Friday, January 27, 2012

The Cost of Innovation

By now many have read or at least heard about the New York Times article on the easily reviled working conditions in the Chinese manufacturing plants that make and assemble the premier apple products. There is a lot to debate about the topic of labor treatment overseas. I don’t believe the argument is as cut and dry on either side. On the one side you have projects like slave footprint which tries to bring to light these abuses. At the same time you have multiple studies that show that while in the short term the process produces reprehensible conditions, industrialization in the long term improves lives and the best that can be done is put enough public scrutiny in place to reduce the time it takes to achieve that improvement. To me though the most important line comes at the end of the piece:
“You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product every year, and make it better and faster and cheaper, which requires factories that seem harsh by American standards,” said a current Apple executive.“And right now, customers care more about a new iPhone than working conditions in China.”
This is... how you say.... Bull Shit!

Apple loves to claim that each new product they introduce is a totally re-imagined revolutionary product. It’s BRAND SPANKING NEW can’t you see it looks nothing like the old model so it has to be new. lets take a look at their flag ship product the iphone. If you were to compare the original iphone to the 4s you could make the case that it has undergone revolutionary change but a look at the actual changes over the years the iphone has undergone gradual minor improvements. To review here are the key specs for the original iphone and the changes over time:



This is not to say these improvements did not create better products, to the contrary they clearly have, but it is of an evolutionary nature. No place is this clearer than in the change from the original iphone to the iphone 3g. The question is can a company innovate and still maintain working conditions?

Part of the reason the working conditions are so extreme for apple products is that in truth apple does make significant changes to the hardware each year. When you make major changes to the hardware every year it requires major modifications to the assembly process. This constant modification means there is very little refinement in the process of putting together an apple device. While apple produces highly refined devices, that refinement comes from thousands of human hands spending countless hours going over each component. The thing is If you look at the actual modifications over the years you will see the changes in the body of the iphone were as superficial as the change from the original iphone to the 3g. Does making the ipad 2 .2 inches smaller than the original ipad really revolutionize the product? Probably not, but it might have a dramatic change on the way the two are put together.

To get back to the question though can a company innovate while maintaining working conditions? The answer is yes, the auto industry is a clear example of this. Honda doesn’t overhaul the design of the civic every year, they make improvements but only overhaul the design every 8 years or so. The reason is simple, to re-tool the assembly of a large machine like an automobile requires huge investments in equipment something that no company can afford. Part of the reason it takes thousands of humans working in grueling conditions to produce new iphones each year is because apple insists on making countless superficial changes to the product to make it look new.

Another reason is the way apple brings products to market. One of the keys to Apple’s success is it’s ability to conceal their products until they are ready to launch. They hide prototypes, force iron clad non-disclosure agreements, and insist manufacturers produce units in drastically reduced production cycles. This allows apple to make big a big splash in the market and get tons of great press.

There is one more thing that can’t be overlooked about Apple as a corporation; they can be real jerks. Apple just doesn’t mind pissing people off, weather its lying to customers about antennae problems, demanding 30% cut from their developer sales, or forcing manufacturers to drastically reduce their profit margins and look for short cuts like reducing worker safety to make a profit. The truth of the matter is Apple could do things to improve working conditions and still create the incredible products every year, in fact of all the companies in the world they have the greatest influence on work standards. The reason they don’t is because no one has expected them to... that is hopefully until now.

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