Apple's PR debacle with its Chinese manufacturing shows a downside to the way many firms approach agility. Corporate responsibility is important, and it will only become more so.
Last week's installment in a New York Times investigative series on manufacturing in China has focused a lot of unwanted attention on Apple, which the Times used as a centerpiece for its reporting. The article does point out that Apple is not alone in exploiting all the advantages of a cheap and phenomenally flexible workforce to assemble its iPads and iPhones. Dell, Sony, HP, Motorola, Nokia, and hundreds of other companies put their tech together in the same factories, such as Foxconn's Shenzhen "factory city."
But Apple makes the perfect poster child to shine a light on labor practices that would not be tolerated in any Western nation. The company just announced a record-breaking quarter, with profit more than doubling and revenue surging 74 percent compared to the previous year. And the intense attachment many people feel for their Apple devices contrasts most sharply with the revulsion they tend to feel when they learn of the conditions of the devices' manufacture. Workers in Shenzhen often put in 12-hour work days and 6-day weeks. They sleep in dormitories. Some have endured forced exposure to dangerous chemicals. The starting salary is $12 per day -- and that's after Foxconn raised it in 2010, following a rash of employee suicides.
Apple's CEO Tim Cook has been wringing costs and delays out of its supply chain ever since Steve Jobs brought him into the company in 1998. Apple's logistics are the envy of its peers, and are a big part of the reason for its fat profit margins. An earlier article in the Times series presented a few anecdotes of the mind-boggling agility Apple has built into its Asian supply chain. One example: after a last-minute switch from a plastic to a glass face for the original iPhone, the Shenzhen factory ramped up production to 10,000-per-day levels in 4 days.
There have been calls for a boycott of Apple products. One blogger laid out the reasons we shouldn't let Apple off the hook despite its protestations that it is doing all it can to improve the working conditions of those who assemble iProducts. My colleague Mitch Wagner calls Apple's response so far to the PR storm "wholly inadequate."
Apple may end up paying a high price in reputation and brand damage for the agility it has bought at the cost of human suffering elsewhere in the world. As time goes on, more and more consumers are going to be holding companies accountable for the level of responsibility they display.
Deloitte surveyed global business leaders' attitudes on the purpose, impact, and leadership of business on society. Seventy-six percent of these .01-percenters said they believe that "the value of a company should be measured by the positive contribution its core business makes to society, as well as by its profits." Deloitte asked the same questions of its own employees born since 1981; among these "Millennials," 92 percent believe that the success of a business should be measured by more than just profit.
This coming generation is not going to buy from companies they perceive as damaging people or the environment in their quest to make money. They won't go to work for those companies either. It is incumbent on all of us to make sure that in our striving for business agility, we never lose sight of the company's core principles -- its heart and soul.