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Tim Cook as James Taggart?

March 5th, 2014 - 11:00 am

You might have read — and I meant to blog about this last week, but it got lost in the shuffle — about the kerfuffle between Apple CEO Tim Cook and conservative think tank (and Apple shareholder) National Center for Public Policy Research. NCPPR wants Apple to spend less money on alternative energy sources for its data centers and offices and whatnot, and pay more attention to the bottom line. Cook got angry, and compared Apple’s alternative energy efforts to its efforts to make its devices more accessible to the disabled — it’s not about the bottom line, it’s about doing what he feels as CEO is “right.”

PJM’s own Walter Hudson had this to say about it:

Stockholders went on to vote down a proposal to halt environmental efforts which hurt the company’s bottom line. In other words, stockholders voted against making money.

The episode evokes comparisons to Ayn Rand’s Atlas Shrugged and the character of James Taggart, heir to a railroad company who squanders his inherited wealth on altruistic efforts which ruin both his company and the national economy. Like Cook, Taggart believes business should be motivated by more than profit. Like Cook, Taggart believes business holds some inarticulate responsibility to help people.

I respect and admire my colleague, but I’m more than a little suspect of his formulation. Taggart was the titular head of a railroad he didn’t know how to run, and sought to fix its declining fortunes through political pull instead of actually taking care of business. “It’s not my fault!” he was known to shout at every disaster that occurred under his watch. Taggart didn’t even want to run a railroad company; he just wanted to be loved.

Tim Cook is the hands-on CEO of one of the world’s most valuable and profitable companies. Before that, he was its operations officer — and Apple was and is widely considered to have the sharpest operations of any big company on the planet. Cook runs Apple and runs it well. Does he want to be loved? Dunno. He’s too busy running Apple to ever talk about his personal life. Ever.

So I find any Cook-Taggart comparison… a bit silly.

When Big Government takes my tax dollars and gives it to some dead-end “green” company to make car batteries nobody wants, I get angry because there’s nothing I can do about it, at least not until the next election. And we just saw how the “next election” turned out. When a private company — even one I might own a few shares of — decides to do the same, I can sell my shares or stop buying their products.

Or I might think, “This could be very cool.”

And I say that for a couple of reasons.

The first is that alternate energy is worth pursuing, even if you don’t believe the science is settled on global warming. I certainly don’t believe that it is. But the fact is that we have all sorts of un- or under-tapped energy sources, and they’re not going to improve because of government diktats. We’ll get to those sources because private industry will find profitable ways to tap them. It could be a fracker in North Dakota or a tech giant building out server farms around the world. Hopefully it will be both, because cheap energy is one of the keys to wealth creation and upward mobility for millions if not billions of human beings.

That’s worth pursing, even if in the short run it shaves a few cents or even a few dollars off the share price.

Now for the second reason.

Apple is one of the biggest users of batteries on the planet. Every iPhone, every iPad, every MacBook runs on battery power. Apple devices also tend to get the best battery bang for the size, compared to the competition. This is a company which understands better than probably any other on the planet how to make devices which conserve power while still producing best-in-class performance. If Apple wants to continue to improve, they should absolutely pursue every kind of energy source Cook believes might produce future improvement for Apple’s devices and for its customers. Will there be blind alleys and dead ends? Sure.

The Apple Newton was a dead-end device, but creating that product also resulted in the super-low-power ARM chips which run damn near every decent mobile device on the planet. Progress is sometimes what happens when you fail, as any Megan McArdle reader can tell you.

If somebody is ever going to invent the sci-fi solar-hyrdogen-kinetic battery-capacitor-hybrid or whatever that never needs a charge, I bet that company will be Apple. And the reason is precisely because Tim Cook is willing to take his eye off the bottom line in the pursuit of something that might just end up insanely great.

ONE MORE THING: Apple’s shareholders cheered at Cook’s statement, and Walter has a problem with that. But why? A company is owned by its shareholders and if they want to pursue their green dreams, who are we to tell them no? If Walter wants to sell his shares (if he owns any) or quit buying Apple products (if he has any) then that’s his happiness to pursue.

But I’m a happy Apple owner in both senses — and plan to remain one.

Comments are closed.

Top Rated Comments   
Stephen, I know you are a huge Apple fanboy, but lets try to take the Apple mystique out of the equation. What would be your take if someone, say Microsoft, said that they were spending money, huge money, on something that produces no good will and is in no way R&D (Research and Development)? The only reason for the expenditure is to subsidize the views of one of the board's directors (Al Gore has been an Apple board member for many years). Now if Microsoft did that, it would be a violation of their fiduciary duty, and they could and would be sued for it. Your fake R&D battery example does not follow from what Apple has explicitly stated they are spending the money on.

The only question that really needs to be answered is if this particular expenditure produces that intangible: good will. For some Apple owners and/or purchasers, it does. For others, it is a huge waste of money. My take is that since the Apple brand relies so much on image, it may well be worth it. However, if you are a true Apple believer that thinks Apple produces better products than anyone else, then I don't see how you can say this does anything for Apple.
38 weeks ago
38 weeks ago Link To Comment
I guess I don't give Cook and his cheering stockholders the same benefit of whatever doubt exists. Certainly, if the philosophical underpinnings of these actions were the pursuit of rationally conceived values - profitable research and development - the actions would be legitimate. But I don't believe that, not when Cook specifically says investors shouldn't expect return on investment to be his top priority.

It would have been one thing if he had said, "Look, I think this gets us more profit in the long run for X, Y, and Z reasons." But he didn't. He said his mission at Apple is to help people, whether it makes money or not. That's awfully Taggartesque.

You'll recall Taggart didn't just rely on political pull to sustain his company. He took affirmative and self-defeating actions in the name of fairness, giving contracts to vendors based on their need rather than their merit. While I appreciate the distinction between private action and public action, a lack of integrity in either proves troublesome. The more business leaders conduct themselves with Cook's priorities, the less production we will see from their companies over time. And less production translates in the long-run to less life and less living of it.
38 weeks ago
38 weeks ago Link To Comment
Sorry to disagree, but Tim Cook isn't out there trying to develop a better battery. He's out there shilling for the global warming religion, and telling those of us who buy his products that if we don't goose-step right along with him, we shouldn't own stock in "his" company.

He didn't invent the iPhone. His job is to sign paychecks for those who did. I won't stop buying Apple products or stock because the real engines of Apple are still there and still working. When the Dagny Taggarts of Apple get sick of the pathetic Tim Scotts, we'll see immediately that they're gone.
38 weeks ago
38 weeks ago Link To Comment
All Comments   (39)
All Comments   (39)
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I think calling Tim Cook a James Taggart is premature and I tend to agree with VP on this one. What interests me is not that Tim Cook does not pursue profit and ROI with passion. (Profit when? Now? Later? ROI based on what assumptions? The NCPPR asked a naive question predicated on the assumption that the rules of the game are set, known, and precisely calculable.)

What does interest me is that Tim Cook pursues energy efficient designs and energy independence with passion. Regardless of his end goal of "save the world", he has intermediate goals of interest that he pursues with passion. Those are qualities and behaviors of successful people. Our end goals are usually not as important as the behaviors we exhibit in pursuit of them.

So far, Tim Cook's investment of company resources (thereby reducing profits) has not diminished Apple's marketability to the public, profitability in sales of product, or marketability to shareholders. I'd say that is at least a hair's difference from James Taggart.
37 weeks ago
37 weeks ago Link To Comment
Well, I must say I admire your stand. It doesn't really matter if Tim Cook siphons of a bit of the profit to his favourite political charity, what matters is what you're doing, examining what the enemy is up to in case they've come up with something smart. Something smarter than your own side. It's so important to know that your own ideology can be flawed and to keep an eye on it to spot those flaws before they go toxic. Feminism unleashed a massive amount of brain power and the prosperity that has come from those brains. 40 years later and unchecked for toxicity it's looking like it may be on it's way to destroying the family. Better if someone on the left forgot the glory days and took a look. On our side I smile when they talk about free market. I've been in business for decades and the majority of business people I know dream of leaving the competitor penniless and his children on the street. And they'd do it too without regulation. We need wisdom from both sides, and we're going through the great lesson in this right now watching Obama and his ilk incapable of shaking a blind faith in equality, regulation from high, reaching out the hand of friendship to the enemy and increasing welfare spending.
37 weeks ago
37 weeks ago Link To Comment
Let me just point out that Mr. Cook's activities are not overtly political -- at least, not yet. But it's not that far a distance to travel.

Suppose Mr. Cook were saying that, in order to do what's right, the company would funnel most of its profits to the Democratic Party? How would non-Democrat employees, stockholders, or Mac users feel about that?

The man's job is to produce quality goods. That emphatically includes innovation. But as others have pointed out, this is not an R&D investment.

37 weeks ago
37 weeks ago Link To Comment
As CEO his job is to increase shareholder value. If the shareholders value what he's doing, then he's doing his job.

Shareholder cheering is normally a sign of approval.

It isn't R&D so much as Public Relations, at which he's succeeded fabulously.
37 weeks ago
37 weeks ago Link To Comment
As an Apple shareholder and customer, think Cook is a blasted fool with this. If it were mere happytalk window dressing to make silly people who might buy Apple products more so inclined great. But it appears to be PC nonsense that Cook really believes.
When I think of any Taggart ruthlessly running railroads, Harvey Korman comes to mind. Perhaps Slim Whitman can give Cook the old number 6 to wake his ass up a bit.
37 weeks ago
37 weeks ago Link To Comment

In some ways, this could be considered an extremely conservative/paranoid move.

What happens if the grid goes down? Because of terrorists, or EMP, or sun spots, or neglect, or Chinese hackers (i.e. the competition), or whatever.

Wouldn’t having your own captive, isolated power source be a very good thing?

Or what if excessive government regulation “necessarily” drives energy costs up 2-3-10 fold? But not yours, because you make your own. And the costs are already sunk. Might that be a competitive advantage?

Investing in your own power source may be good insurance. I’ve been thinking about doing the same thing myself. If I had excessive cash reserves, I'm damn sure I'd put some of it into securing my own electricity supply.

37 weeks ago
37 weeks ago Link To Comment
One problem with that: All of the generation methods they're using suck for backup generation.

Actually, two problems: The methods of generation they're using are already 5+ times more costly than grid energy, and that will go up as the systems age.
37 weeks ago
37 weeks ago Link To Comment
As Mr. Lion points out repeatedly, this isn't an R&D investment Tim was talking about here. It's about using "green" energy to power it's offices and data centers. From an operational view that is an extravagant waste of money. From a marketing viewpoint it is probably money well spent.

A significant potion of their customer base cares a great deal about their "green cred". Apple is well aware of that. This is just marketing being paid for by the operations budget.
38 weeks ago
38 weeks ago Link To Comment
I cant believe so many otherwise intelligent folk are missing the obvious....

Apple makes THE tools everyone wants to have...and he just took a political swipe at "the opposition", while saying the bottom line isnt that important anymore...what does that mean?

It means he's signaling to Obama they are ready to play...big time...with the data his gadgets can record about us...

Apple will now fund all the "right causes", and PROVIDE that data, in exchange for the "special tax rate" Obama friendly companies tend to get...

"profits? we dont need no stinkin profits"

38 weeks ago
38 weeks ago Link To Comment
Your tin foil is slipping.
38 weeks ago
38 weeks ago Link To Comment
Yeah, youre right...

The NSA designed, built and distributed their own unique patented one-off gadgets that we all use every day...I'm sure thats how they've been snooping

And all those servers at Facebook can keep running day and night, when its "free" to anyone who wants to log on...Electric bill, schmetric bill, its all free, right

Because Starbucks...yeah, they GIVE coffee away to anyone who stops by, dont they...

Because the "advertising" covers the expense??

Zucker and Apple shill for lefties..and they have your data...

What could POSSIBLE be wrong with that?
37 weeks ago
37 weeks ago Link To Comment
Stephen, I know you are a huge Apple fanboy, but lets try to take the Apple mystique out of the equation. What would be your take if someone, say Microsoft, said that they were spending money, huge money, on something that produces no good will and is in no way R&D (Research and Development)? The only reason for the expenditure is to subsidize the views of one of the board's directors (Al Gore has been an Apple board member for many years). Now if Microsoft did that, it would be a violation of their fiduciary duty, and they could and would be sued for it. Your fake R&D battery example does not follow from what Apple has explicitly stated they are spending the money on.

The only question that really needs to be answered is if this particular expenditure produces that intangible: good will. For some Apple owners and/or purchasers, it does. For others, it is a huge waste of money. My take is that since the Apple brand relies so much on image, it may well be worth it. However, if you are a true Apple believer that thinks Apple produces better products than anyone else, then I don't see how you can say this does anything for Apple.
38 weeks ago
38 weeks ago Link To Comment
Yes, Stephen Green = Apple fanboy.
37 weeks ago
37 weeks ago Link To Comment
I guess I don't give Cook and his cheering stockholders the same benefit of whatever doubt exists. Certainly, if the philosophical underpinnings of these actions were the pursuit of rationally conceived values - profitable research and development - the actions would be legitimate. But I don't believe that, not when Cook specifically says investors shouldn't expect return on investment to be his top priority.

It would have been one thing if he had said, "Look, I think this gets us more profit in the long run for X, Y, and Z reasons." But he didn't. He said his mission at Apple is to help people, whether it makes money or not. That's awfully Taggartesque.

You'll recall Taggart didn't just rely on political pull to sustain his company. He took affirmative and self-defeating actions in the name of fairness, giving contracts to vendors based on their need rather than their merit. While I appreciate the distinction between private action and public action, a lack of integrity in either proves troublesome. The more business leaders conduct themselves with Cook's priorities, the less production we will see from their companies over time. And less production translates in the long-run to less life and less living of it.
38 weeks ago
38 weeks ago Link To Comment
Taggart was the titular head of a railroad he didn’t know how to run, and sought to fix its declining fortunes through political pull instead of actually taking care of business. “It’s not my fault!” he was known to shout at every disaster that occurred under his watch. Taggart didn’t even want to run a railroad company; he just wanted to be loved.
38 weeks ago
38 weeks ago Link To Comment
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