Which of these statements is accurate:
Apple’s Web of Tax Shelters Saved Billions
Apple Paid $6 Billion in Taxes, Largest Corporate Tax Payer in U.S.
Both are accurate. The first headline is from the front page of The New York Times today and the second is from Apple CEO Tim Cook as he testified today before a Senate subcommittee investing the practice of protecting offshore profits from U.S. taxes. “It’s important to tell our story and that you hear directly from me,” Cook said.
Cook is a skilled communicator and today he put on a display on how to handle tough questions. I’ve worked with many executives who are doing what the law allows them to do in the interest of their shareholders, but are sometimes perceived poorly in the media. I’ve learned that in most cases the issues are incredibly complex and a company can be demonized or hailed as a hero, depending on who is writing the story. Cook did what a strong leader should do—tell his story directly, confidently, forcefully. Here are 5 ways Cook stayed cool on the hot seat.
Be a part of the solution. Senator John McCain’s first question to Tim Cook was, “Do you feel bullied [by this committee]? If Cook had said ‘Yes,’ it would have been the headline of his appearance. Instead he avoided responding to the “bully” comment and said, “I feel good to be participating in the process. I would like for comprehensive tax reform to be passed this year.” With his answer, Cook tried to change the nature of the discussion from a Q&A about Apple’s practices to a conversation on how to reform U.S. tax laws. “Apple supports a dramatic simplification of the corporate tax system that…implements a reasonable tax on foreign earnings that allows free movement of capital back to the U.S.,” Cook said. He added, “Apple supports this plan even though it would likely result in Apple paying more U.S. corporate tax.”
Be respectful, not defensive. On-stage Cook gets compared to Steve Jobs who had a bigger personality when delivering a presentation. Some say he’s a bit too calm. Well, Cook’s calm and cool demeanor served him very well today. He never raised his voice and did not act defensive to tough questions. If he was irritated, he didn’t show it. Committee chairman Senator Carl Levin repeatedly tried to position Apple’s actions in Ireland as, “Shifting its crown jewels (profits from intellectually property worldwide) to three Irish companies that you control and don’t pay taxes on…the result is a huge drain [to U.S. tax income].” Tim Cook listened calmly to Levin’s characterization, resisting the urge to interrupt. At this time in the proceedings Twitter posts were calling attention to Cook’s calm demeanor. Among the posts:
“Tim Cook looks as cool as a cucumber.”
“Tim Cook is smart, cool, and composed. You want this guy for your boss.”
“Tim Cook’s secret to staying cool: 13 years of staff meetings presided over by Steve Jobs.”
Cook respectfully answered even the most pointed questions. Many of Cook’s answers began with statements such as,
“Thanks for the question.”
“I have tremendous respect for you.”
“I think that’s an excellent point.”
By showing respect to the person asking the questions, you can disarm the person quickly especially if the person is looking for any opportunity to pick a fight.
Reframe the question. In response to the question, “Does Apple have an unfair advantage over domestic based corporations?” Cook responded, “That’s not the way I see it” and explained that Apple pays 30.5 percent of profits in taxes in the U.S. “We do have a low tax rate outside the U.S, but that’s for products we sell outside the U.S…the way I look at, there is no shifting going on.” Cook uses a very effective communication technique that I call, ‘controlling the narrative.’ It’s very subtle. Confident leaders don’t avoid the questions. They have answers for even the toughest questions. But they don’t allow others to frame the story. For example, Cook was emphatic when he said, “I’m not an unfair person. It’s not who we are as a company or who I am as an individual…I see this different from you.”
Put the data in perspective. If you only read the headline such as the one in today’s New York Times, you only get part of the story. In his prepared remarks, Tim Cook reminded the committee that Apple’s U.S. tax payments account for $1 in every $40 in corporate income tax collected by the U.S. treasury last year. Cook reminded the committee (and the much larger audience watching live on television and the Internet) that, “Apple is a powerful engine of job creation in the U.S.” and “Pays an extraordinary amount in U.S. Taxes ($6 billion in FY 2012).”
Confident body language. Part of the reason why someone on Twitter called Tim Cook “Tim Cool” is because he displayed confident body posture. Cook sits up straight, leans in, maintains eye contact, keeps his hands positioned in front of him on the desk, and doesn’t grimace or scowl. He doesn’t fidget nervously. When he answers, Cook doesn’t use many filler words like ‘um’ or ‘ah.’ His vocal tone, posture, and demeanor reflect a calm confidence.
As Cook said, the tax issue is very complex. It simply doesn’t lend itself to an easy headline. But the more complex the issue, the more important it is for a leader to get in front of the story and to tell the story directly to minimize the negative fallout that inevitably appears on topics that elicit strong opinions.