Archive for July, 2012

Shareholders, stakeholders and Apple

Tuesday, July 10th, 2012

There’s been a long, raging debate among business school types about whether a business should optimize for shareholders or think more broadly about all of its so-called stakeholders like employees and the local community.  The argument on the shareholder side goes something like whatever is good for boosting profit is ultimately good for the business.

While there’s no doubt truth in that statement over the long term, a short-term focus on optimizing shareholder value can have negative consequences. That’s not really shocking news, but unfortunately it’s still happening.

The most recent victim of myopic, shareholder-first thinking was – of all companies! – Apple. I’d submit that most people when they look at the cute Apple logo on their spiffy iPad or iPhone want to think of Apple as a happy company, sort of like the Disney of computing.  Sure they can cost an arm and leg, but there’s a lot of value in gadgets that look cool and work like a dream.

Apple stores boom — employees not so much

But the reality of Apple is much different. Underneath that shiny veneer lurks a shareholder-centric greedy beast. This was exposed with a NY Times report that Apple works it retail employee hard while paying moderate wages at best (but reaping enormous profits from each store).  Similarly, Apple squeezes its suppliers in China so hard that factory workers face the type of conditions that have been outlawed in the US since the ’20s and ’30s. 

 What Apple is doing, of course, is perfectly legal. It might even be good business for a normal company. But this is Apple. It’s possibly the most successful and profitable company to date.  It’s also the happy company we all want to love.  It’s bad PR not to spread the wealth and fail to make the world a better place.  Especially when it could be so easy. Ironically, the shareholders might not even have noticed.

The shareholders will notice when people start thinking twice about buying Apple products, however.  After hearing a story about Apple factory workers on NPR’s This American Life, my wife was disinclined to purchase Apple products in the future, although I’m not sure workers at Samsung or Dell factories are much better off than those at Apple plants.  Most consumers probably don’t care in any case about a rotten core if the fruit is ok.

From a PR perspective – and here’s where you want to listen to outside counsel – perhaps the biggest loss for Apple was the missed opportunity.  By giving lowly store workers nice salaries and making life better for Chinese factory workers, Apple could have created a massive perception boost – one far greater than the comparatively minor incremental cost of doing the right thing. Apple isn’t completely tone deaf, and recent reports indicate that nice pay raises are due to store workers.  It’s a step in the right direction, but it never should have come to this in the first place.  We expect better Apple.

Plan ahead for social media results

Thursday, July 5th, 2012

Plan ahead for social media results

So how big has social media become? Check out these numbers.

• As of March 2012 Facebook had over 901 million users worldwide.
• As of February 2012 Twitter has over 500 million users worldwide.
• As of April 2012 Google + has over 170 million users worldwide.
• Out of the 6 billion people on the planet, 4.8 billion have a mobile phone and only 4.2 billion own a toothbrush. (Just threw that in there for fun)

To put it in perspective, Russia has a population of over 142 million (census 2010), Brazil has 190 million (census 2010), and the United States has of over 313 million.

The growth of social media has been unstoppable. How many times do you walk down the street or stroll through the airport and see people staring at their smartphones or iPads? More often than not, they are posting photos via Instagram to Facebook or glancing at their Twitter feeds to keep tabs on what’s going on. To be sure, these technologies are having at least some impact on the way we conduct business.

The cynic in me says that social media is just another diversion and a way to occupy time. But in reality, social media is having a significant impact on the business world:

• 56 percent of consumers say that they are more likely recommend a brand after becoming a fan
• 34 percent of marketers have generated leads using Twitter
• 30 percent of B2B marketers are spending millions of dollars each year on social media marketing

But simply arranging for your company to have a Twitter account or a Facebook page doesn’t cut it. Before jumping on the bandwagon companies need to ask themselves, “what are we trying to accomplish by leveraging social media tools?” Is it a lead generation tool or a customer service portal? Are the lines of communication within the company designed to troubleshoot customer problems immediately before they snowball into a PR nightmare? Does customer feedback get routed to the product development team? Does any of the information bubble up to the executive team?

If you don’t think these issues are real, go ahead and ask United Airlines how they felt about the “United Breaks Guitar” fiasco. Better yet, read this brief article titled “Why Social Media Means Customer Service can Make or Break your Brand” to get a better understanding of the impact that customer feedback can have. Better yet, work with a strategic communications firm to develop and implement a well thought out social media strategy instead of simply opening a Twitter account. Remember, just like the man said, “Question: When did Noah build the ark? Answer: Before the flood.”

 


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