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Why Tim Cook’s Leadership Won’t Lead Apple to the Next Phase of CSR

Raz Godelnik
| Friday June 20th, 2014 | 0 Comments

Apple CEO Tim CookThree years after taking over the leadership of Apple, Tim Cook is still struggling to make his own mark in the company. A profile article in the New York Times published last week described the challenges Cook faces while trying to lead a company, living in the shadow of Steve Jobs and “making Apple his own.”

According to the article, there are still many people — including some of Apple’s shareholders — wondering if Cook can fill Jobs’ shoes and maintain the company’s position as an innovation powerhouse and the most valuable company in the world.

One issue where Jobs’ shoes aren’t too big to fill is corporate social responsibility (CSR): In his day, Apple was famous for its reactive CSR strategy, low level of transparency, little commitment to stakeholder engagement and a generally dated approach to what responsibility in business means.

Cook — who had to address some of the issues that were the result of Jobs’ approach, such as the working conditions at Foxconn — seems to be more open-minded about CSR, promoting an agenda focusing on climate change, human rights and philanthropy.

The interesting question is whether this is enough to build Cook’s own legacy and make Apple not just his own, but also more sustainable? I believe the answer is no. And the reason is not what is in his agenda, but what is missing from it.

Right now, Cook’s approach puts him somewhere between what Prof. Michael Porter describes as the first and the second phases in the evolution of the role of business in society. Examples include philanthropy (Cook established a program to match employee charitable contributions) and good citizenship/sustainability (supporting proposed federal legislation protecting LGBT workers, using 100 percent renewable energy sources in Apple’s data centers, publishing an annual list of Apple’s major suppliers, and so on).

These are all important steps, and we definitely need more CEOs that are not afraid to tell shareholders to sell their stocks if they don’t like policies on issues like climate change.  At the same time it’s too little given our sustainability challenges in general and Apple’s challenges in particular. At best it will put Apple and Cook in the middle of the pack, with little chance to become the new Paul Polman or help him build his own ethos.

So, what can Cook do? Here’s one idea he might want to consider: Forget about philanthropy and good citizenship/sustainability and start thinking about designing the new phase in corporate responsibility: The responsible economy.

It all starts with the fact that interestingly the biggest challenge Cook is facing now is also is the biggest opportunity has to make his mark. What we’re talking about? In one word: growth.

As the New York Times article describes many Apple investors “worry that it can’t continue to match the growth that brought it from $65 billion in sales in the 2010 fiscal year to $171 billion in 2013. In fiscal 2013, sales grew a mere 9 percent, far below an average just shy of 40 percent a year from 2004 to 2013.”

The problem Toni Sacconaghi, a financial analyst at Bernstein Research, explains is that Apple won’t be able to show this sort of phenomenal growth “unless it comes up with a gigantic hit on the order of the iPhone.”

Apple’s challenge in a way reflects some of the ills of our economic system, where companies are expected to show continuous growth and can’t really get off the growth treadmill or reduce their growth rate without being punished by the markets. The result many times is short-termism, or in other words making decisions that favor the next quarter over the next decade just to make investors happy.

So what can Cook do about it? He can try looking for the next hits, hoping that somehow he can win the law of large numbers time and again, or at least until his term is over and it becomes someone else’s problem. Yet, his chances are rather slim – as Sacconaghi explains in the article even if Apple sells 10 million units of iWatch in the first year, “it would add a mere 50 cents to its earnings per share, barely a single percentage point.”

The other option he has is to revolt against the system, and say NO to unreasonable growth expectations. Instead he can offer shareholders and stakeholders his own version of what Patagonia calls “The Responsible Economy,” i.e. “an economy that does not rely on insatiable consumerism as its engine, an economy that stops harmful practices and replaces them with either new, more efficient practices or older practices that worked just fine.”

I know it might sound a bit crazy – after all, Apple is not Patagonia, so the sort of discussions and questions about consumerism, responsibility in business and sustainability that might be a perfect fit for Patagonia just doesn’t work for Apple. But at the same time isn’t it crazier to believe that a company with $171 billion in sales will continue growing in double-digit figures forever and ever?

Well, I believe the opposite is true. Apple is actually very close to a point where these questions will become essential to its future. It will have to decide very soon if it continues to focus on growth and planned obsolescence or start thinking in terms of long-term economic stability, responsible design and sustainability.

Now, this doesn’t mean that Apple will stop being innovative or developing new ideas – it will just need to think differently about innovation. It will require leadership, determination and creativity and it won’t be easy, but it can also be a very rewarding process, eventually ensuring that Cook’s legacy will be beyond the next iGadget. So now it’s up to you, Tim!

Image credit: Mike Deerkoski, Flickr Creative Commons

Raz Godelnik is an Assistant Professor of Strategic Design and Management at Parsons The New School of Design. You can follow Raz on Twitter.


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