Five things Tim Cook should do at Apple (now that he’s done testifying)

“Tim Cook performed brilliantly in front of Congress today,” Dan Pallotta writes for The Harvard Business Review. “He was authoritative, in breathtaking command of his facts, as he always is, and brought a unique perspective to each response. Senator Levin was out for blood, but ‘No one laid a glove on him,’ as Phillip Emer DeWitt wrote for Fortune.”

“He put his questioners to shame,” Pallotta writes. “His response to the question of whether Apple was violating basic rules of fairness was brilliant: ‘I am a fair person. Apple is a fair company. I would not administer [something that was unfair.]’ This is no dime-a-dozen MBA or supply-chain guy. This is a man of unique character and exceptional intelligence with an opportunity to make his own mark, not just on Apple, but on history.”

Pallotta writes, “There are a few important things that he could do a this point in his tenure that I believe would advance his movement toward that destiny in a big way.”

• Make a Self-Deprecating Joke (during an Apple Event presentation)
• Run a Great Ad Series
• Stop Delegating Big Announcements to Others
• Make the Distinction Between Product Design and the Design of the Future
• Don’t Worry About Being Liked

Much more – each of the five points above explained – in the full article here.

Related article:
Tim Cook’s doing fine, some Apple shareholders know nothing, but there are 3 things Cook needs to do – March 5, 2013

45 Comments

  1. Cook made his points clear, Levin did not.

    Cook, in my opinion, should knock the DC muck off his boots and get back to running his company. Levin and his colleagues should scurry to the kitchen corners when the light is turned on.

        1. I would hope that just maybe the people who are responsible for writing our tax laws would learn that a little of something is better then 100% of nothing.

          Unfortunately, their pockets are lined with money from those who don’t pay taxes but pay political contributions. (GE/GM)

          We are Rome. Doomed to fail.

        2. You are probably right. Until an inflection point is reached and Apple sits on 300 billion over seas. But perhaps not even then. But the inflection point will come if nothing is done.

  2. There’s something about good corporate citizenship (you know, the thing you have when you’re born and live in a country) that there’s a realisation that the 30-ish % tax rate is something you do because it’s contributing back to the society. There comes a point where a $140 billion pile of cash become obscene. It’s not just Apple. Arguably, if all major corporations pulled their weight, the US debt situation would not be in such a pile of crap that it is in presently.

    Many US people haven’t wrapped their minds around the fact that there comes a tipping point where the debt becomes too large to ever repay, and the country becomes a basket case.

    In case you need a reminder of how the US got into the mess it is in, read carefully Tim Cook’s excuses of how Apple minimises paying tax. Sure, it is legal. Not one denies that. But it is not good corporate citizenship.

    1. Apple paid all taxes in accordance with current U.S. tax codes.

      Please define “good corporate citizenship” as you see it, make it the law of the land and then maybe we can have a discussion.

      My point is simple: neither you nor Levin can unilaterally dictate terms to the American people based on your personal values. We are still a country of laws.

      1. I think I heard Tim Cook say it right, but basically he doesn’t pay taxes on money Apple makes outside of the United States. Which, you can’t really blame apple for all that because the world is still growing and trade laws I assume are changing quite frequently. Keeping that money outside of the US doesn’t sound like the worst thing he can do to the united states. Am I right on what I heard?

        1. You are correct. Apple earns billions of dollars on products sold internationally. Rather than bring that money back to the U.S. at a ridiculous 35% tax rate, Apple chooses to leave it in the countries they earned it. They DO pay taxes on those earnings, to the countries where they earned the money.

          They are under no obligation to bring that money back to the U.S. It’s not being sneaky or bending the rules… it wasn’t the U.S.’s money to begin with. If the U.S. government wants that money in our country, they need to be more competitive with their tax rates. Otherwise it will never make its way here at any rate.

          1. Now just wait a minute! Apple’s ideas for those products sold internationally came from AMERICANs. So AMERICA is due taxes on the sales of all products that emerge from those ideas. Why just yesterday we drew up a bill to tax all the products from Google and Samsung at the same 30.5% effective rate that Apple pays since we all know their products (Android and phones) are based on the AMERICAN ideas created at Apple in AMERICA. Now, we know that some of our esteemed colleagues from across the aisle will try to caution us that in our earnest appeal for tax consequences for international sales of products whose genesis was from the minds of AMERICANS that we might run into unintended consequences where AMERICA becomes responsible internationally for the effects of ideas created here at home, but we’ll not be bothered by that right now: We’ve got to get our budget deficit reduced by taxing more income all over the world as if it were income produced here in AMERICA.

            “Guard, have you found a path around this giant mirror Senator Paul put in the hallway? I’ve really got to back to the office.”

            1. So you’re saying that your idea is that the U.S. Federal Government can — and should — tax ideas (the part created in the U.S.)?

              That’s an interesting (but dumb) idea.

              Did you pay your taxes on that idea?

        2. Apple delays paying US taxes on foreign income, but it BOOKS US taxes on 2/3rds of that amount, the amount it thinks it may some day repatriate. It considers the other 1/3rd foreign working capital. Most US multinationals “book” a far lower amount, thus their net effective tax rates are lower than Apple’s. Apple’s net effective tax rate is 25%. If it didn’t book any US tax on its foreign income, it could be as low as 11.5%. Since the US corporate average is 13.4%, you can see alot of US multis don’t book any US tax on their foreign income while Apple apparently books alot. Both the US Senates’s Professors that testified, and the NYTs tax expert, Martin Sullivan, expressed surprise at how much US corporate tax Apple booked, relative to most US companies.

        3. They do not pay their share of corporation tax in the UK, as they are based in Ireland. This is not an Apple problem it is a UK/US government problem.

          If a government wants more tax or feels there is a legal loop hole sort it out! Don’t hall companies like Apple in because of government bureaucratic incompetence.

    2. Why do you think the fed government would be a better steward of more of Apple’s money than Apple? Apple has shown it’s self to be a much better steward of money than the government ever has!

    3. You probably have a Samsung 4s and support the South Koreans. The problem is NOT apple, its the US congress and most notably the US SENATE. The tax code needs to be fair to US corporations. Why do you think jobs, money and manufacturing is overseas.
      THE US Government !!!!!!! Fix the tax code and jobs will come home……

    4. If Congress wasn’t run by a bunch of self aggrandizing douches, we wouldn’t have these laws that put American companies at a disadvantage in a global economy. In case you need a reminder of how the US got into this mess, look at who you elected.

    5. So let me get this straight. Good corporate citizenship means voluntarily paying more taxes. And collectively, corporate contributions could alleviate the national debt.

      Only two things wrong with that. Who voluntarily pays more taxes? And who believes placing increased revenues in congressional hands would not roll out even more pork barrels?

      Seems like two violations of human nature.

    6. Apple pays a net effective tax rate of 25%. The US corporate avg is 13.4%. Source: US Treasury.

      Is Apple a good corporate citizen? Hell yes. There are literally thousands of US companies paying a lower rate than Apple. Any attack on Apple was nothing less than grandstanding.

    7. Tell us, MM, for I smell a strong political leaning in your post . . . What do you think of the corporate citizenship of Mr. Jeffrey Immelt and General Electric over the past 4+ years?

      Is this company’s insider positioning and ZERO tax contribution to US coffers more to your liking?

    8. Good corporate citizenship has nothing to do with paying taxes. For one thing, corporations don’t pay taxes, they collect taxes: every tax dollar they contribute comes from consumers and ends up in higher prices for their products. Many left-of-center US people haven’t wrapped their minds around the fact that there comes a tipping point where debt becomes so large because politicians can’t help spending every dime of revenue the government takes in, and then some, in an effort to maintain their grip on power by giving money to others. The issue is government inefficiency and waste. Arguably, if politicians would stop spending other people’s money on duplicative and ineffective programs, the US debt situation would not be the mess it is. Simplify the tax code; turn the bastards out.

    9. So, good corporate citizenship is paying taxes overseas for overseas sales and then paying taxes at home for those overseas sales while making all your hardware overseas.

      If a product is made offshore, shipped to another offshore location and sold there, why does the USA think It is entitled to a 30% tax on that foreign sale? It boggles the mind.

    10. I like M&M’s but this MM makes me sick and want to puke.

      When MM pays his extra 30% then I’ll listen to him. “Do as I say, not what I do” is MM’s motto.

    11. Calling BS…. “If all corporations pulled their weight”… It wouldn’t make a spec of difference. Until the government (all sides, both parties, EVERYONE in power) stops the deficit spending, cuts costs, and resolves to be fiscally responsible the problem will never be solved, not even if every citizen, and every corporation gave 100% of their revenues in taxes.

      The problem isn’t Apple, or any other corporation, its the the people in charge who collect and spend the taxes, then greedily forge ahead and borrow more, and more, and more complaining that nothing is ever enough. Hey wait, why does the government sound like Wallstreet?

  3. Tim Cook for President. What better man to run the country than an intelligent social progressive who can crank up that private sector engine to spur economic growth based on his firsthand experience as an adept business leader.

    And since he’s white, he’d actually be able to garner enough Republican support for his agenda.

  4. Sent to the office of Senator Carl Levin:

    Your performance today at the hearing investigating Apple Inc.’s tax practices was an embarrassment of epic proportions. Apple is a triumph of American creativity and capitalism, and yet you treated the company and its CEO like they were scoundrels. In reality, it is YOU sir, and your colleagues in Congress, that are ENTIRELY TO BLAME for the huge mess we call the US tax code. Your failures on this issue, and countless others leads directly to the absurdly low respect that Americans have for their elected “leaders” in Washington. Sanity check? Compare your approval numbers as a member of Congress with user satisfaction surveys for Apple products. Get back to me when you can claim that Americans like what you are doing one-quarter as much as they do their iPhone or iPad…

    1. Anybody read Brian Chen’s live blog on the NYT? He was insinuating that Apple does not have employees in Ireland when in fact they have a few thousand. What is the NYT’s beef with Apple?

  5. I think Tim Cook did great. Yes, he will never be another Steve Jobs, but he is still doing beautifully. It’s almost been 2 years with Cook, and I hope he keeps up the good work.

  6. Where were all these politicians when they were sending those good paying tax revenue jobs overseas?

    It seems as though Levin was trying to get Cook to feel ashamed at proper tax planning. I’m not sure there’s any shame in doing what the tax code allows you to do. I just didn’t understand Levin’s point. I just think they saw a large sum of money and wanted a chance to shake somebody down for a few sheckles.

  7. While everyone is celebrating the great performance of Timmy, I am looking at the collapse of AAPL, the lack of ANY new product to excite consumers, and stupid promises of a new Mac Pro more than a year ago which killed the sales of the company’s best machine and then never delivered the new one. Why oh why does anyone think that kind of mismanagement is overcome by standing down a bunch of liberal demigods?

    1. 300,000 Mac Pros sold a year will not up the AAPL share price.

      Talk to the Security and Exchange Commission if you don’t like The Street’s stock manipulation.

    1. Are we proud of some of the losers we voted in folks?

      I’ve made some voting mistakes in the past myself, but I will be far more careful in elections to come. Not voting for McCain was one of my smarter moments. But the other choice sucked too.

  8. If only C-SPAN cameras would have showed us the entire chamber I’ll bet we would have seen Senators show up just in time to make their remarks, ask a few questions and then leave. We know Senator Johnson did that because he admitted to it. But I think Senator Paul’s comments were prepared because his staff knew what was going to happen… it just hadn’t happened yet when he delivered his comments. And since his comments were out of sequence, Senator McCain had a golden opportunity to “defend” Senator Levin. I suspect we can roughly translate Senator McCain’s comments into English like this:

    “I have enjoyed working with you for over 30 years and do not think in all that time you have ever been accused of badgering a witness.”

    Translation:

    “You know that bill I asked for your support on? Well it’s going to the floor for a vote today, so what do you say?”

    1. “I have enjoyed working with you for over 30 years and do not think in all that time you have ever been accused of badgering a witness.”

      Wel,l he certainly can’t truthfully say anymore that after yesterday!

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