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Why Business CEOs Don’t Make Effective Political Leaders (Forbes.com) June 22, 2016

Posted by daviddavenport in Op/Eds, Politics.
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Let’s imagine that a major business CEO wanted to run for president of the United States.  Oh wait, we don’t have to imagine:  the Republicans ran Mitt Romney, longtime CEO of Bain Capital, in 2012 and appear set to nominate Donald Trump, CEO of his own brand, in 2016.  What do we know, then, about how well business leaders are able to cross over and become effective political leaders?  Basically it works about as well as elite athlete Michael Jordan trying to cross over from professional basketball to baseball:  not very well.

Why is that so?  Well, for one thing, the context of leadership does matter.  John Sculley was an effective CEO of Pepsi who had, at best, a mixed record as CEO of Apple, a firm with a very different product and culture.  More than a few business and military leaders have become university presidents, only to be driven out of office because they didn’t really get that very different context.  And, for the record, Michael Jordan, the best athlete ever to play basketball, batted a miserable .202 in his one season in professional baseball.

Leaders in business have a single overriding goal which must be proven to a well-defined audience of investors:  making a profit, measured every quarter.  By contrast political leaders have multiple goals, few of which are clearly stated or predominate over the others.  They have multiple constituencies and a plethora of responsibilities measured primarily by the vagaries of political polls and elections.  They have a lot of responsibility but, unlike, a corporate CEO, relatively little authority to get things done.  Theirs is the realm of persuasion, not power.  They can only get done what they convince Congress and others to join in.

A further disconnect between business and political leadership is that success in the former is based more on pragmatism while success at the latter requires a philosophy or point of view.  As Milton Friedman famously said, a businessman might be passionately in favor of free markets, but seems eager to lobby for a little special government subsidy or lighter regulation for his own company.  Business leaders must be pragmatic, they must make things work, they are responsible to hit a bottom line.  But while they love their product and their company, rarely are they philosophers.

This explains conservative frustration with Romney and especially Trump:  they don’t seem to stand for anything except winning.  Trump’s so-called policy positions are generally more like one-liners:  on immigration, let’s build a wall; on trade, let’s build a tariff wall; on terrorism, let’s win.   You also see more than the average amount of flip-flopping with candidates like Romney and Trump.  On one hand, Trump said tax rates for the wealthy should be cut, but later said they would go up.  He said he would not raise the minimum wage, but then acknowledged he was “looking at it.”  He’s been on several sides of the abortion question.  This does not elicit much enthusiasm from conservatives, who want principled positions.  But a businessman puts pragmatism ahead of philosophy—in fact, they may not even get political philosophy.  Remember when President George H.W. Bush acknowledged he didn’t get “the vision thing?”

As a consequence, when you look at great presidents you don’t see a lot of business leaders on the list.  Most have been lawyers or career politicians—21 were both.  The only businessman of modern times who made a success in the presidency, Harry Truman, had been a failure in business.  Neither Jimmy Carter nor George W. Bush, both businessmen, is regarded as a great modern president.  Mitt Romney’s suggestion that we had a provision to the Constitution requiring a president to spend at least 3 years working in a business appears to be off base.

Donald Trump has essentially operated his own family business, not a major public company with a strong board and vocal shareholders.  He’s not used to the kind of pushback he has experienced, with mixed results, in a political campaign.  If he can’t bring his own party together, he says he’ll go it alone.  All this sounds likely to produce something akin to Michael Jordan’s .202 batting average.

 

To read at Forbes.com:

http://www.forbes.com/sites/daviddavenport/2016/06/22/why-business-ceos-dont-make-effective-political-leaders/#284b97cd1a48

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