The value of apology and transparency in business, or, Apple, Inc. and its missed opportunities
Linda Stamato
Apple has a problem. The latest version of its iPhone, iPhone 4, has a flaw, which isn’t a big deal, but the company’s stock value plummeted by $5.00 a share, losing $5 billion of market value on Tuesday. The problem is not the product so much, it’s Apple’s “attitude.” To put it bluntly, Apple lacks a direct and effective public relations and communication strategy and, in business, that matters a lot.
“Apple has never done humble or open particularly well. When its chief, Steve Jobs, became ill, the company first said he had a virus, then a hormone imbalance. He went on medical leave and received a liver transplant before shareholders were informed.” (“Downside of Secrecy,” Reuters Breakingviews, Fiona Maharg-Bravo and Robert Cyran, in the New York Times, July 14, 2010)
Apparently, Apple just doesn’t get it. One of the earliest indications came with the first iPhone. Apple reduced the price of its highly touted, long-awaited iPhone by a third only a little over two months after the phone first came to market. This is the phone the company had hyped for one year, so successfully, in fact, that people camped out overnight and waited in lines for a chance to be one of the first to own one.
And, since Apple rarely discounts its products, customers who had purchased the phone for $599 could legitimately feel a sense of betrayal when the company made its unexpected announcement that the phone would cost only $399. For taking that action, and disappointing so many of its loyal customers, Steve Jobs, founder and CEO, apologized.
But, then as now, the message(s) fell flat, didn’t fly. A coach and strategic communications expert and blogger, Ruth Sherman, for example, subjected Job’s apology to her standard and found it considerably wanting, as follows:
“Apparently, the emails poured in and Steve Jobs and his marketing team knew they had a problem. So they sprang into action and posted a letter to the Apple website. After several paragraphs making the business case for the price cut, the one line that has any meaning appears: “Our early customers trusted us, and we must live up to that trust with our actions in moments like these.” It’s the only line with any heart.
But if actions speak louder than words, then Apple’s attempt at mollifying irate phone owners was a dandy. Apparently “living up to that trust” means a $100 store credit. Some people were placated, but others felt used and let their feelings be known. As one irate customer put it, “I was a $200 phone beta tester for Apple.” This could have something to do with another line in the letter that really gets to the crux of things: “This is life in the technology lane.” BAM! Any hope an early phone customer might have had that Steve Jobs felt their pain was wiped out. He might as well have yelled, “Suckers!”
This is known as the “Sorry, but” form of apology. “Yes, we admit it, and we're sorry but you were stupid to think we wouldn’t” or some other form of blame-the-victim.
According to the “rules” for apology I laid out last week, Apple and Jobs failed at every, single one… Bottom line, Apple screwed its customers that it professes to value so highly. And its efforts to make amends are half-baked, at best. This is not leadership in my book and it certainly doesn't pass for an apology.”
Fast forward to this week. Buyers of the latest iPhone have complained about the antenna; they were initially told to hold the device differently; then they were told a software bug was to blame because it showed that the phone was getting better reception than was the case. But the central claim—dropped calls—which lead Consumer Reports to question Apple’s explanation and recommend against the phone was not addressed.
Curious, this development, for, according to the Times article…
“Everything from the screen to how fast it draws up Web pages is improved (over the handset the iPhone 4 replaces). And signal is on a par with, or even better than, rival phones.”
…but, not surprising given how badly the issue was handled.
Apologies and explanations that don’t pass the credibility test can prove to be counterproductive and set back efforts to restore customer loyalty and attract new customers and clients (and impact stock value).
Questions of timing are critical. The longer it takes a business leader to acknowledge his or her mistake, the more likely the undecided folks will turn against him or her. Business leaders need to understand that if, in the end, it is going to be disclosed that they have erred, it’s better to own up as quickly as possible in order to have a hand in making repairs.
Apologizing by admitting a mistake—to co-workers, employees, customers, clients, the public at large—tends to gain credibility and generate confidence in one’s leadership. Acting defensively, on the other hand, undermines it. Credibility requires that an apology be immediate, unforced, sincere and specific in terms of what exactly one did that was wrong and who specifically has been hurt (or what process flawed or product or service affected).
Not all mistakes require an apology but when the stakes are high, it’s better to seize the opportunity to right things, to offer a sincere apology and face up to the error and to be transparent about it, not hide behind a spokesperson or shift the blame to someone else (or forces beyond his or her control). Perception matters. So do conviction and passion.
In short, there is value in taking the hit: “I’m responsible, I’m sorry. Here is what we’re going to do to make things right.”
Apologies may prove to be essential—in operations, customer and client relations and, generally, to maintain public regard—and they may be expected, increasingly, as more public apologies are made.
Failing to meet expectations can be costly; dealing with genuine—and perceived—shortcomings require action. What makes an apology matter is where it leads, what it generates, what, in the final analysis, happens as a result. The author and theologian Tryon Edwards, had it just right: “Right actions in the future are the best apologies for bad actions in the past.”
Apple may get there but it missed an early—and crucial—opportunity. Reports in today’s press suggest that, in the end, Apple will recall its iPhone 4 for a fix. Stay tuned. An announcement is coming on Friday.