The production of the iPod is the only area of the iPod’s development where Apple needed to share and trade knowledge with other organisations. Apple lacked the instrumental and embedded knowledge needed to effectively and efficiently produce the iPod. Embedded knowledge is knowledge that resides in systemic routines. Embedded knowledge is analysable in systems terms, in the relationships between, for example technologies, roles, formal procedures, and emergent routines. As a result of this lack of knowledge they outsourced production of some components to other firms who have a higher level of instrumental and embedded knowledge for example Hitachi produce and design the iPod’s hard drives. The outsourcing of production was a very shrewd move by the senior managers of apple as a survey of iPod users shows that they like they way it looked, how easy they were to use and their reliability.
Apple is a very large and well established firm with many employees who are experts in their respective fields and have vast experience. As a result Apple benefits from high levels of informal knowledge. Informal knowledge is generally limited to a few individuals and is practically based as well as being verbally communicated. Due to the high number of experienced employees Apple is able to understand “best practices” and “tricks of the trade” that would not otherwise be available to the firm. This gives Apple a large competitive advantage over their competitors.
In the 1990’s Tony Fadell created the pioneering idea to create a music player that combined both music software and hardware. This idea was not seen as revolutionary by the first few firms that Fadell pitched to, however it was Apple who understood his vision and gave him the resources and backing he needed. This idea was revolutionary and gave apple’s iPod the embodied and tacit knowledge needed to be the industry leaders. Tacit knowledge is knowledge that people posses in their minds and is hard to communicate or transform into explicit form. Having a high level of embodied knowledge in apples iPod resulted in them having very few competitors and enabled Apple to saturate the market. As a result of Apples success they enjoyed a large market share and profits were at an all time high.
Apples ability to have high levels of both Codified and Tacit knowledge meant they had a huge competitive advantage. Codified and tacit knowledge are complementary as one enables creation of the other. The balance between codified and tacit knowledge is extremely important to organisations Nonka and Takeuchi (1995) stated that “not only that tacit knowledge can be transformed into codified knowledge, but also, by using new codified knowledge, new kinds of tacit knowledge may be developed.” This idea has a drastic effect on Apple due to there high levels of both types of knowledge.
The marketing and promotion of the iPod is innovative and extremely effective and has shown that Apple also has a high level of cultural knowledge throughout the organisation. The advertising campaign showing Silhouetted figures losing themselves in the music, with neon-coloured backgrounds and their all-white iPod’s has received many plaudits. The marketing for the iPod shows a high level of cultural knowledge because their adverts spoke directly to their market and were subtle and cool enough to raise the iPod’s profile and make it a must have gadget. Furthermore 0 using TV, the internet, print and outdoor posters Apple also placed the iPod on many different television programmes and movies e.g. Blade three or the US version of the office. Cultural knowledge involves understanding the norms, values and beliefs of the market and using this knowledge to define opportunities in the industry. Business analysts of Apple have said that they have created an “iPod culture” with it being the must have gadget and a social status symbol. Overall one would be hard pressed to find a marketing campaign more effective and efficient than Apples. Apple has such a high level of cultural knowledge due to there size and reputation as they can hire the best marking executives who have expert knowledge, training and experience.
Apples iPod is a resounding success beyond all the organisations expectations. Before the iPod Apple had a low market share, where as now they are the industry leaders. Apple has sold over ten million iPod’s and is currently struggling to keep up with demand. Their success is based upon the high level of embodied knowledge that has gone into the marketing, production, design and distribution. As a result of Apple high levels of embodied and tacit knowledge it has been very hard for industry competitors to catch up. Apple is a large multinational corporation and this means that they benefit from “core competence which enables them to be innovative. The different mix of departments and employees give Apple wide ranging mix of knowledge which is hard copy or identify. Furthermore Apple has created an atmosphere and culture throughout the organisation which promotes knowledge transfers and modernisation. Apple has created this culture through strong financial backing, excellent management ability and their operating capabilities.
Another attribute in Apples armoury is how well the firm as a whole learns and the speed at which they learn. Apple is always trying to create knowledge through acquiring new skills, technologies and practices. At all levels of the organisation there is a concerted effort for individuals to learn new skills as well as management learning how to introduce new processes and systems. Today Apple is still being innovative and knowledge hungry this is shown by the latest versions of the iPod from the shuffle to the nano. However recently there has been some criticism of the iPod as some of the batteries are failing and new batteries are expensive and only available in specialist Apple stores which are only located in the centre of major cities.
The iPod is a very good example of how knowledge management is a way of creating sustainable competitive advantage. Apple does have some competitors but due to there lack of knowledge they are a few years behind Apple. The iPod has used many different types of knowledge to help it become a success. Knowledge is a sort after asset by all firms but the difficulty comes because most knowledge is not explicit and is hard to quantify or see. Many business analysts say that the iPod is an icon for twenty first century business and culture.
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References
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Malhorta, Y. (1997) Current Business concerns and Knowledge Management. Available online at .
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Nonka, I and Takeuchi, H. (2000). The Knowledge creating company: How Japanese companies crerate the dynamics of innovation. Oxford, UK: Oxford University Press.
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BBC News website. (2003). Available from: ).
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iLounge website. (2004). Availble from: http://www.ilounge.com/index.php/articles/comments/instant-expert-a-brief-history-of-ipod/ (Accessed 3rd December 2006)
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