Apple and the Legitimate Role of Secrecy

Apple and the Legitimate Role of Secrecy

When is it a good thing to have a culture of secrecy within a company? Some would say 'never' - that it is always a good thing when you get maximum disclosure on all matters. I'm not so sure.

Take Apple as a case in point. The company has loyal fans within its customer base because of the superiority of its product design, and its overall 'cool' cachet.

For some of the campaigners, it is way too secretive. It doesn't, for instance, disclose the identity and location of its suppliers. It doesn't produce an integrated sustainability report. It is heavy handed in stopping people disclosing inside information about what the company's doing.

There is a good case that some of these things are what makes the company so successful. 

When a new headliner Apple product hits the shelves, the company does not - like some I could mention - have to pay people to stand in line waiting to get access to the new gadget. The products generate the 'buzz'. The buzz is infectious and it drives sales.

But a key part of being able to achieve this is also the element of surprise. If competitors knew which suppliers were working on Apple products, intelligence about what the new products were and could do would be on the agenda big time. 

You can tell a lot about a company by what's happening with its key suppliers. I remember speaking to one senior investment head who talked about the visits to suppliers of BAA they carried out. They made an excuse for the visits, but the real reason was to try to determine whether the construction of Heathrow's fifth terminal was really on time and on budget like the company claimed. 

Of course, on the other hand, there is a legitimate interest in which suppliers do what from the point of view of ensuring decent working standards and health and safety. 

But there's no point in suggesting that this information has no commercial value to a competitor, and vilifying the company for not providing it.

The problem with secrecy, of course, is that it can be very difficult to draw the line.

What begins as a legitimate interest in delighting the marketplace with innovative new products and generating the buzz can become obsessive and bullying. It can lead to a 'cover-up' culture.

And sooner or later, that becomes counter-productive and damaging.

Critics on the outside may see this line being crossed all the time, on principle, whenever the company tries to keep things confidential. They place no importance on the value to the company of commercial secrecy, and criticisms therefore come lightly.

So the company has to judge for itself - and that is a very hard thing to do. 

Most will make the mistake of erring on the side of caution and secrecy where they might have benefited from more openness.

But we do ourselves no favours when we imagine that such companies would benefit from 100 percent transparency. Sometimes, secrecy is a positive part of business.