Apple's Policy on Conflict Minerals, Workforce Conditions, and Supplier Ethics

A buddy of mine at a local networking group asked me about the ethical posture of one vendor, Apple, Inc.

Apple released its environmental responsibility report for 2013 this year.

Apple issued its first conflict minerals report in May 2014. In that report, Apple identified that a majority of its suppliers are in the clear. 

Apple does have a public supplier responsibility policy and a documented Supplier Code of Conduct. 

That said, as recent as Dec 2013, Pegatron and Foxxcon reviews slighted Apple for workforce conditions in China.

An article from The Guardian in March of this year outlines sustainability and workforce improvements made by Apple since that report.

In my opinion, with any firm, I think what you'd want to look for is management intent. Is there intent on behalf of management to be transparent, to cooperate with recognized 3rd parties to investigate report on compliance, with a willingness to disclose sensitive information.

I think you see this intent at Apple.

Myself, I'm a little concerned with Microsoft, when it's CEO recently suggested that women shouldn't ask for raises because it's good karma to not ask for them, but hey, you get to choose who you do business with.

Apple isn't perfect. It will make mistakes. It's also not alone: in my opinion, Google, Nike, Starbucks, and Intel are also very transparent companies. Perhaps that's part of a larger trend brought on by both new federal regulation and progressive management policy? In either case, Apple's management does seem to show consistent commitment and intent to be both transparent and to improve its operations.

That awareness and sense of responsibility may mean something to you the next time you're planning on shopping for a tablet computer.

R

How to Evaluate Your Competitive Position

In discussing technology strategy with undergraduates, I emphasized the use of a strategic analysis tool that goes by the name of SWOT. SWOT stands for Strengths, Weaknesses, Opportunities, Threats. 

SWOT is a good, basic tool. It gives us perspective of our specific company, product, or business plan as it may react to external emergent market forces.

The internal analysis methods focus on the strategic position of your product as you perceive it in the context of strengths and weaknesses.

Strengths refers to the nature of your project that will give it an advantage over others; weaknesses refers to the disadvantages your project has that makes it vulnerable.

SWOT can be used to evaluate the external forces that threaten to impact your position. The question is: how will changes in externalities create both opportunities that enhance your strengths/position, or, diminish your strengths/position.

(A quick note on externalities ... these are changes that happen outside of you and your firm's control. Things like changes to consumer opinion and preferences, changes in tax or foreign policy, shifts in technology, industry regulations, surprise news events. This is stuff that you can anticipate but not necessarily control.)

Opportunities reflects changes in market dynamics brought on by shifts in externalities; threats are conditions that could harm your position should the externalities come to pass. 

It's a simple tool and it's been taught in business schools since the 1970's. It's not something you just conduct when putting together your business plan. It's something you constantly revisit for two facts will always hold constant:

• Your product/service will change over time;

• Externalities that shape the success of your product/service will change over time.

Change happens. And your technology strategy should adapt accordingly. In fact, we measure technology generations in about nine months; SWOT may be a tool you're using on a bi-annual or six-month basis to re-evaluate how changes influence your spending plan.

There's a good reason for this. Technology projects take a long time to implement. Over the implementation and adoption period, a SWOT analysis is a litmus test. A reality check. Is this still the right plan? Is it good to continue spending and strategic investment in this direction? Or is there a change - a shift - that's about to happen, that will influence adoption and use?

It's the middle of September 2014 and Apple just released the new iPhone6, capable of NFC (Near-Field Communication) and a new payment system called ApplePay. Over its introductory weekend, Apple has sold 10 million of their new phones - that's a record, even for Apple. 

Now use the SWOT. If your in the middle of implementing a technology solution for your company like POS (Point of Sale) systems that rely/depend on magnetic swipes found on the back of credit cards, you're already at a technological pivot. An externality will now start shaping consumer behavior and preferences to start using NFC instead of magswipes for credit card transitions. It also stands to reason that Samsung and Google will ramp-up Droid solutions like Google Wallet to complete.

So, a couple of questions for you - the small business owner - at this critical time:

1. How rapidly do you expect your consumer's adoption rates of this technology? How does that present an opportunity or threat to your business?

2. How could the early internal adoption of NFC improve your product/service's competitive position? What are the risks/consequences to your business for later adoption?

3. What are the potential security consequences? How would your employees need to be trained?

4. How could the shift from magswipe to NFC influence your brand and delight everyone?

Thinking like this, applying SWOT when there's an obvious change in externalities, is a strategic application of technology spending. It allows you to think about, project, anticipate, and respond constructively rather than react. How could you apply SWOT today, tomorrow, next week, next month, next quarter?

R

Containing Your Expenses

It's The Next Big Thing

In my last post, I was describing the first and most basic IT strategy called Reducing Expenses. Under that strategy, we use technology spending to reduce the expenses associated with our current business operations. Applying technology, we can both improve the speed and reduce the cost of doing business, and earn a fair return in the process. 

Today, I'm going to write about containing expenses, or, containing the cost of your growth. It's the next big thing we try do with technology to provide a return. Usually, we won't focus on this strategy until we've exhausted the "low-hanging-fruit" associated with Reducing Expenses since that's the easier kill. 

It Takes Money to Make Money

When containing expenses, we're mostly talking about investments with technology helping to pay for your growth over time. Let's work with an example.

You're a small grocery owner and you've got big plans. You've been relatively successful growing your business and have attracted new customers. Your business processes have been managed with the assistance of technology as to reduce the impact of labor while maximizing return - and mostly because you've been reading all of my great advice on the subject of Reducing Expenses! Good job!

But you know you're going to get bigger. Based on your current growth projections, you're going to need another 5 people over the next five years to accommodate the business volume in your checkout lanes and to earn a 4% margin (a pretty healthy profit for this line of business - there's not a lot of money in retailing food, and that's factoring in the increasing costs of labor over that five year time period, too).

Now, you could hire on eight more people and acquire the long-term liabilities associated with labor - sick leave, vacation, payroll, taxes, family leave, education and pensions, 401k's; sounds kind of risky though given the 4% margin. If you grow on the back of labor, the variable costs could erode your profit. 

On the other hand, you could purchase 4 "U-Scan" machines to take on the extra volume in the checkout lane by shifting the labor (and those costs) onto the back of the consumer. You're paying a fixed, depreciable expense for an asset that can handle the excess volume while taking on, say, just 1 employee - a knowledge worker who helps consumers check out using the new machines.

Because the U-Scan machines are a fixed expense that can be depreciated over time, the cost structure of your growth becomes less variable and more known. Your volume commitments will be met and you're more likely to meet the 4% margin, all the while reducing your dependence on labor.

This is expense containment: spending a little today to reduce the cost of your growth in the future. Through investing in "U-Scan", the company is able to meet its projections and reduce the cost of its growth by not investing in variable expenses like more labor.

Everybody's Doing It

Take a good look around. Where do you see other examples where companies have shifted away from owning labor to putting labor on the back of consumer. Self-checkout lanes like "U-Scan" is just one example. Can't you book your own airline ticket? Reserve your own book at the bookstore? Directly interact with your doctor and schedule an appointment without a phone call? Of course you can! Everyone everywhere is containing the expense of their growth through leveraging self-service technology.

Well, maybe everyone except you.

Yeah, say, how's your expense containment strategy coming along? How are you shifting the cost of your growth away from you and on to consumers? How are you enabling consumers to interact with you faster, to integrate with your processes, so that you don't need to own that labor in the process? How are you giving your customers self-service tools? And if you're not doing this, right now, what are your competitors up to?

Next time around, I'll talk about self-service and the last strategy in our bucket: Revenue Generation. For now, thanks for reading!

R