Business is not politics

Why do business leaders often fail in applying their skills to politics?


After the failed popular uprising in East Germany in 1953, Bertolt Brecht wrote sardonically:

…. the people
Had forfeited the confidence of the government
And could win it back only
By redoubled efforts. Would it not be easier
In that case for the government
To dissolve the people
And elect another?

The contrast between Brecht’s whimsy and the catch phrase of The Apprentice, ‘You’re fired.’, illustrates why the skills of the successful business leader differ from those of the successful politician. The business person works with what he or she creates; the democratic politician must work with what he or she finds.

The most important function of a chief executive is to build a strong and supportive management team.  The ability of a political leader to do this is seriously circumscribed, because many others also enjoy democratic legitimacy. They are also elected, and they hold positions of power conferred by their party positions.  This leads to dysfunctionality in leadership, as individuals who would not have chosen each other and more or less openly covet each other’s roles must work together: neither Donald Trump nor Paul Ryan would have selected the other for the role each occupies.

Perhaps, as Doris Kearns Goodwin claims Lincoln did, an extraordinary leader can win such respect that he can build a cohesive team from such unpromising beginnings: perhaps more often, as with Tony Blair and Gordon Brown, rivals within the same party may wrestle with each other until, like Holmes and Moriarty, both fall into the abyss.

In any event, a political leader faces constraints that no corporate executive could tolerate.  And it must be so: Government enjoys coercive powers that no corporation can be permitted to have, and the price of that authority is the frustration that comes from necessary checks and balances.  The failings of democracy are all too evident, but the twentieth century taught us that they are far outweighed by the dangers of untrammelled political authority.

Businesses too, face checks and balances, but of a very different kind. They operate in competitive markets for products, labour and management skills.  A company occupies a particular segment in a particular product range.  It need not supply the whole market, generally does not attempt to do so, and faces competition from the similar products of its rivals. A business prospers when its strategy and its customers select each other in mutually productive symbiosis.

In contrast, government does not choose which markets to serve; but holds a monopoly in these markets. (Political parties operate in competitive markets, but that is not at all the same thing.) Choosing Wal-Mart over Sears is an everyday reality; choosing to live in Canada rather than the United States a fantasy imagined by a few

So the most important skill of the democratic politician is a talent for mediation – the ability to find ways of reconciling incompatible demands from different constituencies, and persuading power hungry rivals to work constructively together.  ‘My way or the highway’ is a tenable, and sometimes necessary, stance for a business leader:  but not for a politician, who cannot, as Brecht observed, fire his electorate, but can be fired by them.  The greatest of all political leaders are those who earn the deference necessary to lead as they conciliate and unify; ‘with malice towards none, with charity for all’ as Lincoln put it, and as Donald Trump did not.

In the main, attempts by business leaders to bring their skills to politics have not gone well. The spectrum of disasters is extensive. At one end is Robert McNamara, whose genius for implementing management control and information systems proved worse than useless on the battlefields of Vietnam, a country of which, as he later acknowledged, he and his colleagues did and could know almost nothing. He failed in a market he would not have chosen to enter and in which his organisation lacked the capabilities required for success.

At the other end of the range of disasters is Silvio Berlusconi, whose capabilities in Milanese commercial deal-making, translated to Italian politics, generated financial and moral corruption and ineffectual administration, on a scale rarely seen in western democracies.

Between these extremes we see the string of senior executives appointed to government roles who, almost without exception, return to business or retirement after a year or two bemoaning the constraints of working in  Washington or Whitehall. Harry Truman described the impotence of the world’s most powerful executive when anticipating the experience of his successor: “He’ll sit here, and he’ll say, ‘Do this! Do that!’ And nothing will happen. Poor Ike—it won’t be a bit like the Army. He’ll find it very frustrating.”

The modern exception to the rule that business success does not translate into political success is Michael Bloomberg. Perhaps Bloomberg’s good fortune was that Mayor of New York is primarily an executive rather than a political role, with achievement in office judged by the cleanliness and safety of the streets and the reliability of public transportation. And perhaps Bloomberg was wise not to proffer his commercial skills on a larger political stage.

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