Saturday, January 26, 2008

Management: Leaders and responsibility

By Stefan Stern
January 23 2008

Harvard Business School celebrates its centenary this year. We can look forward to a series of grand events, much back-slapping and frequent blowing of its own trumpet. But how energetically will the great school salute the achievements of perhaps its most famous alumnus of all, George W. Bush (class of ’75)? It seems unlikely that the outgoing US president will be claimed as a poster boy for the Master of Business Administration (MBA) qualification any time soon.
Maybe this Bush administration merely represents an embarrassing hiccup in the otherwise increasingly deep and intimate relationship between commerce and elected leaders. The worlds of politics and business inevitably overlap, and collide. What President Dwight D. Eisenhower once labelled the “military-industrial complex”, we might rebrand as “politico-commercial”.
Even in this era of (more or less) free markets, trade takes place within the constraints of man-made regulation. Some politicians may remain uninterested in the business of wealth creation, and some business people may be left cold by the idiosyncrasies of democratic politics – but each side has to deal with the other.
The smartest actively seek cross-fertilisation. When JP Morgan, the US investment bank, snapped up the newly available former British prime minister Tony Blair earlier this month – to serve as an adviser for an estimated $5m a year – some of the sceptical noises that greeted the news were inspired by simple professional jealousy. Mr Blair had already turned down several offers from commercial organisations, his friends maintained. But he does plan to accept a few more. The ex-prime minister’s access to key figures and his understanding of how geo-political trends are likely to develop make him a highly valuable commodity.
Indeed, Mr Blair had long been attracted by the qualities, as he saw them, of successful business leaders. When he wanted to convince the sceptical British electorate in 1996 that his Labour party could be trusted to form a competent government, he turned to his growing body of friends in the business community for inspiration. Encouraged in particular by his contacts with BP, the oil company – a relationship that grew increasingly important as his time in office went on – Mr Blair conceived a series of “performance commitments” that he made to the British people. These commitments, five of them, were printed on a credit-card sized “pledge card”, and carried by Labour party candidates.
This was state-of-the-art performance management introduced to the scruffy world of party politics. The message was: do not bother reading our unwieldy, old-fashioned manifesto. Focus on these modest, practical and business-like proposals instead. Vote Labour – or your money back. And in the course of his 10 years in office, Mr Blair continued to seek the insights and experience of business leaders to lead enquiries, policy groups and task forces.
George Bush too, when he entered the White House in 2001, appeared determined to make the most of business expertise. His administration has been packed with former corporate executives. His vice-president, Dick Cheney, had been chief executive at Halliburton, the engineering and services company. His first treasury secretary, Paul O’Neill, had been CEO of Alcoa, the aluminium company, while Mr O’Neill’s successor, John Snow, had been CEO of CSX, a transport business. Mr Snow’s successor, Hank Paulson, was CEO of Goldman Sachs, the investment bank. President Bush’s first defence secretary, Donald Rumsfeld, had been CEO of the pharmaceutical company GD Searle between 1977 and 1985 – before it was bought by Monsanto. Not for nothing was this known as “the CEO administration”.
Karl Rove, President Bush’s key adviser, spoke with admiration of his boss’s business-like administrative skills. Gone was the chaos and aimless late-night chat of the Bill Clinton administration. In the Bush era, meetings would start and end on time. Ties would be worn. President Bush is said to be a great believer in Peter Drucker’s now rather dated idea of “management by objectives”, or MBO. “I had read Peter Drucker, but I’d never seen Drucker until I saw Bush in action,” Mr Rove once said in an interview with Atlantic Monthly, the political magazine. President Bush has also revealed how business school influenced his approach to the job. “Harvard gave me the tools and the vocabulary of the business world,” he wrote in his 1999 book A Charge to Keep: My Journey to the White House.
In October 2002, before his early departure from the administration, Mr O’Neill visited Harvard Business School. He told the assembled students that much was expected of them. “The world is desperate for the application of what you’re learning here,” he said. “Not only do you have the talent and the tools – you have the obligation.”
Today, the worlds of business and politics look towards each other with greater intensity than ever. The theme for this year’s meeting at Davos is “The Power of Collaborative Innovation”. Business and political leaders will look to learn from each other. One session at Davos exemplifies this. It is called: “Rebuilding Brand America: Five Suggestions for the Future President.”
And yet both parties to this collaborative conversation should take care. Critics – perhaps we should properly say cynics – will be closely watching what they do. As Professor Henry Mintzberg (no friend of MBA orthodoxy) of Montreal’s McGill Univeristy has said: “Davos: where the people who spend 51 weeks a year creating all our problems take another week to see if they can fix them.”
If that sounds harsh, remember these words from President Eisenhower when he gave his farewell address on January 17, 1961: “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought ... The potential for the disastrous rise of misplaced power exists and will persist.”

Stefan Stern is the FT’s Management columnist

No comments: