Several of the Defense Department’s top brass have said it in recent speeches. With the cash it has on hand, Apple could acquire the stock in Lockheed-Martin, Raytheon, Northrop Grumman and General Dynamics outright. I checked the numbers myself. It’s true. This week, the market cap of the four defense contractors was roughly $170 billion. Apple’s cash hoard was just shy of $200 billion. Apple’s own market capitalization is somewhere in the $772 billion range. Almost in the same breath, military leaders note that with a market capitalization of around $225 billion, Facebook is more valuable than the same four companies combined. Tom Temin Air Force chief of staff Gen. Mark Welsh III and former Defense Deputy Secretary Bill Lynn both cited them within the last few weeks because of the scale of research and development going on in consumer and commercial electronics and computer science, versus R&D investments benefitting the defense sector. Unsaid is how surprising hard-headed military leaders must find it, that something as seemingly trivial as Facebook could command such value in comparison to companies that make sophisticated hardware like Patriot Missiles or F-35 fighters or nuclear submarines. The comparisons come in the context of the DOD wanting to re-establish the technology offset that produced so much U.S. military superiority in recent decades. Numbers startle. They provoke thought. But they only tell part of the story. Apple may be worth three quarters of a trillion dollars, but it can’t build bombers or ships or submarines. It’s entirely capable of building sensor networks and software underpinnings for weapons, but it won’t. Numbers don’t tell what’s in a company’s DNA. SpaceX, essentially a start-up with 3,000 employees but no public shares or even statement of revenue, snared $1 billion in private financing in January. And now it’s on the very short list of exactly two companies certified by the Air Force to launch rockets putting military satellites into space. It competes with a partnership of giants Boeing and Lockheed. Boeing built the first modern airliner — in 1933. Few remember the mini-computer wars of the 1970s and 1980s. But like the PC business in the 90s, the minicomputer business had a large number of fierce competitors — Apollo, Digital Equipment Corp, Data General, Hewlett-Packard, Honeywell, IBM, Nixdorf, Prime, Wang. So fierce was the competition, it spawned the 1981 Pulitzer Prize-winning non-fiction account by Tracy Kidder. Soul of a New Machine chronicled the late Tom West, an engineer at Data General, as he coaxed out of an inexperienced team a new 32-bit processor to compete with the mighty DEC. Nearly all of the companies and people involved in the minicomputer wars are gone, but the title of that book persists. One reason is that so often, objects defined by numbers do take on a sort of soul or presence, because people made them. “Soul” might be a troubling word to some people, connected as it may be to something the deity conferred only on human beings. But the idea that numbers add up to more than numbers — that’s universally valid. Over the recent Memorial Day weekend the Rolling Thunder rumbled through Washington for its annual Memorial Day observance. My wife was bicycling right by where the motorcyclists were rolling onto the course. She stopped and took a 90-second video of the endlessly varied bikes and riders chugging past. Most rode Harley-Davidson machines. We watched the video over and over. What is a motorcycle but a chassis, a pair of wheels, a V-twin engine, and tear-drop shaped gas tank? (Gold Wing riders, spare me.) Ah, but of course a Harley-Davidson or any motorcycle is more, much more, than the sum of its parts. Gear heads know the meaning of the stoke- bore ratio, horsepower, torque, and the myriad other numerically-expressed specifications that describe motors. But they don’t explain that sound. Computers, motorcycles, musical instruments, whatever your passion, are more than the sum of their parts and specifications. That’s why automobile junk yards and airplane boneyards look so sad. Or reading about a theatre or defunct church junking its pipe organ. But what about human endeavors? They, too, are more than the sum of their parts. This came to mind recently when reading an analysis of federal inspectors general based on research at the Brookings Center for Effective Public Management. I also interviewed John Hudak, one of the study’s co- authors along with Grace Wallack. Their research quantifies the work of IGs using a return-on-investment metric. It proceeds from the postulate, correct I believe, that in general IGs return many dollars to the government for every dollar spent operating the IG office, and that this is quantifiable. The authors acknowledge that the pure dollar ROI metric is less useful in agencies where the mission isn’t primarily disbursement of money. So, for example, the IG with the highest ROI is that of the Social Security Administration, where the return is $43.60 for every dollar the office costs. The lowest financial return belongs to the Justice Department, where the IG produces a net cost. It’s ROI is about 43 cents for every dollar spent on the IG operation. As Hudak points out in the interview, that the ROI looks weak is not a reflection on the Justice IG operation, just that the particular ROI number doesn’t really capture the essence of the office and how it goes about its work. The Justice IG shop is looking at programs mostly. The department doesn’t exist to disburse hundreds of billions of dollars, as Social Security expressly does. No metric can really capture the essence of any object or program, or the people’s dedication to it.
Tom Temin is host of The Federal Drive, which airs 6-9 a.m. on Federal News Radio (1500AM). This post was originally written for his personal blog, Temin on Tech.
