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Apple and Our Conflicted Love Affair with its Gadgets January 27, 2012

Posted by Peter Varhol in Strategy, Technology and Culture.
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I hate participating in this particular discussion.  It’s one of the most emotionally charged that we face today in tech, and probably in society in general.  The New York Times reports that Apple develops its iPhones and iPads in Chinese factories where workers live in dormitories and work hours that Americans haven’t seen since the dawn of the Industrial Revolution.  The pressure can be so great that workers commit suicide rather than continue along the path demanded by Apple’s product needs.

Apple claims that US factories can’t respond at the speed of business, and that it makes good-faith efforts to improve working conditions along its supply chain.  Oh, and everyone else does it, too.

You know something?  They’re both right, and the argument here is at cross-purposes.  But yes, Apple and Timothy Cook have a special responsibility here.

The problem is that Apple supports its fast response to market trends through business practices that no American would tolerate.  Yet it practices them in a part of the world where they represent a distinct improvement over past working practices.

I’m a believer, probably more so than most of my fellow countrymen, of the economic and intellectual value found around the world.  Free trade, and the ability to source for business rather than political reasons makes us better and wealthier in the aggregate.

I am not going to fault Apple for doing what is best for its business, and for taking advantage of the skills and unique value that can be found in other parts of the world.  The company does have the obligation to work to improve the practices of its suppliers, but it also has an obligation to its customers and other stakeholders.

The New York Times and others are right to point out that there is a cost to a larger world society for our infatuation with electronic toys.  That burden falls on all of us, not just Apple, but Apple is a very active and visible part of that culture.

Could Apple conduct business differently?  In one sense, it is doing just what its competitors are, only better.  But it has a position that enables it to consolidate and extend that advantage far into the future.  It is in a very cutthroat business, where one error of strategy can relegate it to has-been status within a year or two.  But that position also affords it a window of opportunity to create another revolution, this one involving US manufacturing, and manufacturing technology in general.

Ultimately, Steve Jobs (and Timothy Cook’s) assertion that American manufacturing can’t respond fast enough for its business is arrogant and unhelpful.  But it’s also a challenge to the US.  It’s not about waking up thousands of factory workers in a dormitory and feeding them biscuits and tea.  It can’t be, now and especially not in the future.  It simply won’t work after this relatively brief period of history.

Timothy Cook, if anyone has the power to single-handedly change manufacturing in the US to deliver business responsiveness within the parameters of our social covenant, you do, as much as Henry Ford did over a hundred years ago.  Do it, and don’t shirk your position of responsibility here.  You are at the pinnacle of American ingenuity; let’s see you say that it can be done.  And then deliver, as most of us believe that Apple is able.

Google and the Culture of Technology Sales January 27, 2012

Posted by Peter Varhol in Strategy, Technology and Culture, Uncategorized.
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I have a lot of respect for professional salespeople in the aggregate, especially in the technology sector.  It’s not a skill that I have, and I am well aware that their efforts and results pay for my services.  When push comes to shove, tech companies only need people who make the product and people who sell the product (and I am neither).  And they really don’t need people who make that product, at least in the short term, because a good sales person can sell last year’s product, or sell a product that doesn’t yet exist.

But the culture is one that is foreign to me.  Salespeople are both encouraged and incentivized to remove barriers to a sale, and that’s largely a good thing (a sales engineer friend cynically refers to this as “lie until they buy”).

But barriers can also exist for legitimate reasons.  For example, lowering the price until the sale is no longer profitable makes sense only in the most exceptional situation, such as if there is a strong expectation of future business at a better price.

Or there may be legal restrictions on a sale, such as certain pharmaceutical sales of unapproved drugs in the US.  It turns out that it is also a crime to advertise such products, which is what got Google into hot water not long ago (sorry, great article, but largely behind a paywall).  In the sting described in this article, Google sales executives enabled a man playing a role as an illegal drug provider to bypass the company’s own restrictions against such advertising.  In the end, Google paid a $500 million fine rather than be prosecuted.  Apparently there was some evidence that problems with these advertisements were well known within the company up to an including Larry Page.

The incentives to making the sale can be significant.  Certainly there is the individual component, both in sales commissions and in the recognition of your peers and management.  In most tech companies, the best sales professionals go to “Club”, a fully-paid motivational trip to an exotic locale (Hawaii and Caribbean resorts are common).

But the pressure on sales professionals can be significant.  They have quotas that are often unrealistic, and sometimes don’t get good support from the rest of the company.  They are often the “first up against the wall when the revolution occurs”.  And sometimes the line between legitimate and illegal doesn’t seem all that clear.

None of this is meant to condone Google’s likely illegal behavior in this matter, or to apologize for boorish and occasionally illicit sales behavior in general.  But I want to point out that at ground level, it’s at least understandable, if often ugly and ambiguous.

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