By Kevin Meyer

The New York Times created a deserved furor last week with their article describing how the U.S. supposedly can't compete with China on manufacturing – specifically the manufacturing of Apple products.  As our fellow blogger Mark Graban points out in an excellent summary of that article, we shouldn't want to compete in that manner.  The stories of worker abuse and managerial tyranny are appalling.  Time magazine, in typical Time "hey please read us too" fashion, jumped on the bandwagon with an article on the human price of success.  And Apple CEO Tim Cook tried to deflect the PR carnage with a long email describing all that Apple supposedly does.

Don't get me wrong – I'm a huge fan of Apple… products.  I made the leap from PC to Mac a few years ago and haven't looked back.  I also own an iPhone and iPad, a 27" Thunderbolt display, use iTunes – the whole kit and kaboodle.  Those that haven't used Apple products for more than a few hours simply don't understand – the bloomin' stuff just works – and works like I want it to work – every time all the time.  That has value, and is why I happily pay more for Apple products.  Just this past weekend I watched a friend spend nearly an hour trying to get his Android phone to do what he wanted it to do.  Wow.  Really?  There's a reason why less than 1% of Apple users leave Apple.

I've heard several people call Tim Cook the world's greatest supply chain executive.  Sorry, I've never bought that.  Tim Cook executed a traditional "chase cheap labor" supply chain strategy in a great way.  But in my book that's not excellence – that's being the shining star of lemmings – the golden sheep if you will.  The China factory isn't necessarily a bad thing – one valid reason to have a factory overseas is to be closer to your customers, and there are a lot of potential customers in that part of the world.  But as nearly a singular factory serving the whole world?  With employees that are abused?  Sorry, no dice.

Apple, and Tim Cook, has done some good things.  They do audit their supplier's factories more than most companies.  They are taking some strong workers rights positions in their industry.  They are opening their kimono and exposing more of their dirty laundry.

Apple has $96 billion in the bank – think of what they could do.  More than just words and policy statements and such.

They could significantly increase the wages of their employees in China – even if they doubled their wages Apple would still have record profits.  But that could actually cause more harm than good.  Many workers simply want to earn enough to eventually go back to their home town or help their remote families.  Some social destabilization dynamics need to be understood.

However consider this, Mr. Cook:

How about immediately hiring and sending an Apple observer into every plant, perhaps every line in every plant, full time.  That way Foxconn wouldn't be able to shift workers from one line to another to hide abuses before audits occurred.  How much would that cost?  A million or two a year?  Put Foxconn on notice that this is not acceptable, with milestones that could transfer manufacturing elsewhere.  Difficult?  Sure.  Ethical business often is.

How about publicly saying (words…) that chasing low cost labor is not a long-term "manufacturing" option and then back it up by sinking a billion or two into developing truly innovative manufacturing methods and systems. Imagine what could happen if the same level of design prowess that was applied to product design was applied to manufacturing design.  Perhaps Apple could become the next Toyota – instead of just another cheap labor chaser lemming.

I could go on – and I'm sure there are lots of other ideas out there.  The bottom line is that thanks to its success – built on the backs of abused workers – Apple has the unique opportunity to change a global dynamic.  But that will take more than just words.

As my friend Shrikant Kalegaonkar tweeted this morning, the world is changing.  Voice of the customer now extends beyond products, and now includes the process for making the product.  As an Apple customer – and also a shareholder – I care about Apple's financial performance.  I want it to do well so it can return value to me in terms of new products and direct shareholder gains.  I don't have a problem with wealth being created and distributed commensurate with individual effectiveness.  But I also have a conscience, and increasingly I hate battling my conscience when using my Apple products.  I bet many Apple customers are feeling the same way.  That's dangerous for any company, and especially one like Apple which claims to embrace people.

So imagine.  Imagine what would happen if Apple took the high road, then backed up the words with serious, solid, perhaps expensive action.  Action that would change a global dynamic, showing that it is possible to be very profitable, very global, and very human-centered.  $96 billion gives Apple the ability to do something truly incredible. 

In addition to the actual improvement of the global condition, I bet a lot of folks would be impressed with the company – and would be inclined to buy its products.

By Kevin Meyer

Bill's post on Steve Jobs earlier today drew quite a bit of response – from both sides.  Lots of supporting comments on the post itself, lots of emails presumably to both of us saying, to put it politely, the opposite.  A few wondered why I even "allow" Bill to post such stuff.

I do have a partial difference of opinion with Bill on Steve Jobs; more on that later.  First I wanted to clarify a couple of things for those of you who thought it was inappropriate or that I should exercise some additional editorial control.

Those of you that know me well know that I thrive on being challenged, mentally, philosophically, and otherwise.  I like my job because I have a staff and peer group, and an industry, that challenges me every day.  I purposely read newspapers and online material from the extreme opposite end of the political spectrum from me – which in my case exists on both sides – because it challenges my thinking and mental models.  I ran a marathon this year to prove to myself I could – and next year I might just be wacky enough to try this.  For over 20 years I've had an annual goal to visit two new countries and try something completely different – and I've done it every year.  And I'm better because of it, at least in my own mind.

When I first met Bill many years ago he challenged my thinking.  And he still does – with every post and every conversation.  Sometimes I may not agree with or like what he says, but it sets those neurons a firing.  And that's good.  As you recently read in one of my posts, I believe that questioning conventional thinking, the status quo, even "settled science" is necessary to improve.  Anyone that doubts that should read the story of today's Nobel Prize winner in Chemistry.  Bill, unlike many consultants and so-called "thought leaders," has lived in the real world – running real manufacturing operations in real companies around the world.  We read a lot of mumbo jumbo from people who have never had to implement – and live with – the theoretical crap that spews out of their heads.  Bill, and I, have been in the trenches.

There are a few people in life that get the emotions boiling and the juices flowing.  Bill Waddell can be one of them; another is Pamela Anderson, with apologies to my loving wife.  (Yes I've waited years to put Bill and Pamela together in a sentence.)  Maybe I should add Paul Krugman to the list, and now that we're talking about idiots let's add the gal at Starbucks who refused my money a few years ago.  Yes I do read Krugman's articles to challenge my thinking, although I then usually laugh and roll my eyes.  Sometimes I do that to Bill's posts.

The point is that you learn from being challenged, and Bill does that to us a few times a week.  If you don't like it, tough noogies.  I do, and I know a few thousand others that similarly like the challenge.  I wish I could find some dude that truly believed MRP or China was the answer to all production ills to really broaden the challenge, but I haven't been able to find one brave enough to join us.

Now on to Steve Jobs.  There is one part of Steve, a very big part, where I completely agree with Bill.  Steve and Apple did not exhibit manufacturing excellence – they executed a very traditional "chase low cost labor" supply chain excellently.  That's fairly easy to do if you have the profit margins to fund planeloads of engineers to go to China every week to oversee hoards of underpaid people and to beg them to not jump off of factory buildings.  But it was still a very traditional supply chain and "manufacturing" operation.

I wonder what would have happened if the incredible design innovation that Apple, and by proxy Steve, exhibits had been equally applied to manufacturing and the supply chain.  Doing the unconventional, finding the best path.  Would Toyota and TPS be a distant memory and we'd be benchmarking Apple and APS?  Only dreams at this point.

Now some of you are now saying "innovation?"  Like the guy who made the comment about "it's just a transister" or Bill's statement that it's just a computer or just a pair of earbuds.  Innovation doesn't have to be a "thing."  In fact it usually isn't.  In Apple's case the innovation was and is how those things interact with and add value to humans.

I'll illustrate this with a handful of stories about my direct and slightly indirect interaction with Apple.  Let's begin with Steve Jobs himself.

Steve by all accounts isn't exactly a nice person – if you consider "nice" to be calm and tender in demeanor.  If you read some history on Bell, Edison, and Franklin you'll discover those luminaries of invention weren't either.  In fact they were basically tyrants.  So maybe Jobs does belong as part of that group.

But perhaps Jobs is also a tyrant along the lines of our lean buddy Shigeo Shingo – known for his outbursts and rage.  Of course the lean community excuses such supposedly "disrespectful to people" attitude as "teaching" and "not accepting anything less than perception."  What a perfect segue into my first story.

A friend of mine worked at Apple until very recently when he left to move overseas to follow his woman.  A couple years ago he told me the story of when he stepped into an elevator at Apple HQ and before he could turn around in walked Steve Jobs.  They went up a couple floors – in his words the longest elevator ride of his life.  Steve asked him what project he worked on, my friend told him, and Steve proceeded to yell and scream at the status of the project.  My friend felt flattened for days… until it dawned on him that he wasn't being personally criticized, but the project was.  And it wasn't really a criticism, but a challenge to do it better, to find a better way.  And several weeks later, in typical Steve Jobs micromanagement style, he received a followup call and was able to discuss the better way he had discovered.

My very first experience with an Apple was with the Apple II in high school – yep that dates me.  Unlike the TRS-80 that also existed in our brand new computer lab, the Apple didn't require finetuning the volume control on a tape recording to load programs at 300 bits per second.  (not kb, not MB…).  And I soon learned to draw a square on the screen!  Woo hoo… but it just worked.  A few years later, while on co-op making chocolate bars and boullion cubes at Nestle in Connecticut, I got to play on an Apple Lisa.  One of the first graphical interfaces, with a funny mouse thing.  Sure beats typing DOS commands.  A computer that began to think like me.  Visually.  Xerox PARC technology applied to the real world.

A little over three years ago, March 2nd, 2008 to be precise, I dumped my almost-new Dell laptop for a Mac.  I had had it with the excruciating PC experience.  I was dreading connecting the new Mac to the printer hanging off my wireless network as for other reasons I had a rather complex setup.  Helping a PC navigate through two routers with different passwords to find the HP printer usually took hours… then after a few weeks the PC would strangely lose it's way.  I turned on the Mac, went to printers, and it immediately said "would you like to connect to the HP Photosmart on your network?"  Uh… yes, thanks.  It just worked.  And it still does.

Here's another one: I have a 90 year old neighbor lady who switched from a PC to a Mac two years ago.  Really.  She's a wicked smart gal who has sailed the world and worked for presidents and generals, but her PC drove her nuts.  So one day she called up the Ride On bus and had it take her to the Apple store fifteen miles away, and came home with a Mac.  And to this day she still takes the bus down there once a week for a class on some subject or another.  In fact, just last night she was telling me how she learned how to make calendars and cards.  And she made a point of telling me how the folks at the Apple store never push her to buy anything, they just want to help her learn how to use the technology.  Enabling the technology to work – creating value for the customer.  Not pushing the sale.

I have one more, then I'll stop.  My company has some very unique materials processing technologies.  One day Apple came across us and asked for a meeting.  After the usual NDA exchange we discussed how some of these technologies could be used.  One in particular excited them, but we explained that using it on a scale required by Apple would require procuring more processing machines than existed in the world at that time.  They didn't care.  Their group identifies technologies that could add value – defined in terms of user experience.  Then and only then would they figure out how to make it commercially viable.  This "backwards" thinking is why we have MacBooks that are individually machined out of solid aluminum – which also required procuring 30% of the world's CNC machine output one year – which would seem unreasonable if not impossible to most companies.  Not to Apple.  That impossibility and unreasonableness creates value which creates high margins.

Apple didn't invent the computer, or the mouse, or the graphical interface… or the portable music device or even tablet computer.  Those really are just "things."  But they did reinvent how they worked with people.  As Chris Taylor at CNN puts it, Steve Jobs saved technology from itself.

Real innovation isn't a thing.  It's a thing that adds value, that changes our lives.  There's a reason why Apple folks stand in line to get the latest products – because they know those products will change how they operate.

The iPod isn't just a portable music player.  It is a device that allows for easy recall and genre categorization of vast amounts of music.  That was then coupled with iTunes to disrupt the traditional music business – and let people experience a far wider variety of music – with thousands of additional artists getting a chance to be heard.

The iPhone isn't just a phone.  It lets you hold your music with a phone thereby eliminating a device, then it seamlessly links contacts, a nice browser, eventually a camera and HD movie recorder – thereby eliminating even more devices.  Who buys a standalone pocket camera these days?  But the real beauty, again, is the seamless integration.

The Mac isn't just a computer.  It's a computer that thinks and operates like humans do.  A 90 year old lady can get one and be up and running – and adding value – in ten minutes.  All the programs work perfectly together, the computer just springs to life when opened.  It does what you want, period.  Sure if you want complete customization over every little nuance you won't get it – but then again you probably aren't really a human at that point.

The iPad isn't just a tablet.  It's a mobile information platform.  I now get all of my magazines and newspapers on the iPad because the experience is so much better – so much easier.  My books are on it because I can bookmark, make notes, even translate – without scribbling.  I just downloaded a travel guide for my upcoming trip, and unlike a paper book this guide now knows where I am to bring up relevant material, can help me find my way, and create a multimedia learning experience.  I saw a demo of an iPad in a university classroom that combined the textbook, notepad, professor's PowerPoint, and audio recorder.  Anyone still want to invest in backpacks for students?  And then there's Angry Birds…

It's not the thing.  It's how the thing works, how it interacts with us and other things, and how it adds value.  That's the innovation. And that's what Steve Jobs did, and Apple does, better than anyone else.  That's what anyone who has used an Apple product for more than fifteen minute experiences.  And that's why around the corner from my hotel last weekend, at the Apple Store in Palo Alto, there was the following scene.  They, like I, experienced Steve Jobs and Apple.  And the experience changed our lives.

Thanks Steve.  RIP.

(PS: Tim Cook, can you PLEASE turn a few of your guys loose to create a real, innovative, supply chain too?)