Guest Column: Eddie Tao's Reflections on Working for Apple, Steve Jobs, Inspiration, Innovation and Intellectual Property

Eddie Tao: "Co-design is not
how Apple likes to work."

Dear readers of IP Dragon,

IP Dragon (aka Danny), a long time friend of mine asked me to consider writing some notes about the latest news about Apple's CEO, Steve Jobs. Danny and I met at Chinese school in Amsterdam, NL. While Danny worked his way through the Cantonese curriculum and was very interested to get the right pronunciation in Cantonese. So, we met a few times where I gave him some advice on pronunciation. I'm an ex-Apple employee (outside of my control) and an Apple fan (since 1990). So reality distortion factor affects me a lot. I used to work there as quality engineer, and currently work for HP's IPG division in a similar job. I'm not used to write blogs; so, be prepared for tangents and incoherent notes.

Today, 25 August 2011, I found out that Steve Jobs announced his resignation as CEO and wishes to continue as Director and Apple employee. And that Tim Cook will succeed him. Having worked for Apple for almost a decade, and being an Apple fan, the news was shocking, despite this is one of the possible scenarios based on the info about his condition. Many mixed feelings and questions popped up: is Apple going to make it, is Steve doing OK, how will this affect the Apple shareholders, feelings of sadness (as if one loses a beloved one), and what's Tim going to be like, to name a few.

Like myself, many others show concern about whether Apple is able to continue to be as successful and innovative without Steve as CEO/leader. When I checked the stock market today, the Apple stock traded on the Frankfurt exchange dropped about 4.5% in the early trade (-1.75% on NASDAQ at 10.45 PST), and then slowly climbed up to -2%. Related partner companies such as Foxconn/Hon Hai traded almost 5 to 10% lower after the news. As many know already, Foxconn is a large and important Apple partner for product manufacturing such as laptops, desktop PCs and hand held devices. Unlike HP and other PC manufacturers, Apple retains the control over the design and only requires Foxconn and other partners to manufacture their design without further input. Co-design is not how Apple likes to work. (Note: "Designed by Apple in California" and "Assembled in XXX", where XXX is the country of assembly, is found on the Apple label). It is interesting to see how outsourced partners are affected when you look at their stock value. In a way I'm amazed how big Apple's influence/importance is to us. Apple clearly has a plan and executing it step by step - though Apple doesn't like to share its strategy. Steve has shown several glimpses about how he views Apple and about changing the world to provide a better experience. There are numerous examples of his quotes and statements available, which he made in the last three decades.

Back then, when I was part of the Apple family, listening to the keynotes (internal or external) they boosted the connection with the company and Steve. There was this sense of being there together to create an excellent customer experience. Steve would highlight how the products and solutions would market itself through their design and functionality and how they would help the customer do things simpler and easier. (Various books, observations and opinions about this passion for simplicity for the user are available.) At the end of those sessions one would feel amazed and energised to put in an extra few kilometers (or miles) to make it happen. Time spent for Apple is not an issue at all - there are many examples out there - and it was no exception for me to put in 60 (reality) to 80 (ego) hours. One could say, it's the love for the company, the product designs and its charismatic leader that made it worthwhile. To reach the end goal that Steve has envisioned is what matters. I perceived my tasks as to support the magic of Apple and to help change the world a bit. That is unbelievably energising. The feeling that the effort that's put in really matters. (Maybe my ego speaks now.) In my role as Supplier Quality Engineer I was to work with fellow SQEs all over the globe to ensure the products reach the required quality levels that the Apple customer deserves. Few simple examples (but statistically unsound, if I am honest) would be: my Mac Portable still hums happily, as does my PowerBook G3 of 1999, next to the newer iMac 27" of 2008. (I cannot reveal failure rates, but they are impressive in a positive sense.) I dealt with the outsourcing and service partners and basically my job was to remind them what quality levels Apple is expecting, and worked with several: Foxconn, Inventec, Samsung and LG, to name a few. Great people and teams to work with - many of those I encountered with became my friends. Most of them were half a world away from me. But despite the distance we understood our mission - it was to help make happen Steve's vision, his dream as I perceived it. Again, it's this magic that we understood without saying a word. We could read it by looking in each other's eyes. With other employers, there's passion to make things happen, but not as strong as Apple - at least very different.

When it comes to IP (Intellectual Property), Danny's expertise, I can only say that Apple is very sensitive to that. Apple has guarded IP and related info as important to maintain the (competitive) edge. I myself value knowledge and creativity a lot. I remember one or more occasions where my manager informed me that he's been asked to justify why I had been accessing unreleased product information. Consider this similar to a situation where a security breach has been discovered. However, in my role as SQE, getting prepared for a product launch, it is handy to know the info about service parts used in that product, and getting suppliers ready to service them on time so any customer who have an issue with the new product can be supported/helped. The info is needed to set up the reverse logistics supply chain. It's a relative boring and hidden supply chain (of broken products - with negative vibes), but very important in my opinion. Boring as: not so sexy as the Finished Goods (= what consumers buy) supply chain. As the FG is considered making the revenue and thus more important. In my opinion, reverse logistics is even cooler to work with. As there are numbers out there that 1:9 will voice their issue and the rest remain silent. That one customer is able to get a nice service experience and tell like 9 to 11 others about the good service they've gotten from the company. So in my perception, I liked it a lot to get feedback about broken parts/products. To me, it's another way to "talk" to the customer to show what's the value-add of our Service team. Those were customers who think it is valuable to provide feedback, so they can help improve the product. I think if you can show good service to the customer, it's going to change the perception a lot, and customers become more loyal (and hopefully purchase again). Through my job, I was able to "talk" to my customer. And that, in a sense, was carrying out the passion for the customer. To make the customer experience, as Steve envisioned, as nice as possible. I as a nerdy perfectionist, I loved this attitude that drives perfectionism. I'd rather say, it's knowing what is needed to reach customer satisfaction. Others would call it perfectionism of Steve and the team. Maybe because they do not know how to respond otherwise, and use perfectionism with a negative connotation.

Being so passionate about a company such as Apple and its products, makes it hard to have an objective view. I've worked for various companies, but cannot say I've had the same passion before for a company like Apple. It's like working for a team and you know that their mission is the ONE. It's good on the scale of good and evil. It's going to make a change - a change what appears to be for the better. I think all of us have been to a situation while making a decision helps us feel great about it because it's 100% the right one. No doubt about it, not even the devil's advocate can make a difference. Steve's reality distortion force is strong - very strong. He's without question nor doubt, very good at it. And I think it's his level of thinking that makes him put these concepts into the words that he's using. (Note the various quotes from him that are out there). As if from a different dimension. Think of a 3D world. How do you explain in words in such a way that a 2D world (lines) understands the concept of volume. That's how I viewed Steve's messages and his drive for innovation. He's got this idea of how it should be in the future, and uses phrases to help us at Apple to understand (not saying the rest at Apple were not able to understand, but you get my idea). At the same time it's very empowering to know the little things you do, are making a significant change for the Apple customer. (In my case that was for the Europe region).

So, on a more personal note; to me Steve is Apple, and Apple is Steve. I find it hard to imagine an Apple without Steve in charge. It happened before, though. Steve had to leave Apple and came back few years later. While away from Apple he tried to innovate via NeXT. It was OK and Apple came out better (just look at the revenue Year over Year). There's various teams behind the scene that do magical stuff. During some keynotes they're highlighted, but that's just a fraction of the teams. Now, with Steve no longer being CEO, it makes me concerned. But having mingled with the teams responsible for product design manufacturing and the outsourced partners, Apple will do just fine and continue to show their creativity and innovation. Silently, I keep hoping that Steve will become healthy enough to influence Apple as he used to have. For now, I am looking forward to see how Tim leads Apple to the next level. Will miss you, Steve - thanks for the great experience and magic, and good luck Tim. Hoping to see more of Apple in the future.

Eddie Tao

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Guest Blogger Mathijs van Basten Batenburg On The People's Courts of China

IP Dragon asked Matthijs van Basten Batenburg legal counsel of several Chinese and Dutch SME at MvBB Ltd. in Shanghai to write a guest column. IP Dragon does not necessarily agree with the content, but wants to present a forum for all opinions that have something to do with IPR in China.

Inside a Chinese Courtroom presentation for the EU Chamber of Commerce Shanghai by Stéphanie Balme of the China EU School of Law.

By Mathijs van Basten Batenburg in Shanghai

On Thursday March 4 I attend a breakfast seminar organised by the EU Chamber of Commerce in Shanghai. At 8 in the morning I join one of the tables with legal professionals who have flocked to hear a reading that has the tantalizing title “Inside a Chinese Courtroom”. Today’s subject has indeed made many curious, including myself, and I later learn that the turnout for this meeting is indeed well above average. This curiosity might be explained due to the fact that many foreigners have extremely low hopes for a fair trial in a Chinese Courtroom. The result of a small survey over the first cups of coffee of the day is in line with my own prejudices: all the lawyers on my table regard the Chinese judiciary system as a venue to be avoided at all costs, and if unavoidable, either find a Chinese lawyer to “negotiate” with the judge handling the case, or just write the file off altogether. No small wonder we are all keen to hear an expert’s opinion on this subject.

Ms. Balme turns out to be very enthusiastic speaker and it is immediately clear she has a passion for China and its judicial system. For her research she has travelled extensively throughout the country, has interviewed judges and attended court sessions.

We learn that the Chinese government is seriously committed to improve accessibility to the legal system and to modernize the courts. In practise this is mostly taken literally: old, shabby, courts are demolished and replaced by shiny, steel and concrete palaces. The government has also instated some Western rituals such as the robe and gavel, although many Chinese judges are apparently still not sure what to use these weird objects for.

Despite these investments by the government, the quality of the rulings is still questionable. By and large, judges lack a law degree and principles such as “equality before the law” are not applied. It is also good to note that there is no “division of the powers” in China: judges are considered civil servants and are subordinate to the government. Furthermore, public opinion exerts great influence over the rulings of Chinese judges. The well-known case Danone vs. Wahaha (where the Chinese company established mirror companies of their joint-venture with Danone, later forcing the French company out of the joint-venture altogether) is given as a typical example. What doesn’t come as a surprise to most of the listening lawyers is that corruption is still very real and very common, also in China’s major cities. Most of the time litigation fees are still paid cash and judges are commonly presented with “gifts” by the litigants.

Even if the judiciary system would function as in Western countries, the law itself would pose a challenge since laws are still quite chaotic and are often internally contradictory. Nevertheless, Chinese people increasingly use the courts as a way to settle problems as is shown by the stats of civil cases being filed each year. As opposed to the West, in China a judicial ruling is the start of the settlement of a conflict, not dissimilar to that the signing of a contract is still mostly the start of negotiations in this country. From a Western perspective this also means that enforceability of Chinese rulings is extremely difficult. Even if you find a judge that is prepared to rule in your favour, this doesn’t mean you can enforce the verdict!

Unfortunately we run out of time before Ms Balme is even halfway through her presentation. Reinforced in my slightly cynic ideas about the Chinese judiciary system, but once again fascinated by this country, I leave the gathering.

Written by Mathijs van Basten Batenburg, legal counsel at MvBB Ltd. in Shanghai.

IP Dragon does not necessarily agree with the content of this guest blog, but wants to offer a forum to all opinions that have something to do with IPR in China.

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“A new dawn for the China health-care or… Grand theft IP?”

Guest article and picture by Mikołaj Rogowski

Back in January, Chinese government announced another one of its subsidies. This time around public health-care is the target and a sum of $128 billion is the weapon. It is no secret that it is another of Beijing’s measures of calming the nation during the year of the economic slow down, however anyone who has been in a public hospital in China will tell you that the system is indeed in need of the equipment and drugs that can be bought with such a substantial sum. Reasons aside, the dawn of new health care means that in the years to come Chinese officials will be on the medical shopping spree. Forbes (http://www.forbes.com/2009/04/08/china-health-care-markets-equity-stimulus.html) has an interesting article on that topic. As Tina Wang points out, it is more than likely that most of the promised sum will go to the Chinese companies. However, in many fields of medicine there are simply no Chinese-made substitutes for the western made, high-end equipment and drugs. That leaves the government with no other choice than to contract with foreign producers. Seems that non-Chinese firms have much to gain, however it might turn out that there is even more to lose. Most if not all of the companies working in the aforementioned fields are IP-based. Without their patents and know-how their products would simply stand no chance of competing with their cheaper Chinese rivals.

The optimistic scenario: some of the items from the no doubt massive order list will not end up as targets of a disappearing act performances, only to later magically ‘reappear’ as certain solutions in ‘new’ Chinese made products.

The pessimistic picture? Remember how Russian military industry was always eager to sell their arms to the ever-expanding, ever-modernized People’s Liberation Army (People's Republic of China armed forces)? Seems that lately they have had a change of heart. After long negotiations concerning the sale of Sukhoi Su-33 Flanker-D carrier-borne fighters Russian party decided to scrap the deal because of the… Fear of the IP theft. Russians claim that China has already copied most of the equipment they have sold them. (More on this topic here: http://en.rian.ru/analysis/20090313/120554173.html). A month after the fiasco of that deal China Association for Science and Technology publishes an article in which it stated that "In some areas, Chinese weapons have either achieved or are very close to achieving international advanced standards,". (The China Post: http://www.chinapost.com.tw/china/national-news/2009/04/13/204090/China-says.htm) The question that just begs to be asked, assuming the report is trustworthy, is how did the Chinese industry reach such levels of standards and if the theft of the IP was one of the main factors that led to this achievement, what would stop the Chinese medical industry from doing the same thing?

It certainly would not be the first time. Thanks to a friend of mine I had an opportunity to talk to a executive at Optopol ( http://optopol.com/en/), a renowned Polish firm specializing in manufacturing of diagnostics equipment in ophthalmology. They have sold a few units of their devices in China and they were met with a disturbing pattern. Most of the equipment was returned shortly, labeled as nonfunctioning. After a brief inspection it turned out that all of the returned machines bared signs of disassembly and whoever did the dismantling had a much harder time putting the machines back together – hence the returns of the “faulty” equipment. Now why would anyone want to take these machines apart, I wonder? What is even more disturbing is that this practice seems not be local - different copies of their products were sent to various locations in china, with the same results.

What do you think? Have any of the readers had any similar experience with products that were sold in China?

For more on the reform check: http://online.wsj.com/article/SB123982492165322167.html

Text and picture Mikołaj Rogowski

Mikolaj Rogowski, law student at Jagiellonian University, author of several IP articles and Polish-English translations, specializes in Polish, European, Chinese and American IP law,
China assistant to MEP Jan Olbrycht.

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