This paper examines the multinational company, Adobe Systems Incorporated, its innovations, value added for its products, and competencies. The paper then examines the company’s structure culture, leadership and strategy for deploying its products.
Adobe Systems Incorporated
Adobe Systems Incorporated is an American multinational computer software corporation founded in 1982 by former Xerox employees John Warnock and Charles Geschke; the current CEO is Shantanu Narayen, who acquired the position in 2005. Adobe is headquartered in San Jose, CA and is traded under the NASDAQ symbol ADBE. Adobe’s operates in many major cities in the United States; its international operations include China, India, Switzerland, Romania, Canada, and Germany. As of the third quarter of 2012, Adobe has a total revenue of $1.081 billion and a market capitalization of 16.88 billion. Adobe offers software products and services to users of operating systems and technological devices and is best known for Photoshop, Acrobat, and Flash. The company’s business can be broken down into three segments: digital media, digital marketing, and digital publishing (Yahoo! Finance, 2012, & Reuters, 2012)
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One of Adobe’s first product was PostScript, which is a programming language developed by Warnock and Geschke in 1982; at this time, Apple, Inc. was Adobe’s direct competitor. Adobe created Adobe Illustrator for the Macintosh computer in 1986 which helped to popularize PostScript; a version of Illustrator was later made for Windows in 1989. The company went public in 1986. Adobe introduced Acrobat (the PDF) in 1993, which is now the most widely used viewer and reader. The company has acquired many other companies during the early to late nineties and 2000’s. Some of the well-known acquisitions include: Macromedia, Photoshop,
Aldus, Omniture, and Efficient Frontier. Adobe competes directly with Apple, Microsoft, and Google (Adobe, 2012 & Wikipedia, 2012).
Sources and Types of Innovation
A company can have one or many sources of innovation which can range from the company’s culture, policies, practices, and creativity. I think in Adobe’s case, its sources of innovation come from creative talent, consumer and business needs, and acquisitions. Adobe started off with PostScript in 1982 invented by its two founders and it became popular because of laser printer in the 1990’s (Wikipedia, 2012). The PDF file format, which evolved from PostScript, was invented by Warnock in the early 1990’s. Even though there were several competing firms offering the same technology, Adobe was able to make the PDF a market standard because it made the PDF file format usable on the internet where the other competitors could not. As the internet started to boom in the 1990’s the PDF became more and more popular (prepressure, 2011). Postscript and the PDF were developed for the print industry.
Adobe Photoshop is well known today; thought this software was not directly developed by Adobe, the company saw an opportunity to market it. Photoshop was first developed by Thomas and John Knoll in 1987. John was unhappy with the graphics on the Macintosh computer at this time and he began writing his own code to make the Mac work they way he wanted it to, while Thomas was working on imagining process for his thesis. Both of the brothers started a collaboration and named their software Display. Unfortunately, when the brothers presented their software, now called ImagePro (then later change to Photoshop) to companies in 1988, it was rejected because many these companies were working on similar software or they just did not like the software. When the brothers presented the software to Adobe, the company was impressed with the program. The product was licensed and distributed by Adobe and the Knolls received royalties for this. Adobe added new features to the software with Thomas coding them; Adobe mass-marketed Photoshop in 1990 and the rest is history (computerarts, 2005). With these examples, Adobe was able to capture the need of the consumer and market and tweak the technology to make it better. The PDF and Photoshop may have been slow to take off, but Adobe came out the winner because it saw an opportunity to be successful.
Adobe has acquired many companies since its inception in 1982 and the products of the former companies have made Adobe profitable. The most famous acquisition was Macromedia, the company that developed Flash and Dreamweaver for the web. Flash, which was first known as FutureSplash Animator, was developed Jonathan Gay in 1995. When Gay decided he wanted to partner with a bigger company, he approached Adobe with his software. Unfortunately, Adobe was not impressed and passed on it. Macromedia bought the program in 1996; fast forward to nine years later and the program would become Adobe’s own (Beach, n.d.). Adobe has made massive improvements to Flash since Macromedia’s acquisition in 2005, thus making the company profitable with this software as it is very widely known and used.
Value Added for Adobe’s Products
Adobe has added value to all of the products it has introduced to the market. The PDF for example offers many benefits for users. The look of a document is preserved when it is viewed on screen. PDF files can be shared easily among users and is easy and convenient to use. Users can view PDF files on all their electronic gadgets including smartphones and tablets. Not only is Adobe Acrobat easy to use, but it is also free to download. This format is used by individuals, companies and the government. Business and government websites uses this file format because it is easy to use, convenient, fast, and it makes documents easy to print. All of these factors adds value to Acrobat and for these reasons is a market standard internationally.
Adobe Photoshop is internationally famous. When people hear or say the term “photoshopped” they are obviously referring to images that has been modified using Adobe’s program. Photoshop is used by millions of professional people internationally including fashion designers, photographers, architectures, graphic designers, animators, publishers, film and video pros, and web designers (photoshop.com, 2012). This software allows people to be creative and have freedom and control with their work. For example, marketers can use Photoshop to create an amazing ad seen worldwide. By using Photoshop, people create something that is valuable to them to share with others. Photoshop may have started off small, but the enhancements and features Adobe has added over the years to this software have made it very valuable to people.
Adobe Flash may not have been an original idea of the company but like with Photoshop, the company has enhanced it and made it better. Flash is used in the gaming industry, advertisements, animation, and in web applications. This software is used on desktops and mobile devices, is convenient to users, and free of charge. Many web sites, including YouTube uses the Flash as this software has a large user base and it is easy to program (Wikipedia, 2012). Flash makes the internet come alive for many people and the user experience is enhanced when this product is downloaded. The software enhances the look of a webpage making it attractive to users. Adobe flash is slowly declining at the moment and many web developers are favoring HTML5 video. This new type of technology does not rely upon a plugin the way Flash does.
Apple has been very critical of Flash because of its security issues and sluggishness and Microsoft did not support Flash in Windows 8. As a result of all these factors, Adobe will no longer improve the flash player on mobile devices and is favoring the HTML5 video (website design and creation, 2012). Even though Flash is declining, it still has a strong presence in the market as many still use this software.
Adobe helps retailers, publishers, and marketers with digital solutions. These businesses use Adobe services and products to enhance their users experience to make it meaningful, personalized, and interactive. Most of these businesses communicate with their target audience through the web or on mobile or tablet devices. They are able to build their brand, manage and customize content, and gather customer intelligence. For example, Vanity Fair, uses Adobe’s Digital Publishing Suite to create a rich and interactive experience for its monthly digital publication on the iPad. American Eagle Outfitters uses Adobe’s Digital Marketing Suite, which includes Abobe Analytics to see where their customer traffic is coming from, to help the retailer understand what products their customers are looking at, and how their customers are responding to their market initiatives. The company uses these analytics to its advantage to make a difference for their customers online shopping experience. David Fincher, the director for the film The Social Network, used Adobe Creative Suite during post production of the film (Adobe, 2012). Adobe’s software solutions and services have helped businesses all across the globe to become more efficient, productive and profitable, hence adding value to what it provides.
Core and Distinctive Competencies
Adobe’s core competencies include its software and its services. The company is able to provide distinctive products, services and solutions to its customers worldwide for their various needs. The products that Adobe delivers makes customer experiences fun and make their creative side thrive. The software that the company provides are some of the most used and recognized software in the world and cannot be imitated to work the same way or give users the same experience they would have when using Adobe software. Adobe has great talent as well including creative developers with their own core competencies and software engineers. The company is also very flexible as it dabbles in marketing, broadcasting, publishing, retail, financial services, and media and provides solutions and software for these trades.
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Adobe’s distinctive competency is its huge and impressive acquisition list, which is certainly a value-creation strategy for the firm. These acquisitions have helped Adobe’s businesses in publishing, marketing, and computing. As discussed before, Adobe’s acquisitions of Macromedia and Photoshop have made the company very profitable from the existing software of those two providers. Other examples include Omniture and Efficient Frontier Technology; both were acquired by Adobe in September 2009 and November 2011 (Wikipedia, 2012) respectively. Omniture is a web analytics company which helps clients measure users purchasing activities on the web (Hoovers, 2012). Adobe has incorporated Omniture’s analytics software into its digital market business unit creating the Adobe Marketing Cloud (Adobe, 2012) Adobe’s marketing clients can use the software and solutions to help them track what their customers purchase or is viewing online in order to provide better services or have a better marketing campaign.
Adobe’s acquisition of Efficient Frontier has also helped its digital marketing business by providing “search engine marketing using the modern portfolio theory, and display and social media campaigns” (crunchbase, 2012). Adobe’s clients can utilize the algorithms Efficient Frontier provides to increase their ad performance along with Adobe Dynamic Ad Targeting solution (adexchanger, 2011) to become more profitable. Adobe’s acquisitions is a smart move for the company because talent, resources, and capabilities are all pooled together making the company more valuable. With the existing software of the companies Adobe has acquired, costs are truncated because Adobe does not have to use its own resources to create these technologies; instead, the companies utilizes what it has acquired to make a better experience for its clients. These acquisitions have made the company evolve to make its brand name more valuable.
Organizational Structure, Culture, and Leadership
Fig 1.1 – Adobe’s Organizational Chart
Like many huge organizations in the business world, Adobe has a bureaucratic and centralized structure; it is a top down organization where the CEO is control and in charge of the company’s strategic decisions. The levels of the organization and roles of the employees are clearly defined.
According to Adobe’s website, employees are encouraged to be creative and to think outside the box. This would most likely be the slogan of any technology company because technology changes every day and becomes more complex as time passes; a person has to be creative when they work in this industry. Employees at this company often collaborate on huge projects, including the employees from Adobe’s acquisitions. The teams are inspiring and the individual talents are respected and recognized. Employees are encouraged to be ambitious where they can achieve their full potential. The growth within the company for an individual is endless. The company provides wellness and fitness program and good compensation and benefit plans. Adobe is committed to ethical and honest business practices and has a great deal of pride regarding corporate social responsibility and global corporate citizenship. Employees at Adobe participate in the local community and have a commitment to the environment. The company value people as its greatest asset and the culture here is very open.
Adobe’s CEO, Shantanu Narayen took his cue from Apple about leadership when he was employed by the company. He creates a common vision for the organization and challenges his employees by setting goals. He likes when employees use their creativity to come up with solutions to these goals. He believes that great work is motivating and leads to a great impact on the world. Narayen gives general managers at Adobe freedom to run their own business units the way they want. They are encouraged to grow and take risks – and there is room for mistakes. The management team is encouraged to present ideas and discuss their insights into the business about what is working and what is not when there is the quarterly business is conducted; they are coached and guided by Narayen in the problem areas. The CEO thinks that managers being on top of the data is meaningless and wants to know more about what is keeping his managers up at night. Teams at Abobe are built by “complementing people’s strengths by surrounding them with people who can complement their areas of weakness.” Narayen hires people who are highly intelligent, have a passion for what they do, and share the same values as Adobe as he believes these three qualities leads to success (Narayen, 2009).
Strategy, Timing, and Deployment
Since its inception in 1982, Adobe has always been where the “action” is. The desktop publishing era started at this time with laser printers, which used a program called InterPress developed by Xerox, however, this software was not very flexible. Warnock and Geschke developed PostScript at this time in a much simpler language and marketed it in 1984. When Apple developed its laser printer in 1985, it adopted Postscript to work with it. (Wikipedia, 2012). Adobe’s strategy here was to license and market its technology to OEM’s such as IBM, Texas Instruments, and Apple. The strategy paid off because Postscript had become the standard for laser printers into the 1990’s and it made Adobe very profitable. Postscript became a big hit with the publishing industry because it was extremely useful for professionals who were in the creative field (fundinguniverse, n.d.). Adobe acquired one of its major competitors in the desktop publishing industry, Aldus Corporation, the creator of desktop publishing software, in 1994 and now had rights to Aldus’s products with this acquisition (Wikipedia, 2012). Adobe was now a market leader in the industry due to its successful strategies.
Adobe began to focus on creating new software when the internet began to boom in the mid-nineties. The company acquired Cencena Communications, Inc. in 1995 to strengthen its
position in the market. Cencena developed communication and management tools for the world wide web and Adobe saw an opportunity. With Adobe’s creation of the PDF at this time and the web management tools of Cencena, the companies combined technologies helped to produce new solutions for customers and acquire a broader range of customers. Adobe was now able to integrate its software with companies such as Microsoft, Netscape, and AT&T (The Free Library, 1995).
When Adobe wanted to expand more rapidly into digital media, it acquired Macromedia in 2005, one of Adobe’s biggest competitors. Macromedia developed cutting edge software, such as Flash; once again with Macromedia’s and Adobe’s technology, Adobe was able to make its software evolve and capture new markets. Adobe’s current strategy involves focusing on digital media and digital marketing. The company is investing resources into HTML5 video and has acquired Nitobi, an open source software company (Adobe, 2012). When businesses and individuals need new and better solutions, Adobe steps in with its software and acquires companies that can help it evolve in the industry. Strategic partnership has always been this company’s strategy and this is something Adobe does very well.
Adobe has done well as a corporation for the past thirty years. The company has developed amazing products during the past years which have had an impact on millions of people internationally and has added value to their lives and work. Adobe is able to understand what it customers needs and wants are and has catered to them with its excellent solutions and easy to use products; this has made the company become successful over the years. Adobe’s culture is open and encouraging and its leadership is supporting and inspiring. These factors are indicative for creativity in the company. Successful acquisitions have made the Adobe evolve with combined technologies and talent, which has led to new technologies and products for its customers. Adobe’s impact on the software industry has made it a powerful and well established corporation.
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