Apple’s new leader faces ethical dilemmas at Foxconn

January 31, 2012

As Tim Cook picks up the leadership of Apple from Steve Jobs, he faces a significant ethical dilemma in Wuhan in a supplier’s company where workers threaten suicide in protest over their working conditions


by Paul Hinks

Articles recently reported that Tim Cook (Apple’s new CEO) earned $378m in 2011. He inherited a global technology juggernaut, renowned for its creativity and innovation; a business with $90 billion in cash reserves (The Guardian). Yet there are serious problems at one of its key suppliers, Foxconn, where a recent mass suicide threat posed an ethical dilemma facing Apple and its new leader.

The Telegraph reported [11th Jan 2012]:

Around 150 Chinese workers at Foxconn, the world’s largest electronics manufacturer, threatened to commit suicide by leaping from their factory roof in protest at their working conditions. The workers were eventually coaxed down after two days on top of their three-floor plant in Wuhan by Foxconn managers and local Chinese Communist party officials.

Not all measures should be financial

A lot of organisations highlight in their annual reports the progress they’ve made against various Corporate Social Responsibility (CSR) metrics. Very commendable, but it’s important to dig deeper beyond the glossy brochures and corporate fanfare. Increasingly social-economic factors come in to play, creating a conflict of priorities opposite financial metrics.

Apple is indeed well placed to influence the working conditions at Foxconn. Despite assurances from Apple on its website that it is committed to the highest standards of social responsibility across its worldwide supply chain, the evidence presented highlights that Foxconn employees are seriously aggrieved with their working conditions. In an online article published on Thursday 26 Jan 2012 Reuters noted Apple’s apparent silence on the Foxconn situation – referencing on-going investigations carried out by the New York Times, the Reuters article is an example of growing interest and awareness of the problems at Foxconn.

Difficult working conditions

The Foxconn situation has not developed overnight. The Guardian reported recently [16th Jan 2012] the problems had been developing since at least 2010:

In 2010, a total of 18 of their colleagues in the Shenzhen campus of the Taiwan-owned company did attempt suicide; 14 died. Some employees and labour organisations blamed a combination of factors for the workers’ deaths: low wages, long working hours – sometimes up to 16 hours a day – and inhuman treatment. A number of Apple products have been cited as ‘game changers’ – products that have helped to change how we use technology to live our lives – in stark contrast, it seems that the workforce at Foxconn that help to create these Apples products survive, and sadly tolerate a rather mundane existence. Loyal Apple consumers crave for their Apple products. However, it appears there is a darker, more un-savoury side to how Apple products make it to our shelves.

Leaders can’t ignore ethics

On Tuesday [Jan 24th 2012], Apple announced its financial results for its first fiscal quarter: the figures were impressive and beat analysts’ expectations. Bloomberg (& others) immediately focused on the financial merits of Apple’s results – increasing revenue forecasts & speculating on dividend payments – a few websites noted the share price increments of various Apple suppliers, including Foxconn.

This is all very good news if you’re an Apple shareholder – however will the fortunes of Apple mean anything to the workers in Wuhan?

I borrow a comment from Dilemmas of Leadership [1st edition, p196]: “For some leaders, matters of ethics arise as unwelcome intrusion in the pursuit of economic success”.

Apple’s financial strength isn’t in doubt; however Apple’s position on ethical topics such as the welfare of workers at its suppliers is clearly attracting increased interest. Continued negative media coverage of working conditions at its suppliers may begin to influence and alter customer perceptions of the Apple brand; perhaps ultimately impacting Apple’s cherished economic success?

The need for more than ethical tokenism

The Telegraph highlighted [27 Jan 2012] that Apple have been working on number of initiatives:

In response to outside pressure, Apple this year published a list of its 156 suppliers, representing almost all its supply chain, for the first time. It also joined the Fair Labor Association, becoming the first technology company to do so. Apple has also worked with Chinese labour rights advocates, environmental groups, and has agreed to allow outside monitors into its suppliers’ factories.

Hopefully, Mr Cook and Apple will ensure their corrective actions are interpreted as more than just ethical tokenism; the challenges presented at Foxconn provide an opportunity for Apple to lead by example beyond the technology forum where it enjoys such enviable success.


Paul sent us updating information [Feb 14th 2012]  You can find more out about Paul in his earlier post on Antonio Horta-Osorio.

Update [LWD editors]

More than 10 people were injured in a fight that broke out among workers at a Foxconn plant in north China’s Shanxi Province, police said Monda [September 2012]

Foxconn, the world’s largest maker of computer components, faced criticism on harsh working conditions two years ago after a string of suicides committed by several Chinese factory employees. The company currently has about 1 million employees on the Chinese mainland.

The relationship between Foxconn and Apple flourishes. China Daily announced [May 2012]

Foxconn Technology Group will invest $210 million to build an Apple production line in October in east China’s Jiangsu province, local authorities announced Monday to be located in Huai’an city. Foxconn Technology Group, a top maker of products for Apple, announced [April 2012] that it will build a high-tech manufacturing base in Hainan, China’s southernmost island.

The working conditions at FoxConn have been said to have improved:

Working conditions have improved at plants owned by Foxconn, a Taiwan-based electronics giant and Apple Inc’s biggest supplier, according to a report released on Tuesday. The Fair Labor Association, a United States-based nonprofit organization, said that Foxconn, a Taiwan-based electronics giant and Apple Inc’s biggest supplier, has completed the actions it agreed to take to improve working conditions at its two plants in Shenzhen and one plant in Chengdu, which make Apple’s popular iPhone and iPad products.

Sunday 7th October 2012

There is growing interest internationally in the Foxconn situation. China Daily commented as follows:

A major supplier for tech giant Apple on Saturday denied reports that thousands of workers making components for the iPhone 5 went on strike at the company’s plant in Zhengzhou, Henan province.

The strike was said to have started at 1 pm Friday [5th October 2012] and continued to 11 pm, involving workers mainly from assembly lines and quality-control inspectors.

“Foxconn raised overly-strict demands on product quality without providing worker training for the corresponding skills. This led to workers turning out products that did not meet standards, and ultimately put a tremendous amount of pressure on workers,” China Labor Watch said in a statement.

October 12th 2012

A new story is developing which suggests harsh treatment of an employee after a near-fatal accident.

October 18th 2012

Latest allegation in Western media is of Foxconn using underage students to work in one of their factories.

November 26th 2012

Foxconn has begun its scheme to replace workers with robots which have been called Foxbotts. Scheme was announced in 2011

March 8th 2013

Major report claims Foxconn factories are ‘Labour camps’

April 2nd 2013

Foxconn profits jump aided by manufacture of Apple components. However, The adverse publicity continues with a denied report about a further suicide attempt as a Foxconn factory.

May 21st 2013

Apple leaders including Tim Cook defend the Corporation’s tax arrangements to a Senate Sub-Committee.

October 5th 2013

Two years after the death of Steve Jobs, leaders present and departed at Apple are compared.

February 17th 2014

Stories are emerging of Apple’s interest in diversification, specifically into acquiring electric car business Tesla. ‘Clean green’ image may appeal to Apple as brand strengthening. Foxconn also indicates wish to diversify away from intensive factory manufacturing with a Billion dollar investment into Indonesia for more automated manufacturing processes.

March 3rd 2014

Cook displays his ethical and environmental credentials and concerns Says business is ‘not just about making a profit.

April 18th 2014

Apple blunders in attempt to avoid ethical threats to its image.

May 7th 2014

Big golden hello of $67 million to new retail boss from Burberry.

June 20th 2014

Suggestion that Cook should make CSR a priority

July 4th 2014

Apple CEO’s Cook’s statement at Investors’ meeting has become a matter of debate

July 18th 2014

Apple faces charges of illegal price-fixing of e-books

September 26th 2014

Another bad news story as Leukaemia victims at Foxconn plant die but no support offered by firm.

October 6th 2014
At last: a good news story. Foxconn to build an electric car for Chinese market. $800 million investment.

October 29th 2014

Apple 6 mocked by Conan O’Brien as flaccid in parody commercial comparison with Galaxy Note 4

October 30th 2014

Apple chief Tim Cook is .. ‘Proud to be gay’.

November 1st 2014

Tim Cook has become a gay icon overnight partly through social media. Says he did not want to be ‘an activist’.

Dec 15th 2014

Anti-trust case. Apple appeals judgement against its i-pad entry into e-books market

December 18th 2014

Another worker abuse story from Pegatron, another Apple supplier

Apple ‘deeply offended’ by BBC investigation of the allegations

January 25th 2014

Tim Cook in line for $500 million stock bonus

January 28th 2015

Apple records largest profits in history: Shares in rise more than 6pc after it records biggest profits ever reported by a company, ‘equivalent to $8.3m profit every hour of the day’

February 15th 2015

Evaluation of Tim Cook’s impact as leader  two years after his appointment.

March 7th 2015

Apple’s strategy of Big Data management examined

Match 14th 2015
Apple executive slams unofficial biography of Steve Jobs

Steve Jobs to donate much of his wealth to charitable stories

July 21st 2015

Quarterly Sales watch on Apple watch sales. Not good news.

October 29th 2015

Apple stock down although its financials up, as is Tim Cook’s reputation.   Investors said to be ‘spoiled’. One suggestion. It is explained by lack of evidence of iWatch potential.

January 30th 2016

activist shareholder declares Apple shares seriously under valued.  Call for buy back of shares to adjust value.

Feb 18th 2016

Apple in battle with FBI over terrorist phone information

February 29 2016

Summary of the ‘FBI v Apple’ case here from an Indian source here.

April 14th 2016

FBI Director reflects on the dispute with Apple now on its way to resolution

April 27th 2016

Apple profits and stock valuation dip.


The answer to the question “what’s the difference between map-reading, map-making and map-testing?”

January 27, 2012

Why is is often difficult to distinguish between conceptual map-reading, map-testing, and map-making? Set theory provides one explanation

Big maps have little maps…

One explanation is that any conceptual map draws on other previously created maps. Sometimes you will find yourself reading a map, which itself indicates some map-testing that had gone on during the map-making. From that starting-point it can be seen that map-reading, map-testing, and map-making are not totally isolated one from the others.

Sets within sets

In set theory, the concept might be examined as overlapping sets (Venn diagrams). This offers hope of isolating out the three ‘pure’ processes, plus various examples of overlaps, including the triple overlap of map-reading, testing, and making.

Recursiveness in systems

A related way of looking at it (another mapping) is through the wider systems notion indicated above of recursiveness. This proposes that systems replicate fundamental aspects of themselves at different levels of system. (Think biological cells, organs, individuals, sub-species etc).

That’s why the question does not have a simple answer

We have two theoretical possibilities suggesting why the question does not have a simple answer.

The good news

The good news is that those same principles can be put to positive use, as you reflect on your own mapping processes. If you believe you are primarily map-making, that’s your map of what you are doing. If you are testing (beliefs), you are map-testing (beliefs). This ‘get out of conceptual goal’ card relies on another powerful map known as the interpretative or sometimes the sense-making map. But that would be the subject for another post

An example from Tennis

I’m ‘reading’ (literally, on my PC) an account of the tennis battle at the Australian Open between Andy Murray and Novak Djokovic. The score is one set all. The commentators say that Djokovic is fatiguing. That’s their ‘read’ of what’s happening. Someone adds ‘he sometimes appear to be struggling but isn’t’. That’s testing the fatigue idea.

I am noting the evidence that Murray may be having a mid-match slump or nerves. That’s testing another idea.

Djokovic recovers from his apparent fatigue. Does this test conclusively refute the ‘fatigue’ idea? Do we need the more subtle idea of ebbs and flows of energy?

Commentator says: “Whoever wins this set wins the match. That’s not a fact, that’s just what I think might happen”. Notice how the commentator shows awareness of the difference between a fact and a ‘map reading’ of ‘what might happen’.

Djokovic eventually wins a close match lasting nearly five hours. Murray on interview ‘reads’ the experience as evidence he is getting closer to the play of the World No 1 (and to Nos 2 and 3, Nadal and Federer)

Think map-reading as sense making

The Tennis story also shows how conceptual map-reading is rather like examining and making sense of a map.

Murray v Nishikori: The progress principle

January 25, 2012

Kei Nishikori

Murray has had a good Australian Open. But has he improved his play?

I watched, again, bleary-eyed, as Murray, (seed 4) played and beat the 24th seed Kei Nishikori in the quarter finals [25th Jan 2012]. I wanted to see if there had been signs of significant change in his play.

Three patterns of play were checked.


In the past, Murray’s mental attitude has been predictable. Predictable rather than positive? Under pressure he tends to get hard on himself (and his coaches). That’s changed a bit. Maybe he won’t aim his anger towards his new coach, eight time major winner Ivan Lendl . maybe, he is even managing his anger better.

His serve

Not much change here. Percentage still too low. But hits winners under pressure.

His mid-match slump?

Most disturbing was his continued tendency to drop games having gained a measure of controll over the match. I wondered would it happen after he won the first set. I wondered again after broke in the first game. Then he dropped his serve, admittedly to a ‘dead’ net mishit, but he had already lapsed.

It is too harsh to call this a major slump. But the pattern was too familiar and a bit predictable. A return to ‘normal service’ literally followed plus a break. Murray wins set easily.

And match

Mishikori, more fatigued after a tougher journey, wilted in the third set. Murray wins 6-3, 6-3, 6-1

The progress principle

In an earlier round of the tournament we commented on Murray as illustrating the principle of mommentum. For this match we might shift attention to the progress (or performance) principle.

Rugby is more like chess than you might think

January 22, 2012

Chess and Rugby games both start with two sets of eight ‘forwards’. In chess the forwards are called pawns and most of them get taken out of the battle as each game is played

The beautiful parallel came to my attention through the remarks of a commentator on one of the Heineken cup games yesterday [Jan 21st 2012]. Rugby is like a game of chess, he said. I began to look more carefully at the structure of the game I had been watching.

The dynamic structure

You may find what follows easier to understand if you already have some knowledge of both games, but the main point is easier to grasp. I am looking at the dynamic structure of two systems, chess and rugby. Some of the surface characteristics are similar. There is a deeper structure that has even more system similarities.

The forwards are like two sets of eight pawns …

The point was deeper than I first thought. First, consider the configuration of the forces involved. Each game begins with two sets of eight forwards. In chess, the pawns (forwards) advance towards each other, clash, and many are often are taken out of the game. Most rugby games start and end with two sets of eight forwards (pawns). The scrums and line-outs are mini-battles as the two sets struggle for advantage. Chess players are taught that the pawns are the soul of chess. Most forwards say the same.

The lineouts

I played rugby as far away from the forward skirmishes as possible. Their black arts are lost on me. Yesterday the wonderful replay-graphics revealed the deep structure of the lineout battle. It was far from the unitary structure I had imagined. I had ‘read’ lineouts as taking place with the two sets of very tall players rigidly assembled and arranged one against like two sets of chess pawns (only in two files, rather than in two ranks). Lineouts (and scrums) are after all called set-pieces.

The basic idea is that the ball is thrown into the lines of players. Elite jumpers compete to catch the ball, aided by support players who lift the jumper. Yes it is a bit like ballet although few rugby players will see it like that.

The three clusters

The lines of forwards moved more dynamically that I had imagined. Instead of obedient sets of eight, the system morphed itself into three clusters. Each cluster was a sub-system with players from each team. The three clusters are still arranged in a sequence at the front, middle and back of the line-out.

The chess nature of the contest was picked out in the video. Each cluster or sub-system has one of those elite jumpers plus an undefined number of support players. There is wonderful scope for feints and ploys to confuse the opposition. Some are obvious. A jumper will run back or forward, perhaps from one cluster to another, triggering responses in the opposing line.

A game of threes

Rugby players might want to think of the similarity in the structure of forwards in the scrums: the front row, then in the middle, and the back row. Then there are clusters of players across the entire team: the forwards, the half backs and the backs. Rugby is a game of threes.

In principle, in the line-out…

In principle, the team with the advantage of the throw-in should win the line-out ball. Increasingly complex moves of the kind makes the lineouts more interesting and competitive. The game also has rules and structures which permit intense and balanced competition. Systems theorists call that ‘requisite variety’.

Then there are the scrums

I have even less understanding of the dark arts of the scrums. But I now see again the rule of three, and the chess-like nature of the grunting and groaning. Who said that the backs play the music and the forwards are bred for carrying the piano?

Existential dread as phone and internet go dead

January 19, 2012

Yesterday I found myself cut off from phone and internet contact and in a state of existential dread. This is the story of how it happened and what happened next

This post is to announce that I am now on line again. It also helps me to thank a large number of people who helped in the process. Maybe it serves as therapy, as I calm down by writing what happened.

Dramatis personae:

Susan and Tudor. Occupants of Tudor Towers, whose home office arrangements for internet access have changed in haphazard ways as as earlier components such as dial-in modems and ancient PCs became obsolete or just passed away.

Wendy. Ace decorator working on making good the West wing. Wendy has appeared in earlier blog posts for her artistic efforts.

Laura and team of cleaning wizards. No we don’t have Downton Abbey scale staff. Laura et al arrive twice a month to reach the parts other hands haven’t got to.

Stan and Nora. Long-suffering neigbours who are first to be visited when something goes wrong.

British Telecomm. But you know about BT, whose billing practices and call-centres have also been mentioned in earlier posts

Michael. One of the team of master gardeners (see Laura for indication of working arrangements). Michael also knows how to get dead down-lights out of the ceiling, and replace them with live ones.

Paul 1 Friendly IT doctor at Manchester Business School

Unknown associate John Lewis, Cheadle Royal

Paul 2 Hardware assistant, B&Q

Rachel Wendy’s daughter

All clear so far? Then on to scene 1

Scene 1

My office in Tudor Towers. Late morning, Wed 18th Jan 2012. I am leaving to shop for essential liquid supplies. Computer is down-loading stuff. Wendy is ‘making good’ in the West Wing. Laura’s team (that reminds me of the music for Dr Zhivago) is attacking and repelling all signs of enemy dirt etc. I creep out.

Scene 2

I return early afternoon. Laura’s team gone. Computer has switched itself off but is ready to reboot. I reboot. Nothing happens. No internet connection. I jump to wrong conclusion. I assume router has been disrupted by Laura’s team as they plug in their various electrical weaponry. Not happy. Check the router. No internet connection. Hmm. Call Susan to get Laura’s number. No phone connection either.

Put 2 and 2 together. Wendy had been asked to remove that ancient box on the wall she was about to decorate. Check with Wendy. We both think we know what happened. We agree grimly it was not just an obsolete box Wendy had whipped out, but a vital part of our telecomm system.

I Head out to Stan and Nora and prepare to battle with BT’s celebrated help-line.

Scene 3

I will spare reporting the various human and computer interactions that took place over the afternoon. Stan and Nora on messenger duty with cleft stick, to bring us news if BT engineer(s) contact them. Fast falls the eventide. Susan arrives to give moral support.

Scene 4

BT engineer arrives. Reconnecting telephone. Warns the internet router now has to be relocated in the West wing. Can’t help more as he has to go once the job is done. Points out I need a new router connection. But at least the phone works. I dial Michael for technical support and leave message on his answerphone. He retuns call and says he can drop by over during the weekend. OVER THE WEEKEND!! Existential panic kicks in. I have no internet at home. UNTIL THE WEEKEND. I’m doomed to working in cybercafes in Stockport. Resolve to get IT advice from MBS in the morning.

Scene 5 The next morning. MBS

Susan holds fort on my planned work at MBS. I visit friendly internet doctor who says he doesn’t have the connection I need. Suggests somewhere in Manchester. I decide to try somewhere closer to home.

I Head forJohn Lewis’. Friendly person there says they don’t sell accessories like that but B&Q down The road does. That’s what I like about John Lewis. Helpful.

Scene 6 B&Q

Find almost deserted cavern that could serve double as hanger for building super jumbos. Entire aisle of accessories that look as if somewhere the shelves contain what I’m loking for. Hello, I shout, my voice echoing around the rafters. Anybody there…? Eventually someone at the front of store puts out an APB for a hardware assistant. Even more eventually Paul 2 arrives. He can’t decide which cable I need either. Finally rips the plastic wrapping off one item which seems the closest to requirements.

Scene 7 Tudor Towers

Wendy working with daughter to do the room’s ceiling. I show them triumphantly how clever I had been and how Michael will be able to get me back on line. Daughter Rachel inspects cable and router. Points out how they need to be connected. Can’t see it myself, but agree she should do it. Ha! It doesn’t work. I knew it.

Seconds later she finds a safety switch and the Netgear modem flickers into life. I scamper back into my office. It’s fixed. I am reconnected. I should find some tangible expression of gratitude. I just keep repeating thank you, thank you, thank you.

The end

So there you have it. Must call Michael. Now where did I put that phone number?

Note to my students

This is not a good example for you to take as illustration of how to write a blog post for examination purposes. It is too self-indulgent, lengthy, and needed far more reflection on the relevance of the story for leadership issues.

Much More than Marmite: The Unilever Strike

January 18, 2012

One popular newspaper has been running stories about ‘Marmite workers’ going on strike. For Unilever’s employees it’s much more than that

To associate Unilever only with one of the manufacturer’s more quirky products is an oversimplification. Unilever is a modern global organization founded by the entrepreneur and social welfare pioneer William Hesketh Lever.

The strike last month and continued today [January 18th 2011] is over the 21st (as well as the 19th century) issue of pension rights. It is believed to be the first in the company’s century of operations.

The Guardian describes the background to the strikes:

Before Christmas, Unilever, which produces goods such as Dove soap, Wall’s ice-cream, PG Tips and Marmite, was hit by the first ever national strike involving its UK operations after revealing plans for a pensions shake-up.
The firm, which employs around 7,000 workers, is looking to move 5,000 staff to a less generous career average scheme by the middle of next year. The remainder are already signed up to the new scheme, which was closed to newcomers in 2008.
On Saturday, leaders of the Unite, Usdaw and GMB unions said they would call for a series of strikes from 17 January, claiming new pension arrangements could cut retirement income for staff by 40%.

A personal view

Unilever recruited me as a technical manager in its Port Sunlight laboratories on Merseyside at the start of my professional career in the late 1960s. Even in proximity to the militant culture of the shipyards of Birkenhead and with Liverpool across the Mersey, Port Sunlight retained its paternalistic but cosy ethos. The laboratory and manufacturing sites were in walking distance from Port Sunlight’s model village built for the workers, with its Art Gallery, Bowls green and (open-air) swimming pool.

Later, as a management researcher, I retained memories leaving me with a largely positive view of big company culture and sensible employee relationships with ‘management’. Today, Unilever employees are facing up to changes to a century of tradition.

[Image is not of your editor protesting for pension rights]

Momentum Studies: Murray v Harrison Australian Open 2012

January 17, 2012

Ryan Harrison

Andy Murray was expected to beat Ryan Harrison in the first round of the Australian tennis Open in January 2012. After Harrison won the first set Murray won the second and commentators began to talk of momentum swing.

Andy Murray v Ryan Harrison Australian Open Jan 2012. Round 1

Sets 1-2

Murray faces promising but somewhat erratic young American. Expected to win. Early start for watchers in UK . Awoke 5.30 am to learn Murray had lost first set. By time I’d settled to watch, Murray was moving ahead in second set. He seemed a bit tentative but won with fewer errors. One set all. First mention of momentum swing by the commentators.

Set 3

Murray breaks early. Still appears a bit tentative. ‘Retains advantage but still unconvincing. [The playing] level from both has dropped.’ Harrison seems a bit more prone to error,

Idea: Momentum more likely to sustain if stronger player/team seizes it.

First racquet-chucking by Harrison.

Idea: Murray’s ‘momentum’ not helped by low 1st service %. Although 4-2 up, talk is not of Momentum. Maybe negative momentum (Let’s call it ‘NegMo’) for Harrison. Murray has chances but fails to capitalize on them for second break of serve. Murray wins set. Commentators assess performance as steady. Imply no momentum (or not sustained). My assessment: Murray playing well enough to win match.

Set 4

Murray drops four points (from three game points at 40-0 to break point at Advantage against in second game of set) before squaring at one set all. Conserving energy?

Second racquet chuck from Harrison. Conditions continue to change (Shadows). Harrison drops service. Murray now leads 1-2 with serve to come. But seems a bit listless. Poor body language. Commentator picks up possible shoulder trouble for Murray. Set continues, with Murray playing with little urgency (apparently). Breaks again for 5-2. Wins in over three hours.

Momentum check:

The notes above suggest that the remark about momentum was not much more than a commentator’s knee-jerk assessment when the stronger player recovers after dropping the first set.

A Similar note was struck on sky text: “Murray seized initiative in second set [and] maintained momentum when he broke Harrison again in the opening game of the third set”.

To be continued…

Subscribers are invited to join in on this examination of momentum. It’s a phenomenon frequently mentioned in sporting and political contests.

Message from and to the Financial Times

January 16, 2012

The Financial Times now supplies information about its web articles with the request “Please don’t cut articles from and redistribute by email or post”. Point noted. The battle for pay to view continues

Rupert Murdoch was among the earliest figures to recognise the importance of developing new business models for successful management of news in the era of electronic information media.

The Financial Times, (FT) is also wrestling with these issues.

The FT is part of the Pearson group, the largest book publisher globally. Pearson, led by Dame Marjorie Scardino, has risen to the challenges of the electronic age. Its recent innovations include the search engine newsift

Creating value

On this issue I suggest that the FT may be misreading the way to create value from its information generating capacity. Increasingly the protectionist route is being eroded (music being the obvious example). News media are increasingly relying on social media inputs for the first signals of breaking news stories.

I remain a personal supporter (and reader) of the FT. However, as things stand at present, LWD will chose alternative sources from which to to extract information, and to critique and cite the source. What LWD does is of little importance to the FT. If a similar decision is reached by millions of web-savvy individuals around the world, it’s a different matter.

Tesco’s ‘near perfect succession plan’ coincides with period of business turbulence

January 15, 2012

Philip Clarke

When Philip Clarke replaced CEO Sir Terry Leahy in 2011, Tesco’s succession plan was described as ‘near perfect’. Within a year, serious profit warnings suggest it will be unlikely to deliver its strategic aims

The Guardian has followed the story closely, and analysed the succession plan in depth:

Leahy’s retirement has triggered a changing of the guard, including the departure of Andrew Higginson, its former finance and strategy director, who will step down as head of its retailing services arm in September [2012].

The Big Price Flop

The Big Price Flop, as some analysts now refer to it, also suggests the British arm is missing the influence of Tim Mason, the group’s deputy chief executive and Clubcard guru; he currently has his hands full with its heavily loss-making US chain Fresh & Easy.

The Terry, Tim and Andy show

One former executive argues the top team is depleted and weaker than when “Terry, Tim and Andy” ran the show, but adds: “Terry was always going to be a hard act to follow. He was a retail genius.”

When [Philip] Clarke, who first worked for Tesco in 1974 as a part-time shelf stacker while he was still at school in Liverpool, was appointed to succeed Leahy, their similar backgrounds and immersion in the business suggested they were cast from the same mould. Only time will tell if Clarke can have as much success.

So what went wrong?

If you consider the reported evidence, Tesco has had a tough time in the near recessionary conditions of 2010-11. Its failure to meet its financial targets was shared with most of its rivals. A few bucked the trend, notably Sainsbury, Morrisons, and the discounters Aldi and Netto.

Arguably, Clarke was too willing to accept the positive picture of a company requiring no major change of strategy. Forced to respond to market conditions, he and the respected top team appeared to have focused on an extensive price cutting plan of £500 million.

Black Thursday

As poor results at Christmas [2011] were unveiled, securities analyst Dave McCarthy talked of a Tesco ‘black Thursday’ as £5bn was wiped off the company’s stock market value and when the results showed that the UK chain, which generates more than 60% of group profits, was funding international losses.

“We suspect that when investors look back, they will view this day as the day the market recognised the fundamental changes that are taking and have taken place. A profit warning is the last sign of a company in trouble — and they usually come in threes.

Tesco admitted for the first time that it has long-standing problems around range, quality and service. It has slashed wage bills to try to preserve profits and that, like pushing prices up, is a short-term fix at the expense of future profits.”

Hero to zero again

Another Guardian story replays the hero to zero theme, comparing the rise and fall in reputation of Leahy’s leadership at Tesco with that of Philip Rose at Marks and Spencer.

More on Tesco’s succession plan

Tesco’s succession planning was covered in an earlier LWD post

How ritual resists the march of time

January 14, 2012

The introduction of a social innovation is resisted in a remote community in Wales through an annual ritual acknowledging the more ancient tradition

The social innovation is the Gregorian calendar. In 1752 an attempt was made to adjust the calendar to arrange the festivals of midwinter and midsummer to reflect the actual seasons. Several weeks were lopped of the year. Some resistance occurred for this as in most social innovations. Resistance is likely to be strongest in rural locations isolated from the dynamic hubs of change.

The BBC reports the story from such a location in South West Wales:

The people of the Gwaun Valley near Fishguard in Pembrokeshire ignored this decree and carried on regardless.
In keeping with tradition, [on New Year’s day by the ancient Julian calendar] children from the valley walk from house to house and sing traditional songs in Welsh which have not altered for centuries.
In return, householders shower them with sweets and money – or “calennig”, literally “New Year gift or celebration”.
The local school, Ysgol Llanychllwydog in Pontfaen, will be open but the teachers are not expecting to see much of their 25 pupils that day.

Of course, for much of the year, the community lives with the Gregorian calendar. now standardised internationally. Note however, that there are also alternatives in several cultures also co-existing and respecting older cultural traditions aropund the world.

The story is of interest as an example of how ritual helps retain an old traditional way of thinking.