JUNE 23, 2009

Apple’s Transparency

Knowing how companies are urged to be transparent in today’s environment, I was surprised to read about Apple’s success despite its culture of secrecy in this New York Times article, “Apple’s Obsession with Secrecy Grows Stronger.” As journalists Brad Stone and Ashlee Vance wrote:

Few companies… are more secretive than Apple, or as punitive to those who dare violate the company’s rules on keeping tight control over information. Employees have been fired for leaking news tidbits to outsiders, and the company has been known to spread disinformation about product plans to its own workers. [S]ecrecy at Apple is not just the prevailing communications strategy; it is baked into the corporate culture.

They continue, ”[Apple’s] handling of news about the health of [CEO Steve Jobs], who has battled pancreatic cancer and recently had a liver transplant while on a leave of absence, is unparalleled.” This issue is a big deal in the corporate governance world because “the biggest question is whether Mr. Jobs’s approach has led to violating laws that cover what companies must disclose to the public about the well-being of their chief executive.” Some say that because responsibilities for day-to-day operations were passed onto the COO, no further information about Mr. Jobs’s health needed to be shared. On the other hand, some argue that Apple violated the law by not fully disclosing material information, e.g., the CEO’s health. Reportedly, the Security and Exchange Commission is “already looking into [Apple’s] handling of Jobs’s health disclosures.”

Not only is Apple dancing in a fuzzy, gray area of material information, but it is also snubbing its nose at transparency. Some find it “a little odd” that they are a technology company that views themselves as innovative. But at the end of the day, has Apple’s lack transparency hurt the company? It certainly hasn’t impacted the bottom line. While Apple’s stock dropped $2.11 to $137.37 on Monday, it “sold a million units of its new iPhone 3G S over the weekend, well above analysts’ forecasts.”