In particular, a New York Times article published on January 21, 2012 ("Apple, America, and a Squeezed Middle Class") generated a lot of press, online and off. The newspaper's focus was its decision by then Apple CEO Steve Jobs and other executives to overwhelmingly utilize foreign companies to supply materials and expertise in the manufacture of its products. Foxconn, one of many companies used by Apple, has been in the news recently because of a string of worker suicides at one of the company's plants. The article touched on a variety of concerns--the complexity of the global supply chain, the intense competition in what used to be a strength of the US (manufacturing, electronics, scientific research)--but most people I believe focused on the Foxconn worker's conditions.
I'm nowhere near the first HR blogger to comment on the article (check out this example, as well as this one) and I probably won't be the last. I hope that my perspective can provide my readers, particularly those in the retail industry, some insight that they can take back to their organizations.
As someone who's worked in retail for over 2 decades, I'm surprised that Apple didn't see this coming. The company, aside from being a maker of personal elecronic devices, is a retailer. Most retailers I'm aware of have long standing Corporate Social Responsibility (CSR) initiatives. As in the case of Apple and other electronics companies, part of the reason many retailers chose to outsource their operations were because it produced lower operating costs. The trade-off was that this practice often translated into child labor, mistreatment, and unsafe working conditions on the part of vendors companies did business with. When brought to the public's attention, many retail organizations chose to revisit their practices. Forward thinking ones used this as a way to differentiate themselves from others in the industry, for example, by consistently highlighting efforts being made to improve working conditions.
Once a reactionary measure against negative publicity, CSR initiatives are now a way for retailers to give back, demonstrating to vendors, shareholders, and customers that it's a good corporate citizen. Now announcements from retailers on this issue generates more kudos than criticism. Some CSR programs are little more than PR window dressing, while others are deeply woven into the day-to-day operations of the business. Overall, it's a common enough business practice within the industry. Apple, while not selling shoes and suits, is as much a retailer as any fashion house. And it's the most profitable: Apple generates the most revenue per square foot of sales space than any other company (check out this 2007 CNN article for perspective).
What's surprising to me about the Apple isue is that it was so un-Apple like. It's a company frequently praised for its commitment to innovation and high quality. For example, other companies made MP3 players before it entered the market, but Apple made a superior one. The genius of the Ipod though, is its link to Itunes. It's marriage-a superior product with a simple and effective digital service-enables Apple to dominate this market segment.
Part of the reason they're able to create elegant and seductive products and services is because they understand what consumers want. The same NY Times article discusses why Steve Jobs wanted the Iphone to have a glass case instead of a plastic one. Here's an excerpt:
In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.
Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.
People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”
He pointed out what seems obvious now, that a person carrying an Iphone in their pants pocket will also be carrying other items (like car keys) which could scratch a plastic screen. He made a smart decision at that point to have the company find a way to mass produce glass screens in order to correct this issue. This is a wonderful example of leadership, customer insight, and organizational creativity at work.
Now imagine what Apple might have been able to do had it applied those same qualities to its overall business practices. They were not ignorant of what was going on in these plants. And while the company's powerful in many ways, it can only do so much to alter another company's practices in the short-term. What if, as Apple products and services were being developed, they had put forward a CSR-style program, one as innovative as its products? What could have resulted from an Apple sponsored program that recognized the current status quo, yet had measures and goals to bring the company and its partners in-line with standards that would have further distanced itself from its competitors and detractors? In this it could have looked to such initiatives as the B Corp and Conscious Capitalism movements. This could have been another area by which Apple could have been an industry leader.
Reports like the one from the New York Times will continue. More than likely it will expand into other business sectors and companies. Apple or any other electronics company now have a choice to make. One, they could take this lesson and proactively revisit their vendor relationships and business practices in general. Or two, they can hope that, when faced with a choice, consumers (and lawmakers) will continue to support them. This is a risky proposition, one that even an industry leader such as Apple may want to avoid. Let's see what the new leadership has in store for the brand.
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