“He’s never actually seen one on, this thing that took his hand. I turn it on, unlock the screen, and pass it to him. He takes it. The icons flare into view. And he strokes the screen with his ruined hand, and the icons slide back and forth. And he says something to Cathy, and Cathy says, ‘He says it’s a kind of magic.’ ”
Cathy was the name of Daisey’s interpreter. Coming after news of the suicides and the factory explosions, the episode had a profound impact. The podcast version, was downloaded 822,000 times and streamed 206,000 times, making it the single most popular podcast in the show’s history.
A few months later, This American Life retracted the story after discovering that Daisey had fabricated many of the details. There had been no underage workers and no man with a mangled hand. He had also lied about the number of factories he’d visited and the number of workers with whom he had spoken.
“I’m not going to say that I didn’t take a few shortcuts in my passion to be heard,” Daisey admitted to the show’s host, Ira Glass. “My mistake, the mistake I truly regret, is that I had it on your show as journalism, and it’s not journalism. It’s theater.”
Despite the fabrications, the momentum created by the original segment was unstoppable. A few weeks after Daisey’s original program, the New York Times took aim at Apple in a damning series called iEconomy. The series opened with an article exploring the consequences of Apple’s long-standing practice of moving its manufacturing overseas and profiting from cheap labor at the expense of America’s jobless factory workers.
“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” Jared Bernstein, a former White House economic advisor, told the Times. “If it’s the pinnacle of capitalism, we should be worried.”
The article wasn’t entirely fair to Apple. It ignored the fact that Apple would have surely gone out of business in the 1990s had it not started outsourcing its manufacturing to China. The Times reporters also didn’t offer an economically feasible alternative to overseas outsourcing, a practice relied upon by many American corporations. For any major corporation that wanted to stay in business, the reality was that huge obstacles stood in the way of returning manufacturing to the United States. Part of the challenge was that the United States no longer had enough of the highly trained factory workers essential to churning out the millions of smartphones and laptops and other devices sold by Apple. Even if a massive army of skilled workers could be created, American labor costs were higher—which would translate into higher retail prices. For Apple to move manufacturing back to the States, consumers would have to be willing to pay a premium for their iPhones and iPads. Apple would lose customers to Samsung and other competitors manufacturing their products at cheaper costs.
Unlike Daisey’s piece, the Times story was backed by exceptional reporting and gave frustrated Americans a target for their plight during a presidential election year when the economy was the center of conversation. The accusations wrecked the consumer-friendly image that Apple had carefully constructed. They also signaled a shifting tide in public sentiment.
Before the company could recover from that piece, the New York Times published a second story on the labor conditions and environmental practices at Chinese factories that make iPads. The article pointed out that more than half of the suppliers audited by Apple had violated at least one aspect of its code of conduct every year since 2007. Many of the violations echoed the content in Ma’s reports, but it was fresh to Western readers.
“Apple never cared about anything other than increasing product quality and decreasing production cost,” Li Mingqi, a former Foxconn factory manager, told the newspaper. “Workers’ welfare has nothing to do with their interests.”
The exposé, a direct hit from one of the world’s most respected news organizations, set off alarms inside the mother ship. Less than six months after taking over, Cook needed to solidify his status as a leader, and the Times had raised questions no leader could ignore. Making matters worse, the timing was disastrous, at least from Apple’s point of view. Many of the embarrassments detailed in the series had been focused on the production of iPads, and the Times had published the stories just as Apple was preparing to release its third generation iPad. That March, Cook scheduled a meeting in New York with the newspaper’s editorial staff.
The showdown began pleasantly enough. Before Cook sat down, he chatted with executive editor Jill Abramson, telling her how he had been a faithful reader of the Times as a boy growing up in Alabama. “I loved the New York Times,” Cook told her. “I’d run out and get it every morning.”
For the first hour, editors and reporters plied the CEO with questions about upcoming products and his thoughts on topics like wearable computing. As the group broke for lunch, Charles Duhigg, the lead reporter of the iEconomy series, asked Cook what he thought of the stories. Cook had his back turned and was filling his plate. But he sat back down and opened fire. He accused Duhigg of relying on sources who weren’t truthful. He protested the fairness of the entire series, arguing that the newspaper had been gunning for Apple from the start.
“I think you set out to write this story,” Cook told the journalists. “There was nothing that we could have said that was going to change it.”
The room went dead silent as Cook grew angrier. Though the intensity of his voice increased, the reporters in the room noted that Cook vented more quietly than Jobs, who had been a screamer. The new CEO’s control made him all the more intimidating, especially when he emphasized one of his grievances by hitting the table with his fist.
For all of Cook’s criticisms, the series prodded Apple to address the problems. In a statement similar to the one Apple issued after the 2006 Daily Mail article, the company announced that it was working this time with the nonprofit group the Fair Labor Association to audit final assembly suppliers, including the Foxconn factories that had been named in the newspaper article. The company said the association would review thousands of employees about working and living conditions, including health and safety, compensation, working hours, and communication with management.
Cook also sent a letter to employees. “We care about every worker in our worldwide supply chain. Any accident is deeply troubling, and any issue with working conditions is cause for concern,” he wrote. “Any suggestion that we don’t care is patently false and offensive to us.”
In a meeting with senior executives, Cook vowed to rectify the situation. “Look,” he said, “we’re going to do the right thing no matter what the press says.”
In March, Cook paid a visit to China to meet with political leaders and telecom executives and tour a new Foxconn factory.
In a shrewd public relations move, Apple did not announce his visit beforehand. Instead, Cook suddenly showed up at a Beijing Apple Store in a thirteen-story shopping center called Joy City that boasted one of the world’s longest escalators. The choice of location for his surprise appearance was strategic. The shopping center wasn’t Apple’s most upscale location, but the store was popular with the masses. The press learned that Cook was in the country only after fans posted photos of themselves on the Internet, smiling next to the CEO, who was dressed casually in a navy Nike jacket with his glasses resting on top of his head.
“I met Tim Cook today in the Apple store in Joy City,” one young woman tweeted excitedly in a widely circulated post on the Chinese Twitter-equivalent site, Sina Weibo. “I was so lucky to take a photo with him.”
A couple of days later, Cook headed for Foxconn’s newest plant in the north central city of Zhengzhou, where he donned a bright yellow factory cap and coat to tour the facilities. Apple hired a photographer to take publicity photos of him talking to a worker and smiling by an iPhone production line as he raised his hand at someone in greeting. That, too, made its way into publications around the world.
The highly public nature of the trip was rare for both Cook and Apple, and in the immediate aftermath, it seemed to pay off.
“C
hina weighs more in Cook Era,” the Beijing News daily declared. “In contrast to Jobs’s policy to ignore China, Cook made China the destination of his first foreign trip as CEO.”
Just by showing up and acknowledging the country’s existence, Cook scored goodwill. But none of the coverage mentioned the reality that many of the problems he was responding to were of his own creation.
Years before, Jobs had given his second-in-command complete authority over the supply chain. Cook was the font of the pressure that his team put on suppliers and that the suppliers, in turn, put on workers. He was the one who told his team to do whatever it took to get the job done. Cook had no one else to blame. In one of the articles, the New York Times had recounted a famous story of how Apple had changed the iPhone screen from plastic to glass six weeks before launch. Internally, the story had been told and retold as an example of Apple’s brilliance. But Cook had pressured Foxconn into making the change in an almost impossibly short window of time. The factory workers who made the iPhone had been called into work in the middle of the night. They started a twelve-hour shift to fit the screens into the frames after being given just a cup of tea and a biscuit.
8
Into the Fire
On an unseasonably warm day in London in May 2012, Jonathan Ive arrived at Buckingham Palace with his wife and twin sons, dressed formally in a black tailcoat and a cornflower-blue vest and tie. After being offered a glass of champagne, he took a seat in the ballroom. In recognition of his contributions to design, he was about to receive a knighthood.
The ceremony began with the lesser honors. Though the queen or the Prince of Wales usually conferred the awards, on this day the Princess Royal, the queen’s eldest daughter, stood in for them. Shortly before his turn came, Ive rose to take his place.
“To receive the honor of knighthood and be a knight commander, civil division,” a royal official announced, “Sir Jonathan Ive for services to design and to enterprise.”
As Bach’s Double Violin Concerto played softly behind him, Ive walked solemnly forward across the palace’s red carpet. He stopped for a moment and gave a small bow before approaching Princess Anne, standing in her Royal Navy uniform. He knelt on the investiture stool with his right knee, and then the princess tapped his shoulders with a sword that had belonged to her grandfather, King George VI. When Ive stood up, she placed a medal around his neck, then chatted with him for a moment before moving on to the next honoree. Ive’s hands, usually so expressive, stayed glued to his sides. But he talked to her animatedly about how often he returned to the United Kingdom. The princess spoke about her iPad.
He told reporters later that he was “both humbled and sincerely grateful” for the award. He described it as “absolutely thrilling.”
“I’m extremely fortunate that I’ve found what I’d love to do, and that’s essentially to draw and make stuff,” Ive said. “To actually be able to spend all my time doing that, just that alone is fantastic, so then to get some recognition for that is . . . I don’t know . . . It’s a wonderful affirmation of the craft and the profession of design.”
That afternoon, Ive changed into a more relaxed gray-blue suit with a dark blue-gray open collared shirt to attend a reception at the Royal Academy of Arts in commemoration of the queen’s Diamond Jubilee and Britain’s creative arts. He mingled with other guests, including Paul McCartney, Judi Dench, and Bono. Later on, when the queen awarded five special grants to up-and-coming young artists, Ive presented the award for design.
“I am the product of a very British design education,” he told the audience as the queen stood near him in a white dress and a shimmery silver jacket. When the ceremony was over, a smiling Ive shook her hand and then stood behind her as she spoke to Bono.
Sir Jonathan had finally arrived.
Ive’s knighthood was one more proof of his soaring prominence. Now that Steve Jobs was gone, and with him all his fiery brilliance, his protégé was widely seen as the most radically talented creative force remaining at Apple. If anyone could be relied upon to carry on the company’s reputation for matchless bursts of elegant innovation, it was most likely to be Sir Jonathan.
It almost didn’t matter if Ive truly was as indispensable as his reputation suggested. So many investors and stock analysts believed him to be irreplaceable that it became a self-fulfilling prophecy. At this delicate moment in the company’s history, even the slightest whisper that Ive felt unappreciated could have been enough to send Apple’s stock tumbling.
In the first months of his tenure, Tim Cook needed to deal with both the perception and the reality of the company’s internal stability. Ive was key, yes, but so were the other top executives that the new CEO had inherited from his predecessor. After observing them during years of working together, Cook knew his senior team well enough to understand that they were all big personalities, fueled by egos and ambitions no longer tempered by the titanic presence of Jobs. A master of power dynamics, Jobs had managed his senior executives in a constructive way by giving each a separate domain of responsibility. On big decisions, though, he liked to throw them into the pit together, setting them against one another as they jockeyed to see who could come up with the cleverest solution to whatever challenges they faced. It was a harrowing but highly effective method that dared them to think harder and deeper, weeding through dozens of ideas until they finally arrived at a jewel of inspiration.
This approach had other benefits as well. When Jobs ruthlessly dismissed a proposal that the team felt strongly about, they relied on each other to change his mind. Jobs had transformed himself into a towering father figure, and all of his officers into his strong-willed but ultimately compliant children. Freud might have raised his eyebrows at such savage parenting. But the strategy worked, keeping his executives wary yet bonded to one another. Both competitors and collaborators, they had no choice but to take their cues from Jobs.
Now it was up to Cook to figure out how to keep the team working together effectively. Given the impenetrability of his personality, it remained unclear if he had the style and cunning to maintain their loyalty. Would Jobs’s men stay at Apple and help him map the company’s path into an increasingly volatile future? Now that their beloved father figure was gone, would they abandon their corporate home and take their vaunted talents elsewhere? Cook could not afford to let such questions linger. He had to establish his own rapport with Ive and his other top officers. Cook brought different strengths—and weaknesses—than Jobs to the equation. So did the others on the team.
The key, as Cook well knew, was to find a collective equilibrium. At one of the memorial services, he had talked about how his predecessor had modeled Apple after the Beatles.
“They were four guys who kept each other’s kind of negative tendencies in check,” Cook said, quoting Jobs. “They balanced each other, and the total was greater than the sum of the parts.”
The reality, however, was that two superstars, John Lennon and Paul McCartney, had been given most of the credit for the band’s genius. Once McCartney left, the rest of the band parted ways, showing the fragility of such high-powered collaborations.
Somehow, Cook had to forge a new dynamic with Ive and the others. If Apple was going to keep its juju, he needed to reconfigure the underlying currents of power so that the team orbited his personality, not their dead mentor. Together, they had to prove to the world that Apple could succeed without its biggest star.
To realize the magnitude of Cook’s challenge, it was necessary to understand the personalities on the team.
The newest member—and Cook’s first major hire—was John Browett, the senior vice president in charge of Apple’s retail stores. The hiring of Browett had raised eyebrows because he had come from Dixons, a European technology retailer reminiscent of Best Buy. In contrast to Apple’s clean, minimalist store environments, Dixons was a typical big-box retailer with brightly packaged products packed onto store shelves. At first glance, Browett seemed ideal because Cook had wanted someone wit
h international experience to manage Apple’s global retail business. Browett also seemed to care about customer service, one of the cornerstones of Apple’s retail philosophy.
The Brit had a reputation for being a strategic thinker and a team player who was calm and focused—attributes that Cook was predisposed to appreciate. When Browett was running the British supermarket chain Tesco’s online site, he had told a journalist, “I don’t do lunch. I don’t do conferences . . . there is too much to do.”
But the newcomer had a great deal to prove. Browett was taking over one of the most successful retail operations in the world. Starting with just two locations in 2001, Apple had expanded the chain to include more than 400 stores, about a third of which were overseas. Annual retail sales per square foot was higher than at any other U.S. retailer, including Tiffany & Company. In fiscal 2011, the stores contributed $14 billion in sales. Browett had to find a way to grow Apple’s retail profits even more while navigating an increasingly complex business. And he had to do so under the watch of a tightly knit executive team that had worked closely with Ron Johnson, his predecessor and the stores’ original architect.
One of the most important and longest-standing members of the team was Phil Schiller. As marketing chief to a marketing genius, the Boston native held one of the most difficult jobs at Apple. Jobs had constantly put him and his team under the microscope, second-guessing their every decision. Very little was good enough to pass muster. In some areas like advertising and branding, he had virtually no say. Jobs had managed those areas directly under an umbrella known as marketing communications. Throughout it all, Schiller survived and even flourished with a resilience that impressed everyone.
Haunted Empire: Apple After Steve Jobs Page 15
