer market. The most promising candidate for the “next big thing” in user experience is Artificial Reality.

0K: Supply chain shapes product

Products are constrained by their supply chain. Supply chain partners are incentivised to optimise production to serve the greatest number of customers; over-reliance on these partners therefore leads to commoditization.

Guiding Policy

: provides an overall approach to cope with or overcome the obstacles identified in the diagnosis, determining a set of Coherent Actions

1A: Own the Customer Experience

Customer Experience [0B], including every touchpoint and interaction with the company [0E], is the source of Customer Trust [0A], which must be nurtured and protected with priority. Any partners or suppliers coming between Apple and its customers should be disintermediated [0K].

1B: Innovate on Customer Experience

Focus Technology, Business, and Design R&D [0E][0K] to stay on the forefront of research into new interaction paradigms [0C][0I][0J], with an emphasis on customer empowerment and delight [0B]. Frame new introductions in terms of customer emotions and experiences, rather than technical performance and specifications. 

1C: Compete on Privacy

Use Customer Privacy to differentiate against competitors. Apple has the trust of consumers [0A], allowing it to command a premium and, consequently, to forgo revenue models based on selling data about its users, Unable to command a similar premium, most of Apple’s competitors are compelled to adopt such privacy-compromised models, undermining consumer trust, and strengthening Apple’s competitive advantage [0G].

1D: No less than excellence

Apple must prioritize delivery of truly great products, through focus and devotion to detail. Consumer trust, difficult to win, is easily lost [0A]. Rather than first to market, the focus is on best in market [0D].

1E: Turn to services

Turn to provision of services. Compared to products, services – integrating tools, content, and delivery [0E] to provide immediate gratification – are a step up the ladder of consumer value [0B]. Subscription-based service revenue models constitute a longer term, more intimate, customer relationship.

1F: Build systems

Design and develop products and services holistically [0E]. Optimise hardware, software, content, user interface, and delivery together as integrated systems, optimising for customer experience [0B] [0C]. Position products as channels for services and components of ecosystems.

Action

: coordinated steps that work together to realise the guiding policy.

Apple Watch

Apple Watch delivers on Customer Experience Innovation [1B] and System Building [1F], as well as improving Apple’s (literal) position to deliver services [1E].

AirPods

Having another brand of earpods connecting an Apple device to a user’s ears is stark disintermediation. In addition to delivering on Innovation [1B] and services [1E], AirPods give Apple control of the listening experience [1A]. 

Apple Stores

Apple Stores place Apple in control of the retail shopping portion of the Customer Experience [1A], with an emphasis on high-touch Service [1E].

Homepod

HomePod gives Apple control over the listening experience [1A], integrates with and extends its ecosystem, [1F], and adds a channel to deliver audio-based services, including Apple Music and Siri [1E].

ARKit / Lidar / UWB

Building LiDAR and Ultra Wideband into Apple products prepares them for Artificial Reality. [1B]. ARKit seeds the developer and partner ecosystem to develop new AR applications.

HomeKit

HomeKit is a framework that links smart home products together and adds new capabilities to devices like lights, locks, cameras, thermostats, plugs, etc, into an an integrated system [1F] letting users control smart home products using apps on iPhone, iPad, or Mac, or Siri voice commands [1E]. 

Privacy by Design across all propositions

Privacy by Design is an approach to systems engineering that takes privacy into account throughout the entire process. [1C]

Lobby for Privacy Regulation

Stronger privacy regulations advantage Apple over competitors whose business models rely on the sale of customer-generated data. [1C]

Apple Silicon

The move to proprietary Silicon chips gives Apple greater control over product performance [1A] and the ability to more tightly integrate software and hardware [1F]. 

Functional organisation

Like startups, and military organisations, Apple is organised by function; the way to advance in the company is to get better at what you do. This nurtures excellence in each specialised competence and, because every competence relies on the others, also encourages collaboration [1D].  

Apple Services

Apple Services include the App Store, Apple Music, Apple TV, AppleCare, iCloud, Apple Arcade, Apple Card, Apple News and Apple Pay [1E]; all of which are integrated with their hardware products [1F].

Shift from China 

The Shenzhen manufacturing ecosystem that Apple relies upon is highly-specialised, complex, and inter-connected. Shifting production to another region can only be a long-term project, but preparations have begun, with investigations into the potential of India as an alternative [1F].

Tagline

: a catchy phrase that hooks into the essence of the strategy.

‍Technology that works

This phrase identifies customer experience as a priority and gestures toward service, simplicity and minimalism. 

Wrap up

Apple is doing fine. My purpose in this post is to provide a familiar handle to help you better grasp the Strategy Canvas.  The finished canvas stands as an efficient communication tool, but its real value is as a framework for discussion and analysis. Good strategy evolves from the process of developing a coherent canvas.

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