There’s only one Tim Cook in the world. But, there’s also only one me in the world.
CEOs don’t get paid so much because they are personally unique. Every human is globally unique; it’s a consequence of how complex humans are.
CEOs have artificial scarcity because of the hierarchical structure of companies. By definition, there’s only one CEO of Apple.
Does that mean that ONLY Tim Cook, out of billions of humans, could have brought Apple to the success they have today? Try this thought exercise: if Tim had stayed at Compaq in 1997 instead of jumping to Apple, what are the chances that he would be CEO today of a Compaq worth $2 trillion?
“How much of Apple’s success is personally attributable to Tim Cook” is a perfectly valid question to ask. Unfortunately, answering it is extremely difficult; you’d need to rerun history for each alternate person. But the weight of a process doesn’t guarantee that it finds an optimum.
CEOs benefit from a human tendency to attribute systemic qualities to individual things or people. It’s the same reason we say a jacket “is warm” even though all it is doing is trapping the warmth that we created ourselves. We say a “successful CEO” instead of “the CEO of a successful company.”
Tim Cook makes incredibly consequential decisions every day. But the reason they are so consequential is mostly because he is the CEO of a huge company.
The negative effect of the current thinking on CEO “scarcity” is visible in the absurdly outsized personal rewards that the CEOs of successful companies get. But it’s even more visible in what happens to the CEOs of companies that are not successful. They still get absurd rewards! Adam Neumann also became a billionaire.
> CEOs don’t get paid so much because they are personally unique. [...] CEOs have artificial scarcity because of the hierarchical structure of companies.
They get paid proportional to the impact of their decisions, not in proportion to their scarcity, skill, etc.
If Apple must have someone to make decisions every day that could cost the company millions of dollars, what is the correct amount to compensate that person?
And if Apple were instead a $50M market cap company, would that amount change?
CEO compensation is a combination of "someone has to be in the chair" + "how important are our decisions?" + "how much can we afford to pay."
To reach back to the GP's gripe: if 1 (or even 160,000) assembly workers screw up at their job, it has a much lower impact on Apple as a whole.
CEOs don’t get paid so much because they are personally unique. Every human is globally unique; it’s a consequence of how complex humans are.
CEOs have artificial scarcity because of the hierarchical structure of companies. By definition, there’s only one CEO of Apple.
Does that mean that ONLY Tim Cook, out of billions of humans, could have brought Apple to the success they have today? Try this thought exercise: if Tim had stayed at Compaq in 1997 instead of jumping to Apple, what are the chances that he would be CEO today of a Compaq worth $2 trillion?
“How much of Apple’s success is personally attributable to Tim Cook” is a perfectly valid question to ask. Unfortunately, answering it is extremely difficult; you’d need to rerun history for each alternate person. But the weight of a process doesn’t guarantee that it finds an optimum.
CEOs benefit from a human tendency to attribute systemic qualities to individual things or people. It’s the same reason we say a jacket “is warm” even though all it is doing is trapping the warmth that we created ourselves. We say a “successful CEO” instead of “the CEO of a successful company.”
Tim Cook makes incredibly consequential decisions every day. But the reason they are so consequential is mostly because he is the CEO of a huge company.
The negative effect of the current thinking on CEO “scarcity” is visible in the absurdly outsized personal rewards that the CEOs of successful companies get. But it’s even more visible in what happens to the CEOs of companies that are not successful. They still get absurd rewards! Adam Neumann also became a billionaire.